Yet Another Offshore Account Plea (11/19/18)

DOJ Tax announced, here, another plea deal today.  The defendant is Teymour Khoubian.  Key excerpts:

According to the plea agreement and related court documents, Teymour Khoubian pleaded guilty to filing false tax returns for tax years 2009 and 2010 that failed to report foreign financial accounts in Germany and Israel, and failed to report income earned on those accounts. Between 2005 and 2012, Khoubian jointly owned multiple accounts at Bank Leumi in Israel with his mother that held between $15 million and $20 million. Additionally, since at least 2005, Khoubian also owned a foreign account at Commerzbank AG in Germany. Despite his ownership interest in these accounts and a legal requirement to declare all offshore accounts containing $10,000 or more, Khoubian prepared false tax returns for tax years 2005 through 2011 that did not fully disclose his foreign accounts, nor report all the interest income earned on those accounts. For instance, Khoubian’s Bank Leumi accounts generated interest income in excess of $4 million between 2005 and 2010, none of which was reported to the Internal Revenue Service (IRS).  The total tax loss associated with the Bank Leumi accounts is approximately $ 1.2 million.  

At least since 2009, Khoubian was aware of the IRS’s Offshore Voluntary Disclosure Program (the OVDP).  The OVDP allowed U.S. taxpayers to voluntarily disclose their previously unreported foreign accounts and pay a reduced penalty to resolve their civil liability for not declaring foreign accounts to U.S. authorities. During 2011 and 2012, Bank Leumi requested that Khoubian sign a Form W-9 for U.S. tax reporting purposes. In an August 13, 2012, recorded telephone conversation with a banker at Bank Leumi, Khoubian stated that the reason he did not want to sign a Form W-9, was "because you have to pay half of it." 

In 2012 and 2014, Khoubian knowingly made multiple false statements to IRS special agents investigating his foreign accounts, including falsely stating that the Bank Leumi accounts were not in his name, that he did not own a bank account in Germany from 2005 to 2010, that he closed his German bank account and moved all of that money to the United States, and that none of the money in his German bank account was moved to Israel.     

As part of the plea agreement, Khoubian agreed to the entry of a civil judgment against him for an FBAR penalty in the amount of $7,686,004.  Khoubian further agreed to pay an additional $612,310 in restitution to the IRS.   

Documents related to the plea are:

1.  The plea agreement, here.
2.  The docket entries as of today, here.

JAT Comments:

1.  One of the attorneys listed on the docket entries is Chuck Rettig, the current IRS Commissioner.  I am sure he has long since disassociated himself from this case.

2.  The plea is to two counts of tax perjury, Section 7206(1).  These are 3-year felonies,  which by stacking produces a maximum sentence of 72 months incarceration.

3.  The Sentencing Guidelines offense level calcs are on p. 12 of the plea agreement.  The calcs are Base Offense Level 20 (based on tax loss of $1.2 million), sophisticated means (+2), acceptance of responsibility (-3), producing offense level of 19.

4.  There is a limited appeal waiver permitting the defendant to appeal if the sentence is greater than the guidelines range for offense level of 19.

5.  The discussions with Bank Leumi, including the recorded telephone call, are in paragraphs 11 ff on pp. 25 ff.  I don't recall that I have encountered these offshore banks playing the enabler game recording telephone calls.  But, as the offshore juggernaut, particularly against Swiss banks and some Israeli banks heated up, I am sure that those banks were figuring out ways that they could get some protection by throwing clients under the bus.  Recording telephone calls (or even in person meetings) would be a good way to do that.

6.  The calculated restitution is $612,310 (par. 10, p. 8) to be credited to tax which, I presume, is the as yet unpaid tax loss.