Another Plea to Offshore Account Tax Crimes (9/21/16)

DOJ Tax announced here another conviction related to an offshore account.  The title of the press release is:  "DOJ Tax Press Release, Connecticut Man Pleads Guilty to Concealing Income from Undeclared Panamanian Bank Account."

Key Excerpts from the press release:

A Weston, Connecticut man, who used a Panamanian bank account to conceal over $1.5 million in income from the sale of duty-free alcohol and tobacco products pleaded guilty today to one count of conspiring to conceal assets and income from the Internal Revenue Service (IRS) * * * * 

Saul Hyatt, 53, pleaded guilty today before U.S. District Judge Freda L. Wolfson of the District of New Jersey to an Information charging him with conspiracy to conceal assets in an undeclared bank account held in Panama for his benefit.  According to documents filed with the court, Hyatt conspired with another individual in the United States and others to conceal his assets and income derived from the sale of duty-free alcohol and tobacco products.  To execute the scheme, Hyatt used a registered Panamanian corporation, Centennial Group, to buy and sell the duty-free products.  The alcohol shipped through a customs-bonded warehouse in the Foreign Trade Zone in Fort Lauderdale, Florida.  The tobacco products, Chinese-brand cigarettes sold under the names “Chung Hwa” and “Double Happiness,” passed through a customs-bonded warehouse in North Bergen, New Jersey.  From 2006 to 2012, Hyatt directed that $1,627,832 in profits from the sale of duty-free alcohol and tobacco products be wired to his undeclared bank account in Panama.  Hyatt repatriated money from the Panamanian bank account to buy a Mercedes Benz SL 550R automobile and to pay for $19,000 in interior design goods and services.  

* * * * 

Hyatt failed to report income earned on his Panamanian account, and failed to file an FBAR for the years at issue.  Hyatt admitted that this scheme resulted in a tax loss of $521,986. 

* * * * 

Hyatt faces a statutory maximum sentence of five years in prison, as well as a term of supervised release and monetary penalties. Hyatt has agreed to file true and accurate tax returns and to pay the IRS all taxes and penalties owed, in addition to paying an $854,465.50 penalty for failure to disclose his foreign accounts.

JAT Comments:

1. The Panamanian bank is not named.
2. The bank account appears to represent untaxed income that, in the resolution, will be fully taxed.  Often in these resolutions to the extent that proceeds were deposited many years ago, they may not be taxed.  The statute would still be open if fraud were involved.  See § 6501(c)(1), here.  But developing the information to assert the tax on the original deposits may be difficult.  Hence, the resolution oft the tax in many cases relates only to later years where the income involved is the income on the earlier deposits without regard to whether the original earlier deposits were of untaxed income.

 Here are some of my compiled statistics.  I have not recently reviewed the spreadsheet in detail to make sure that all formulas work as they should.  I will try to do that soon.  But, with that caveat, here are some of them now.

	All	Taxpayers	Enablers	# Uncertain
Charges (Indictments, Information, Complaint)	171	122	49
Charges with Taxpayer Entities Involved	102	102	N/A	5
Guilty Pleas	108	91	17
Guilty Verdicts	19	17	2
Acquittals	3	1	2
Dismissals	2	1	1
Cases Sentenced (Total)	87	73	14
Cases Pending (All Prior to Sentencing, incl. Fugitives)	77	47	30
Cases Pending (without Fugitives)	53	45	8
Cases Pending (Fugitives Only)	24	2	22