Saturday, February 16, 2013

New Plea Agreement Involving Israeli Banks (2/15/13)

According to reports, Zvi Sperling pled guilty to a conspiracy count related to offshore accounts.  The Plea Ageement is here and the Sperling Information is here.

Key Facts

Defendant:  Sperling, Zvi
Conviction (by Plea):  Conspiracy (One Count)
Banks:  Bank Leumi (Bank B),  Mizrahi-Tefahot Bank (Bank A)
Entities:  Yes (Orot Investments Ltd, incorporated in Island of Nevis)
Tax Loss;  $30,000 - $80,000 range (this is a Sentencing Guideline Range)
FBAR Penalty: 50% of high balance
Court:  CD CA

The article making the report is David Voreacos & Tom Schoenberg, Bank Leumi Said to Help California Man Cheat IRShere. Some cuts and pastes from Mr. Voreacos' article are:
A California man agreed to plead guilty to conspiring with people at Bank Leumi Le-Israel Ltd. and Mizrahi Tefahot Bank Ltd. to hide offshore accounts and income from the U.S. Internal Revenue Service, according to court filings and people familiar with the matter. 
Zvi Sperling was accused Feb. 14 by federal prosecutors in Los Angeles of conspiring with people at two Tel Aviv-based banks, identified only as Bank A and Bank B. The charging document and plea agreement didn’t identify the banks. Bank A is Mizrahi, according to a person who wasn’t authorized to speak publicly about the case. Bank B is Leumi, according to a second person, who asked not to be identified for the same reason. 
* * * * 
“Sperling wanted to keep the money secret from the United States government and Banker 1 ensured that the money would be secret at Bank A in Israel,” according to the agreement. “Banker 1 also explained that Sperling would use the money by borrowing against the money at Bank A in the United States.”
Many more details are in the article.

Facts (fairly typical in their pattern):
  1. The conspiracy related to the Israeli Banks started in 2001.  Existed with other banks prior to that date.
  2. Israeli banks as of 2001, principally Bank A.
  3. Bank A had U.S. offices where certain of the documents (back-to-back loans) were effected. The back-to-back loans were apparently loans secured by the secret Israeli accounts.  When Bank A closed its U.S. office, Bank B then pitched that it could do such loans and keep the foreign accounts secret  better than Bank A.  The funds were moved to Bank B.
  4. A foreign entity was used, Orot Investments Limited, an Island of Nevis corporation.
  5. An Israeli attorney, Attorney 1, was used 
  6. Bankers 1 through 5, of Bank A, are mentioned in the information.
  7. Representatives of Bank A met with defendant in the U.S. to discuss the opening of the account and thereafter traveled to U.S. to discuss the account
Plea Agreements:
  1. Cooperation agreements: Defendant agrees to (i) "cooperate cooperate fully with the USAO, the Internal Revenue Service, and, as directed by the USAO, any other federal, state, local, or foreign prosecuting, enforcement, administrative, or regulatory authority;" and (ii) pay civil fraud penalty for years 2006 through 2011 on on his beneficial interest in unreported income from all funds held through foreign accounts; (iii) pay 50% on his interest in Bank Account A accounts.
  2. Nonprosecution agreements:  Will not prosecute "Jacob Sperling, Shelly Sperling, and Miri Sperling"
  3. Sentencing Factors:
   a.  Tax Loss:  $30,000 - $80,000, with indicated SG Guidelines  Offense Level of 14.
   b.  Sophisticated Means Enhancement:  +2
   c.  Acceptance of Responsibility Adjustment:  -2 or -3.
   d.  Potential for 5K1 departure.  (This means that he is cooperation with respect to others, including possibly his brother and the Israeli Banks)

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