Another UBS Depositor Indicted; the Russian Connection (3/21/14)

DOJ Tax announced here that "Victor Lipukhin, formerly a resident of St. Charles, Ill., was indicted yesterday."  The charges were tax obstruction (Section 7212(a)) and filing false tax returns (Section 7206(1)).  Key excerpts:

According to the indictment, Lipukhin formerly served as president of Severstal Inc. (USA), a subsidiary of AO Severstal, the largest steel producer in Russia.  He lived in St. Charles from at least 2001 through mid-2007. 

Lipukhin, a Russian citizen and former lawful permanent U.S. resident, kept between approximately $4,000,000 and $7,500,000 in assets in two bank accounts with UBS in Switzerland from at least 2002 through 2007.  In 2002, he and another individual opened a UBS bank account in the name of Old Orchard, a sham Bahamian entity.  The account was initially funded with over $47,000,000 transferred into the account from a previously maintained UBS account in the Bahamas.  In 2003, the other individual left the account, leaving Lipukhin as the sole owner and signatory.  Lipukhin also maintained another account at UBS in Switzerland in the name of Lone Star, another sham Bahamian entity.  He directed virtually all transactions in the accounts, typically through a Bahamian national who served as the nominee director of the Old Orchard and Lone Star entities to help conceal Lipukhin’s ownership and control.  However, he failed to report his ownership of these accounts and failed to report any income earned in these accounts on his tax returns.

According to the indictment, in order to further conceal his ownership of the undisclosed UBS accounts, Lipukhin utilized fictitious mortgages through an entity called Dapaul Management, controlled by a Canadian attorney, to conceal his purchase of real estate in the United States with funds from the UBS accounts.  This includes his purchase of a historic building at 18 N. Fourth St, in St. Charles, Ill., for $900,000 in the name of Charlestal LLC, a domestic entity controlled by Lipukhin.  He also transferred funds from his UBS accounts to the Canadian attorney for ultimate transfer to a domestic Charlestal bank account in order to conceal the source of the funds, then used the funds in the Charlestal account to pay for various personal expenses and to withdraw cash for personal use.  Finally, Lipukhin impeded the administration of Internal Revenue laws by attempting to prevent an automobile dealer from filing a Form 8300 – which is required for certain cash transactions over $10,000 – with the IRS in order to report Lipukhin’s cash payment to purchase an automobile.

Notice this last item of impeding the IRS --the purchase of an automobile for cash.  I haven't seen that one before.

The announcement says "If convicted, Lipukhin faces a potential maximum sentence of three years imprisonment on each count."  However, the announcement does not say how many counts are involved.  However, there are at least two counts -- tax obstruction and tax perjury.  However, I infer from what is said that there a multiple counts of tax perjury.  In any event, even if only two counts, based on the charges it would appear that there is no way that, if convicted, the defendant will be sentenced to in excess of 6 years and, given the pattern of sentences for offshore accounts, his sentence is likely to be far less than 6 years.