Saving the best for last, the top two IRS:CI tax fraud matters of 2023 take a broad swipe at a multitude of IRS regulations from failure to file an FBAR report to money laundering, and tax fraud based on biofuel tax credits.
No. 2: From CFO to Convicted Tax Evader
Coming in at number two, Mr. Mark Gyetvay was a certified public accountant with dual Russian and Italian citizenship living in Naples, Florida. According to the media, Mr. Gyetvay took a position with PwC in their Moscow office in 1996. Moving on in 2003, Mr. Gyetvay became the CFO of Novatek, the largest independent natural gas provider in Russia. He separated from the company in 2014. So far—so good.
Given his compensation package and benefits, Mr. Gyetvay had a tidy nest egg that he wished to remain under the radar of American taxation. Mr. Gyetvay opened accounts at different Swiss banks and took the usual steps of concealment—placing the accounts in the name of his then-spouse, and having all mail held to avoid U.S. detection of the accounts.
From there, Mr. Gyetvay failed to file tax returns for 2013 and 2014. Importantly, he did not heed the advice of his accountant to file a Report of Foreign Bank and Financial Accounts (FBAR). On his way down, Mr. Gyetvay also filed with the IRS through the Streamlined Foreign Offshore Procedures protocol—a process available only to those whose failure to file offshore tax reports was not willful. With millions of unreported income in Swiss banks, Mr. Gyetvay was a prime target for an IRS criminal tax investigation. The result? Seven-plus years in prison, a $4 million fine, and $350,000 restitution.
No. 1: The $1 Billion Biofuel Tax Scam
And number one on the IRS:CI Top Ten of 2023 list is split squarely between five crew members who undertook a $1 billion tax credit scam in biofuels. The tax fraud involved Lev Dermen, Jacob Kingston, his wife Sally, his brother Isaiah Kingston, and their mother, Rachel Kingston.
The group created a fraudulent biodiesel company in Utah in 2018, called “Washakie Renewable Energy.” The crew was running multiple schemes at the same time. By purchasing legitimately produced biodiesel fuel and selling it offshore with doctored papers, the company was able to create and file fraudulent biodiesel claims to the IRS. In addition to mail fraud, transferring millions offshore, and money laundering, the group also purchased biodiesel fuel which they schlepped around ports in the U.S. to support the appearance of the production and sale of biodiesel fuels.
The Kingston’s unwittingly believed the claim of Mr. Dermen that they would not face prosecution for their crimes given his large protective network of police officials. The network did not do much for any of them. Mr. Dermen was sentenced to 40 years in prison, while the Kingston men earned 18 and 12 years respectively. Mrs. Kingston will be in prison for seven years and Jacob’s wife in prison for six.
The number of schemes, tax crimes, and global reach of this case richly earned the top berth of IRS:CI tax frauds of 2023.
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