Wednesday, November 4, 2015

Not Your Ordinary U.S. Taxpayer With Foreign Accounts (11/4/15)

DOJ Tax announced today here the conviction of an Alaskan plastic surgeon, Dr. Michael Brandner, for "four counts of wire fraud and three counts of tax evasion."  As set forth in the press release:
Doctor Hid Millions in Secret Accounts in Panama 
According to the indictment and evidence introduced at trial, in late 2007, shortly after Brandner’s wife filed for divorce, he collected millions of dollars in marital assets and secretly drove from Tacoma, Washington, to Costa Rica in Central America.  In Costa Rica, he opened two bank accounts into which he deposited more than $350,000 in cash and hid a thousand ounces of gold in a safe deposit box.  He then traveled to Panama where he opened an account under the name of a sham corporation and in 2008,deposited $4.6 million into the account. 
Dr. Brandner concealed both the existence of the bank accounts and the interest he earned on those accounts from the court in the divorce proceedings and from the Internal Revenue Service (IRS).  Dr. Brandner owed the IRS $600,000 in additional taxes for the 2008 through 2010 tax years.  He presented the divorce court with a fabricated promissory note to mislead the court into believing he had invested more than $3 million in the foreign corporation. 
In 2011, once the divorce was final, Dr. Brandner repatriated more than $4.6 million, only to have the funds seized by Homeland Security Investigations agents.  He then lied to federal agents about his control of the funds.
The press release narrative is a bit cryptic, but states the key points -- he cheated and lied to his estranged spouse and then to others including a court and federal agents.

Jay Adkisson wrote about the currency seizure in a Forbes blog:  Brandner: Alaska Plastic Surgeon Faces Forfeiture Of $4.656 Million For Undisclosed Offshore Account Used To Attempt To Cheat Ex-Wife (Forbes / Personal Finance 3/17/12), here.  The blog entry is drawn from the complaint in a civil forfeiture case.  As Adkisson summarizes the allegations in the complaint. Dr. Brandner's actions seem incredibly stupid.  Adkisson summarizes the lessons as follows:
There are quite a few lessons to be had from this case, but the most important is that it is stupid — very stupid — to engage in conduct that has the effect of turning a purely civil dispute (here, a divorce) into potential criminal charges. 
The events related here are nothing like legitimate asset protection planning, but rather is another “Dumb Doctor Case” (the slang acronym is “ DDC’) where a physician wrongly concluded that he could out-smart the system. Probably every real asset protection planner who reads this Complaint will roll their eyes and count Brandner’s numerous missteps as he floundered through his scheme. 
Attempting to cheat spouses out of their share of the marital estate is not a proper part of asset protection planning, either, and is wholly reprehensible conduct. Asset protection against spouses is cheap and easy and totally legitimate: It is called a “Pre-Nupt”, short for pre-nuptial agreement or pre-marital agreement. For those who are already married, most states allow post-marital agreements. Agreements to divide assets are proper; cheating the other spouse by hiding assets is not — that is what sleazy planners do. 
Finally, when it comes to offshore planning, we once again see the truism: “Somebody Knows.” No matter how rock-solid the laws of some offshore jurisdiction seem to be, no matter how tight the security at an offshore bank, and no matter how carefully somebody keeps their paperwork out of the wrong hands, “ Somebody Knows.” Here, that somebody was our still-unknown Mr. X, and Mr. X was “flipped” by law enforcement to turn over his clients such as Brandner.

No comments:

Post a Comment

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.