Monday, March 6, 2023

Paul Manafort "Settles" His FBAR Civil Willful Penalty Case in Full (3/6/23)

I report today on Paul Manafort’s “settlement” of his FBAR civil willful liability. I had earlier decided not to report on the “settlement” because the only noteworthiness was that the penalty was imposed on Paul Manafort, a person of some public notoriety resulting in the FBAR “settlement” achieving some public press. E.g., Azi Paybarah and  Devlin Barrett , Paul Manafort agrees to pay $3.15 million to settle with Justice Dept. (WAPO 3/5/23), here.

 The number is large, but there have been large FBAR civil willful penalties that were more or less routine, which I have not deemed worthy of posting to the blog. Why do I post now?

I do so because of the press about the "settlement." As I read the motion to enter this “settlement,” it was not a settlement in the way I think of settlements with mutual concessions. The Joint Motion for Entry of Consent Judgment and Notice of Settlement, here, says “As part of the settlement, Mr. Manafort has consented to an entry of judgment in full in this case, with interest accruing.”

Note, for some reason, the link to the Joint Motion seemed to be spotty in working. Readers can retrieve the document from Court Listener service for the docket entries at docket number 29 here,

I suppose that there may have been some costs that the Government gave up. And, I suppose, that it Manafort committed misconduct to hide assets or some other form of obstruction, the “settlement” might include the Government foregoing any further investigation or prosecution of that.  

JAT Comments:

1. The complaint in this case, here, recounts the criminal cases involving potential FBAR violations. (See paragraphs 29-35, pages 8-10.) Although in those cases, he was convicted of only one FBAR count for one year, and, in the D.C. case, for conspiracy to violate the FBAR reporting requirement (rather than the offense of violating the FBAR reporting requirement). The Statement of Offenses in the D.C. criminal case is quoted in the civil complaint case, in part:

 … MANAFORT was also aware that it was illegal to fail to report information to the IRS regarding the existence of foreign bank accounts, as required by Schedule B of the IRS Form 1040. MANAFORT also understood at the time that a U.S. person who had a financial interest in, or signature or other authority over, a bank account or other  financial account in a foreign country, which exceeded $10,000 in any one year (at any time during that year), was required to report the account to the Department of the Treasury…

Knowing the existence of his reportable foreign accounts and hidden income, MANAFORT knowingly, intentionally, and willfully filed and conspired to file false tax returns from 2006-2015 in that he said he did not have reportable foreign bank account when he knew that he did, he did not report income that he knew he in fact had earned, and he did not file Foreign Bank Account Reports.

In infer that the Statement of the Case was drafted by the Government but the defendant often has to agree to such a statement.

These I suppose might have been at least admissions against interest in the FBAR civil willful penalty case and may have been preclusive on the willful issue.

2. I am reminded of a case I handled while with DOJ Tax. It was a refund suit. Based on my discovery in the refund suit, the IRS authorized a counterclaim asserting the civil fraud penalty. It was a sensitive case because of the prominent players in the fraud. Rather than pursuing the matter (which probably would have resulted in a jury verdict or judge holding of fraud implicating those prominent players), the taxpayer agreed to a “settlement” fully agreeing to the tax amount (no refund) and the newly asserted civil fraud penalty plus interest. The taxpayer wanted to call it a settlement. We finally agreed, but I was uncomfortable with that. 

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