The method they used to file the false claims was the use of Forms 1099-OID which reported bogus withholdings which they used to claim large refunds.
Armstrong received over $1.6 million and, according to the testimony at trial, quickly moved most of this money into accounts in the names of shell entities and offshore bank accounts.I suspect that Mr. Armstrong did not report the offshore bank accounts either on FBARs or 1040s, but do not know why he was not prosecuted for either violation (of course, there may not have been any or significant earnings on the accounts). Given the charges and convictions, adding additional counts would not make any difference in terms of sentence or deterrence effect. And, the gravamen of the Government's complaints against the pair was stealing from the Government and not violation of reporting obligations. Still, under the facts the FBAR reporting requirement would directly implicate his Fifth Amendment privilege and perhaps that was a consideration in not charging FBAR.