Monday, July 1, 2013

Depositor Pleads to False Return; Depositor in Luxembourg Branch of Israeli Bank (7/1/13)

DOJ Tax announced today that Alexei Iazlovsky of Potomac, Md., pled guilty to filing a false tax return for 2008 related to his interest in a foreign account, here.  The plea agreement and information are here and here.  Key facts:

Name:  Alexei Iazlovsky
Conviction (by plea):  Tax Perjury, 7206(1) (1 count for 2008)
Foreign Bank(s):  Luxembourg branch of an Israeli bank (unnamed in release);
FBAR Penalty:  50% of the high balance.  (High balance not stated.)
Omitted income:  $2.6 million
Tax Loss:  More than $400,000.
Admitted conduct:  False individual and corporate returns
Enabler: Nadav Kalai, a return preparer (see below).
Court:  CD CA

Cut and paste from the press release):
According to court documents, Iazlovsky, a U.S. citizen, maintained an undeclared bank account held in the name of a foreign corporation at the Luxembourg branch of an Israeli bank. Iazlovsky owned a corporation that produced documentaries for Russian television stations. A tax return preparer suggested to Iazlovsky that he could reduce his taxes by keeping money out of the United States and diverting payments from his Russian clients to a foreign bank account held in the name of a foreign corporation.  Iazlovsky met with a banker from the Israeli bank at a New York hotel to open the Luxembourg account.

According to court documents, Iazlovsky diverted a total of $2.6 million in untaxed payments from his Russian clients to his undeclared bank account in Luxembourg. From 2002 through 2009, Iazlovsky filed false individual and corporate tax returns that failed to report his authority over and ownership of the bank account in Luxembourg. He also omitted the income diverted to and generated by the undeclared account in Luxembourg. Iazlovsky has admitted that the tax loss is more than $400,000.

Iazlovsky is the latest in a series of defendants charged in the U.S. District Court for the Central District of California with failing to report income from undeclared accounts held at Israeli banks.
 I will update the spreadsheet later this week.

There is a provision in the plea agreement (par.7(b)) that I had not seen or, if I had, I had not paid attention to before.  The provision excludes from the Sentencing Guidelines calculations certain information (referred to as paragraphs 19-23 of the Statement of Facts (Appendix A) of the plea agreement).  The exclusion is pursuant to S.G. 1B1.8, here, which is
§1B1.8.     Use of Certain Information
(a)        Where a defendant agrees to cooperate with the government by providing information concerning unlawful activities of others, and as part of that cooperation agreement the government agrees that self-incriminating information provided pursuant to the agreement will not be used against the defendant, then such information shall not be used in determining the applicable guideline range, except to the extent provided in the agreement.
(b)        The provisions of subsection (a) shall not be applied to restrict the use of information:
(1)        known to the government prior to entering into the cooperation agreement;
(2)        concerning the existence of prior convictions and sentences in determining §4A1.1 (Criminal History Category) and §4B1.1 (Career Offender);
(3)        in a prosecution for perjury or giving a false statement;
(4)        in the event there is a breach of the cooperation agreement by the defendant; or
(5)        in determining whether, or to what extent, a downward departure from the guidelines is warranted pursuant to a government motion under §5K1.1 (Substantial Assistance to Authorities).
The excluded information relates to a return preparer named Nadav Kalai.  See my prior blog on Kalai, titled New Indictment of U.S. Tax Return Preparers & Enablers re Offshore Bank & Related Activity (6/14/12), here.  Also, it appears that, in the indictment referenced in that prior blog, Mr. Kalai is attempting to force his own plea to the count charged without any plea agreement.  See the Notice of Intention to Change Plea; Proposed Factual Basis; Memorandum of Point and Authorities in Support, here.  Mr. Kalai's maneuver is not mainstream, so it is not certain what he and his counsel are up to (I could but won't speculate).  The factual basis that Mr. Kalai proffers for his attempted plea is for his actions related to Mr. Iazlovsky.

1 comment:

  1. SeniorResearcherJuly 2, 2013 at 3:42 AM

    lol...yes Jack you go ahead and update


Please make sure that your comment is relevant to the blog entry. For those regular commenters on the blog who otherwise do not want to identify by name, readers would find it helpful if you would choose a unique anonymous indentifier other than just Anonymous. This will help readers identify other comments from a trusted source, so to speak.