The key excerpts are:
Beginning in May 1996, and continuing through at least 2009, Dan Kalili opened and maintained several undeclared offshore bank accounts at Credit Suisse Group (Credit Suisse) in Switzerland. He also opened and maintained several undeclared offshore bank accounts from at least 1998 through 2008 at UBS AG (UBS) in Switzerland. Similarly, David Kalili opened and maintained several undeclared accounts at Credit Suisse in Switzerland, from February 1999 through at least 2009, and at UBS in Switzerland, from October 1993 through at least 2008. Dan and David Kalili also maintained joint undeclared Swiss bank accounts at both UBS and Credit Suisse beginning in 2003 and 2004, respectively. Meanwhile, Azarian opened and maintained several of his own undeclared accounts at Credit Suisse in Switzerland from May 1994 through at least 2009, and at UBS in Switzerland from April 1997 through at least 2008.
In July 2006, Dan Kalili, with the assistance of Beda Singenberger (Singenberger), a Swiss citizen who owned and operated a financial advisory firm called Sinco Truehand AG, opened an undeclared account at UBS in the name of the Colsa Foundation, an entity established under the laws of Liechtenstein. Singenberger was indicted in the Southern District of New York on July 21, 2011, for conspiring to defraud the United States, evade U.S. income taxes, and file false U.S. tax returns. Singenberger remains a fugitive. As of May 2008, the Colsa Foundation account at UBS held approximately $4,927,500 in assets.
Each of the defendants took affirmative steps to prevent their assets in UBS and Credit Suisse from being discovered. Dan Kalili opened an undeclared account at Swiss Bank A in the name of the Colsa Foundation and in May 2008, transferred his assets from the UBS Colsa Foundation account to Swiss Bank A. He later made partial disclosure of the Swiss Bank A Colsa account on his individual income tax returns. In 2009, Dan Kalili opened undeclared accounts at Israeli Bank A and at Bank Leumi, both in Israel. In June 2009, he closed the joint undeclared account at Credit Suisse he held with David Kalili, as well as his own undeclared account, and transferred the funds. Shortly before its closure, the undeclared joint account of Dan and David Kalili at Credit Suisse held approximately $2,561,508 in assets. As of December 2009, Dan Kalili’s undeclared account at Israeli Bank A held assets valued at approximately $1,569,973, and his undeclared account at Bank Leumi held assets valued at approximately $2,497,931.
Similarly, in August 2008, David Kalili opened an undeclared account at Israeli Bank A in Israel, into which he transferred funds from his UBS accounts. He later partially declared the Israeli Bank A account on his individual income tax returns. As of August 2009, David Kalili’s undeclared account at Israeli Bank A held assets valued at approximately $1,369,489.
In August 2008, Azarian, also opened an undeclared account at Israeli Bank A in Israel, and in May 2009, he closed his undeclared account held at Credit Suisse and transferred the funds to Israeli Bank A. Azarian later partially declared this Israeli Bank A account on his individual income tax returns. At the time of its closure, Azarian’s undeclared account at Credit Suisse held assets valued at approximately $1,903,214.
For each year from 2006 through 2009, Dan Kalili, David Kalili, and Azarian, as U.S. citizens, were required, but willfully failed, to report their ownership and control over foreign bank accounts through the timely filing of FBARs with the IRS disclosing their signatory or other authority over the various undeclared accounts held at UBS, Credit Suisse, Israeli Bank A, and Bank Leumi, each having an aggregate value of more than $10,000 during each of these years.
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* * * In addition [to the criminal exposure], each defendant agreed to pay a civil penalty for willfully failing to file FBARs. Dan Kalili agreed to pay a civil penalty of $2,674,329, David Kalili agreed to pay a civil penalty of $1,325,121 and Azarian agreed to pay a civil penalty of $951,607.The civil penalty is the willful FBAR penalty, which is 50% of the high amount in the accounts.
The plea agreements and docket entries for each defendant are here:
- Dan Kalili docket entries, here.
- Dan Kalili plea agreement, here.
- David Kalili docket entries, here.
- David Kalili plea agreement, here.
- Azarian docket entries, here.
- Azaraian plea agreement, here.
The plea agreements are all dated 10/10/16. Key points in the plea agreement for Dan Kalili (DK) in addition to the plea count:
1. DK agrees to cooperate in the civil investigation by the IRS for the years 2003 - 2009.
2. DK Admits liability for the civil fraud penalty under § 6663.
3. DK agrees that the plea agreement does not bar the IRS from assessing and collecting tax for 2003-2009.
4. Sentencing Guidelines agreements
a. The applicable sentencing Guideline is the Guideline for fraud under § 2S1, but since the offense related to tax fraud and the tax guideline under § 2T1.1 is higher, the Tax Guideline applies pursuant to SG 2S1.3(c)(1).
b. The base offense level is 18 based on a tax loss more than $250,000 and less than $550,000.
c. The sophisticated means 2 level increase applies. SG 2T1(b)(2)
d. The acceptance of responsibility 3 level downward adjustment applies.
e. The resulting offense level for the Sentencing table is 17.
I do not provide the similar points for the other two defendants, but on quick perusal think they are basically the same template with facts and numbers customized for the particular defendant.
JAT Comments (based principally on Dan Kalili's plea agreement):
1. Apparently, the parties have not yet calculated the precise tax loss and thus could provide only the $250,000 - $500,000 range which is the important range for sentencing guidelines calculation purposes. The inference is that this tax loss relates only to the years 2003-2009. There was undoubtedly tax loss related to earlier years, but the IRS seems to forego pursuing those losses (which would be relevant conduct) for purposes of sentencing.
2. The inference is that the defendants' criminal conduct with respect to their tax returns dates back earlier than 2003, but the tenor of the agreement is that the IRS will insist on tax, penalties and interest only for 2003-2009. The civil statute of limitations for income tax assessments is still open for all years in which fraud was involved (§ 6501(c)(1), here), so the IRS is foregoing some taxes, penalties and interest for the earlier years. This highlights that, even when there is a statute that may still be open for fraud, the IRS will often not pursue those types of old liabilities.
3. The attorneys for each of the defendants are the same. (See the docket entries and the plea agreements.) And, the activities underlying the statement of facts in each case were probably somewhat known by each of the defendants. (That is my inference / hunch.) So, at least superficially, there is a potential conflict of interest involved. For example, one of the defendants might be able to strike a better deal with prosecutors by turning on the other two. My anecdotal experience is that prosecutors and judges will frown on such joint representation. Still, I know the attorneys for the defendants to be outstanding attorneys of the highest ethical reputation, so I am sure that they crossed their t's and dotted their i's on that. But in other situations, practitioners will want to pay particular attention to such joint representation.