Saturday, October 19, 2013

New Superseding Indictment of U.S. Enablers of Foreign Bank Noncompliance (10/19/13)

DOJ Tax announced here a superseding indictment of David Kalai and Nadav Kalai, father and son, adding to the previous defraud / Klein conspiracy charge two counts of FBAR violations.  See the prior blog on the prior superseding indictment, New Indictment of U.S. Tax Return Preparers & Enablers re Offshore Bank & Related Activity (Federal Tax Crimes Blog 6/14/12), here.  Nadav Kalai was previously reported to be connected to the  Alexei Iazlovsky who pled guilty earlier.  See Depositor Pleads to False Return; Depositor in Luxembourg Branch of Israeli Bank (Federal Tax Crimes Blog 7/1/13), here.

I have not read the new superseding indictment, but cut and paste the key description from the DOJ Tax Press Release:
As alleged in the June 2012 superseding indictment, David Kalai and Nadav Kalai were principals of United Revenue Service Inc. (URS), a tax preparation business with 12 offices located throughout the United States. David Kalai worked primarily at URS' former headquarters in Newport Beach, Calif., and later at URS' location in Costa Mesa, Calif. Nadav Kalai, who is David Kalai's son, worked out of URS' headquarters in Bethesda, Md., as well as URS locations in Newport Beach and Costa Mesa. David Almog was the branch manager of the New York office of URS and supervised tax return preparers for URS East Coast locations. 
* * * * 
The superseding indictment further alleged that the co-conspirators prepared false individual income tax returns which did not disclose the clients' foreign financial accounts nor report the income earned from those accounts. In order to conceal the clients' ownership and control of assets and conceal the clients' income from the IRS, the co-conspirators incorporated offshore companies in Belize and elsewhere and helped clients open secret bank accounts at the Luxembourg locations of two Israeli banks referred to as Bank A and Bank B in court documents. Bank A is a large financial institution headquartered in Tel-Aviv, Israel, with branches worldwide. Bank B is a mid-size financial institution headquartered in Tel-Aviv, with a worldwide presence on four continents. 
The indictment also alleged, the co-conspirators incorporated offshore companies in Belize and elsewhere to act as named account holders on the secret accounts at the Israeli banks. The co-conspirators then facilitated the transfer of client funds to the secret accounts and prepared and filed tax returns that falsely reported the money sent offshore as a false investment loss or a false business expense. The co-conspirators also failed to disclose the existence of, and the clients' financial interest in, and authority over, the clients' secret accounts and caused the clients to fail to file FBARs with the Department of the Treasury. 
In addition to the earlier charges, yesterday's superseding indictment alleges that David Kalai and Nadav Kalai each failed to file a FBAR for calendar years 2008 and 2009 concerning a foreign account held at Bank A in Luxembourg. The second superseding indictment alleges that both David Kalai and Nadav Kalai had a financial interest, signature or other authority over a foreign financial account that had an aggregate value of more than $10,000 during 2008 and 2009.

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