Thursday, May 28, 2015

The FIFA Indictments and Guilty Pleas - the Tax and FBAR Angles (5/28/15)

Yesterday, amidst great fanfare, DOJ announced the indictment of FIFA officials and others.  See press release titled Nine FIFA Officials and Five Corporate Executives Indicted for Racketeering Conspiracy and Corruptionhere.  Key excerpts relevant to tax crimes are (bold-face supplied by JAT):
A 47-count indictment was unsealed early this morning in federal court in Brooklyn, New York, charging 14 defendants with racketeering, wire fraud and money laundering conspiracies, among other offenses, in connection with the defendants’ participation in a 24-year scheme to enrich themselves through the corruption of international soccer.  The guilty pleas of four individual defendants and two corporate defendants were also unsealed today. 
The defendants charged in the indictment include high-ranking officials of the Fédération Internationale de Football Association (FIFA), the organization responsible for the regulation and promotion of soccer worldwide, as well as leading officials of other soccer governing bodies that operate under the FIFA umbrella.  Jeffrey Webb and Jack Warner – the current and former presidents of CONCACAF, the continental confederation under FIFA headquartered in the United States – are among the soccer officials charged with racketeering and bribery offenses.  The defendants also include U.S. and South American sports marketing executives who are alleged to have systematically paid and agreed to pay well over $150 million in bribes and kickbacks to obtain lucrative media and marketing rights to international soccer tournaments. 
* * * * 
The guilty pleas of the four individual and two corporate defendants that were also unsealed today include the guilty pleas of Charles Blazer, the long-serving former general secretary of CONCACAF and former U.S. representative on the FIFA executive committee; José Hawilla, the owner and founder of the Traffic Group, a multinational sports marketing conglomerate headquartered in Brazil; and two of Hawilla’s companies, Traffic Sports International Inc. and Traffic Sports USA Inc., which is based in Florida. 
* * * * 
The Convicted Individuals and Corporations 
* * * * 
On Nov. 25, 2013, the defendant Charles Blazer, the former CONCACAF general secretary and a former FIFA executive committee member, waived indictment and pleaded guilty to a 10-count information charging him with racketeering conspiracy, wire fraud conspiracy, money laundering conspiracy, income tax evasion and failure to file a Report of Foreign Bank and Financial Accounts (FBAR).  Blazer forfeited over $1.9 million at the time of his plea and has agreed to pay a second amount to be determined at the time of sentencing.
* * * * 
The indicted and convicted individual defendants face maximum terms of incarceration of 20 years for the RICO conspiracy, wire fraud conspiracy, wire fraud, money laundering conspiracy, money laundering and obstruction of justice charges.  In addition, Eugenio Figueredo faces a maximum term of incarceration of 10 years for a charge of naturalization fraud and could have his U.S. citizenship revoked.  He also faces a maximum term of incarceration of five years for each tax charge.  Charles Blazer faces a maximum term of incarceration of 10 years for the FBAR charge and five years for the tax evasion charges; and Daryan and Daryll Warner face maximum terms of incarceration of 10 years for structuring financial transactions to evade currency reporting requirements.  Each individual defendant also faces mandatory restitution, forfeiture and a fine.  By the terms of their plea agreements, the corporate defendants face fines of $500,000 and one year of probation.
The press release also has links to various documents, principally informations.  The Charles Blazer information unsealed yesterday is here.  A sweeping corrupt enterprise conspiracy is alleged.  Included in the corrupt acts are (par. 30, p. 15):
the creation and use of shell companies, nominees and numbered bank accounts in tax havens and other secretive banking jurisdictions; the active concealment of foreign bank accounts; the structuring of financial transactions to avoid currency reporting requirements;
the use of safe deposit boxes; income tax evasion;
Counts Four through Nine (beginning on p. 28) allege tax evasion for the years 2006 through 2011.  The alleged evasion was through failure to file.  Presumably through some acts of post filing evasion, he refreshed the statute of limitations for the early years.   The indictment alleges that he engaged "in affirmative acts of evasion, including concealing and attempting to conceal from the IRS his true and correct income."  Count Ten alleges an FBAR failure to file for the year 2010.  The account was at FirstCaribbean.

I tried to figure out the maximum sentence by stacking the various counts in the information to which Mr. Blazer pled.  The number is, I think, about 840 months, without consideration of downward departure for cooperation.  Of course, that number is also irrelevant under the Sentencing Guidelines alone, much less the Judge's sentencing discretion under Section 3553(a) and Booker.

A New York article (Jere Longman, Chuck Blazer, a Soccer Bon Vivant Laid Low (NYT 5/27/15), here) says:
The guilty plea was made on Nov. 25, 2013, at which time Mr. Blazer forfeited $1.9 million, the authorities said. He has agreed to pay a second amount to be determined at the time of his sentencing. He faces a maximum penalty of 10 years for failing to report foreign bank accounts and five years for tax evasion.
It is not clear to me why the article does not mention the other counts to which he pled, which appear to be the more serious counts and misconduct that might be considered (both directly and as relevant conduct) in terms of the sentence he is likely to draw.  But, as noted above, he is likely to qualify for departures and variances which will make his actual sentence well below what he would receive if he had only pled to the tax counts.

The NYT article also has this report of a piece of the investigative puzzle:
This led to an unusual confrontation with federal authorities in the autumn of 2011, described last November by The New York Daily News: As Mr. Blazer wheeled down Fifth Avenue on a motorized scooter, headed for a meal at Elaine’s, the now-closed celebrity restaurant, he was intercepted by an agent from the F.B.I. and another from the I.R.S., and was reportedly told, “We can take you away in handcuffs now or you can cooperate.” 
The next summer, The Daily News reported, Mr. Blazer wore a keychain embedded with a microphone at the 2012 London Olympics, and recorded conversations with international soccer officials. 
Some may consider Mr. Blazer a kind of hero as a whistle-blower. Others were not so generous. Richard Weber, the chief of criminal investigation for the I.R.S., told reporters that Mr. Blazer and others were being given a “red card” in “the World Cup of fraud.”

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