High Profile Bribery Scheme Involving UN Official with Tax Charges (10/7/15)

We have another high profile criminal case for a tax crime wrapped in larger criminal conduct.  The USAO SDNY filed a criminal complaint, here, against John W. Ashe, former president of the United Nations General Assembly, and others.  See USAO SDNY Press Release, here.  The gravamen of the complaint of criminal conduct relates to bribery of a public official.  As stated in press release, certain individuals "were charged in connection with a multi-year scheme to pay more thann $1.3 million in bribes to ASHE in exchange for official actions in his capacity as UNGA President and Antiguan government official in support of Chinese individuals."   There are the standard conspiracy charges and money laundering for such conduct.  As to Ashe, the only charge is tax perjury, § 7206(1), here.  (See Counts Four and Five.)  As to Ashe's tax counts, the press release states:

ASHE’s Tax Fraud 

As alleged in the Complaint, in 2013 and 2014, while ASHE was UNGA President, he solicited and received payments from LORENZO, NG, YIN, YAN, PIAO, and others, to business accounts he personally created in the name of the President of the General Assembly.  More than $1 million of the money that ASHE solicited to allegedly support his UN Presidency ASHE then transferred to himself, primarily in the form of $25,000 monthly checks written to and by him with the memo line “salary” (notwithstanding the fact that he already received a salary from the Government of Antigua).  During these years, ASHE was also paid approximately $200,000 annually in “consulting” income from LORENZO, NG, PIAO, and YAN.  For tax years 2013 and 2014, ASHE filed tax returns that materially failed to account for the income he was deriving from his purported salary payments and his “consulting” contracts.  Specifically, for year 2013, ASHE and his wife underreported their income by approximately $462,350 and, for year 2014, they underreported his income by approximately $796,329.28.

According to a New York Times Story (Marc Santora, Somini Sengupta and Benjamin Weiser, Former U.N. President and Chinese Billionaire Are Accused in Graft Scheme (NYT 10/6/15), here (bold face supplied by JAT):

The complaint alleges a broad pattern of corruption on the part of Mr. Ashe, 61, who was accused of using the bribes to support a lavish lifestyle: spending $59,000 on hand-tailored suits in Hong Kong in 2013 and 2014, buying two Rolex watches in 2014 for $54,000, and later that year paying $40,000 to lease a new BMW X5. 

He also bought a membership at a South Carolina country club for $69,000, and solicited money to construct a $30,000 basketball court at his home in Dobbs Ferry, N.Y., according to the complaint. 

“If proven, today’s charges will confirm that the cancer of corruption that plagues too many local and state governments infects the United Nations as well,” Preet Bharara, the United States attorney in Manhattan, said at a news conference. He said that the investigation was still in its early stages, adding, “We’re looking at a lot of things, and I wouldn’t be surprised if you would see other people charged.”  

* * * *

Mr. Ashe was arrested on Tuesday morning at his home in Dobbs Ferry; he was not charged in the bribery scheme but was charged with two counts of filing false federal tax returns. The five other defendants, including Francis Lorenzo, the deputy permanent representative to the United Nations for the Dominican Republic, were charged with bribery and conspiracy counts. 

* * * * 

Mr. Bharara [the USA SDNY] did not address why Mr. Ashe, a lawful permanent resident of the United States, was charged only with tax violations and not bribery, like the other defendants. He did say that he did not expect claims of diplomatic immunity to succeed in the case. 

We don’t think any immunity issues would arise in such a way to prevent the current charges, and obviously we do all that in consultation with the State Department,” he said.

A federal magistrate judge, James C. Francis IV, set a $1 million bond for Mr. Ashe, and said he would be subject to home detention and electronic monitoring, and must surrender his travel documents. It was unclear how quickly Mr. Ashe could post bond.
Prosecutors had sought his detention, saying he posed “a severe risk of flight,” while Mr. Ashe’s lawyer, Robert F. Van Lierop, argued that the charges were only allegations, which his client intended to fight. “I expect him to be fully acquitted,” Mr. Van Lierop said after the hearing. The five other defendants were all ordered held pending further proceedings.