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Calif. Businessman Enters Guilty Plea for Conspiring to Defraud U.S. by Hiding Israeli Bank Accounts

December 3, 2013 — The Internal Revenue Service’s Whistleblower Office first came about as a result of the Tax Relief and Health Care Act of 2006. The Office provides tipsters who have information about tax fraud with the means to notify the government. Informants who collaborate with the IRS may be eligible to receive financial rewards that range from 15 to 30 percent of the funds the government recovers. When available, the substantial monetary rewards provide a significant incentive to thwart tax cheats who flout the laws that everyone has the duty to live by.

Los Angeles Defendant the Latest Found to Have Hidden Income from Undeclared Accounts in Israel

Another defendant has pleaded guilty in Los Angeles to charges of conspiring to defraud the United States government by using undeclared bank accounts in Israel as collateral for back-to-back loans obtained in the United States, and then failing to report the income. U.S. citizens with assets exceeding $10,000 in an account in a country abroad must disclose the account on their individual income tax returns. They must also disclose the account by filing a Report of Foreign Bank and Financial Reports (FBAR) with the U.S. Treasury. A back-to-back loan is one in which entities in different countries borrow from one another in the currency of each entity’s country.

David Raminfard, a U.S. citizen who lives in Los Angeles, California, kept undeclared bank accounts at a Tel Aviv bank in Israel. To hide the accounts from the U.S. government, the accounts were maintained by nominees. One account, for example, was held by Westrose Limited, a Turks and Caicos Islands nominee. Raminfard also placed a mail hold on the accounts in Israel so that he did not receive account statements in the mail. Instead, an international accounts manager with the international bank in Israel would hand deliver the statements to Raminfard in California, where the two would review them together at a Los Angeles hotel.

In 2000, Raminfard began to obtain back-to-back loans from the Los Angeles branch of the bank in Israel, using as collateral the funds in the undeclared accounts in Israel. According to the Justice Department, this allowed Raminfard to access his money in Israel without alerting the U.S. Government to the undeclared accounts. Further, Raminfard was able to treat the interest he paid on the loans as a business expense on the tax returns of his businesses, without having to report to the IRS the income interest he earned in Israel as part of the back-to-back loan. Between the tax years 2005 and 2010, Raminfard declined to report over half a million dollars in income. The high balance in just one of Raminfard’s undeclared accounts was about $3 million.

For failing to file the required FBARs, Raminfard has consented to pay the IRS a civil penalty of 50 percent of the high balance of his undeclared accounts. He also faces a maximum prison sentence of five years and a fine of up to $250,000.

Insider Informants Collaborate With the IRS Against Tax Cheats

Before notifying the IRS, tipsters should seek advice from a knowledgeable qui tam lawyer to ensure they understand how the process works. Rewards for information about a corporation’s tax violations may be given even if the government’s recovery is modest. On the other hand, rewards are available for tips about a private individual’s tax violations only when certain financial criteria are met. The tax fraud lawyers in Waters & Kraus’s offices in Texas, Maryland and California are available to provide whistleblowers with the sound advice they need. Contact us by email or call our whistleblower lawyers at 855.784.0268 to discuss how we can protect your interests while guiding you through the process.

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