Accountant Sentenced For Tax Crimes; Conduct Included FBAR violations (5/30/14)

The United States Attorney's office has announced the sentencing of "Dennis Duban, a Los Angeles-based accountant and tax return preparer."  The press release is here.  He was sentenced to 24 months in prison pursuant to his plea for one count of conspiracy to defraud (Klein conspiracy) and for one count of aiding and assisting (Section 7206(2)).  The sentencing minutes record is here.

The gravamen of Duban's conduct is that he assisted the persons related to the automobile dealership in running nondeductible personal expenses through the corporation.  He also was involved in offshore accounts and entities for one of the principals and for himself personally.  The release says (bold facing supplied by JAT).

- Prior to the sale of the Hacienda property, Duban and others assisted the same co-defendant in creating a nominee Cook Islands trust and opening a bank account at Wegelin Bank in Switzerland in the name “Southpac Trustee International, Inc., as Trustee of the Vista Pacifica Trust.” Proceeds of the Hacienda sale, over $14 million, were sent to the Wegelin account. Duban and a New York-based firm served as investment managers for the account. Duban and the co-defendant did not timely report the co-defendant’s beneficial interest in the Swiss account on Schedule B of a Form 1040 individual income tax return or by filing a Report of Foreign Bank Account (“FBAR”).` 

- Duban had an interest in other foreign bank accounts that he failed to properly report to the government. For at least 2006 and 2007, Duban failed to report his interest in at least one New Zealand account, held in the name of Lookout Point Limited, on Schedule B of his individual income tax returns or by filing an FBAR.

Others involved perviously pled guilty.  The news release says:

Three of Duban’s codefendants, Alan Pflueger, Randall Kurata, and Julie Kam previously pleaded guilty. Alan Pflueger pleaded guilty to willfully filing his own false 2005 Form 1040. In his plea agreement he admitted that from 2003 through 2005, personal expenses were paid for on his behalf by Pflueger, Inc., and Pacific Auto Distributors, LLC, another entity he owned, and his personal tax returns did not report these personal expenses as income. Randall Kurata, CFO of Pflueger, Inc., pleaded guilty to willfully filing a false 2003 Form 1120, U.S. Corporation Income Tax Return, for Pflueger, Inc., which improperly deducted as business expenses significant personal expenses of Alan Pflueger. Julie Kam, Alan Pflueger’s executive assistant, pleaded guilty to willfully filing her own 2004 Form 1040, which did not report personal expenses paid to her through Pacific Auto Distributors. Judge Kobayashi sentenced Alan Pflueger to 15 months’ imprisonment, while Randall Kurata and Julie Kam were both sentenced to terms of probation.

I previously reported on the acquittal of a related defendant:  Acquittal in Pflueger Involving Offshore Accounts (Federal Tax Crimes Blog 3/20/13), here.

I think this is an atypical case because I think it arose from investigations unrelated to the offshore account initiative.