U.S. Accountant Enabler Connected with Panama Papers Pleads Guilty (3/1/20)

DOJ has this press release: U.S. Accountant Pleads Guilty in Panama Papers Investigation (2/28/20), here.  Key excerpts are:

A Massachusetts-based accountant who was charged along with three others in connection with a decades-long criminal scheme perpetrated by Mossack Fonseca & Co. (Mossack Fonseca), a Panamanian-based global law firm, and its related entities, pleaded guilty today to wire and tax fraud, money laundering, aggravated identity theft and other charges.  

Richard Gaffey, aka “Dick Gaffey,” 75, of Medfield, Massachusetts, pleaded guilty to one count of conspiracy to commit tax evasion and to defraud the United States, one count of wire fraud, one count of money laundering conspiracy, four counts of willful failure to file Reports of Foreign Bank and Financial Accounts (Financial Crimes Enforcement Network Reports 114), and one count of aggravated identity theft. 

* * * * 

According to the allegations contained in the indictments, other filings in this case, and statements during court proceedings, including Gaffey’s guilty plea hearing, since at least 2000 through 2018, Gaffey conspired with others to defraud the United States by concealing his clients’ assets and investments, and the income generated by those assets and investments, from the IRS through fraudulent, deceitful, and dishonest means. 

During all relevant times, while acting as an accountant, Gaffey assisted U.S. taxpayers who were required to report and pay income tax on worldwide income, including income and capital gains generated in domestic and foreign bank accounts.  Gaffey helped those U.S. taxpayers evade their tax reporting obligations in a variety of ways, including by hiding the beneficial ownership of his clients’ offshore shell companies and by setting up bank accounts for those shell companies.  These shell companies and bank accounts made and held investments totaling tens of millions of dollars.  For one U.S. taxpayer, Gaffey advised the taxpayer how to covertly repatriate approximately $3 million to the United States by reporting to the IRS a fictitious company sale  to thereby evade paying the full U.S. tax amount.  Gaffey was assisted in this scheme through the use of Mossack Fonseca law firm, including Ramses Owens, a Panamanian lawyer who previously worked at the Mossack Fonseca.

Gaffey was the U.S. accountant for co-defendant Harald Joachim von der Goltz.  From 2000 until 2017, von der Goltz was a U.S. resident and was subject to U.S. tax laws, which required him to report and pay income tax on worldwide income.  In furtherance of von der Goltz’s efforts to conceal his assets and income from the IRS, Gaffey falsely claimed that von der Goltz’s elderly mother was the sole beneficial owner of the shell companies and bank accounts at issue because, at all relevant times, she was a Guatemalan citizen and resident, and – unlike von der Goltz – was not a U.S. taxpayer.  In support of this fraudulent scheme, Gaffey submitted the name, date of birth, government passport number, address, and other means of identification of von der Goltz’s elderly mother to a U.S. bank in Manhattan. 

The press release does not state the maximum sentence based on the counts of conviction as is often stated in press releases.  Stating the maximum sentence is often misleading because sentences, particularly in tax crimes cases, are often well below the maximums based on the counts of conviction.  The sheer range of crimes to which he pled and is thus convicted would make a statement of the "stacked" maximum so great that, probably, merely stating the maximum would be misleading to the uninitiated.  Although the stacked maximum sentence is surely well in excess of 15 years, the likely sentence given his age is probably in 3-4 year range.

I did note at the bottom of the press release that the components involved were:

Criminal Division
Criminal - Money Laundering and Asset Recovery Section
USAO - New York, Southern

Interesting that this was not a Tax Division.  Of course, SDNY has its own tax prosecutors, and announcements with SDNY AUSAs involved in tax prosecutions usually identify the component only as "USAO - New York, Southern."

One other point.  The press release quotes US Attorney Geoffrey Berman and then mentions the sentencing judge in the case as Judge Berman.  That judge is Richard M. Berman.