Following a full week of trial, a Dutch tax advisor pled guilty to one count of aiding the filing of a false income tax return for celebrity clients who were U.S. taxpayers, but earned income around the world.
According to the Department of Justice (DOJ), Frank Butselaar worked with a cadre of well-known clients including DJs Tijs Verwest, Nick van de Wall, and several models including Patricia van der Vlie and Daria Strokous.
In working with clients with U.S. tax obligations, Mr. Butselaar constructed a network of offshore tax entities for his clients. Although the offshore tax accounts were controlled by these clients, they were held in trusts with phony beneficiaries to avoid reporting income from the offshore tax entities to the Internal Revenue Service (IRS). Essentially, it is a game we have discussed before—shell companies and foreign bank accounts used to shelter taxable income. Under the scheme devised by Mr. Butselaar, the shell companies ostensibly belonged to family members who were not U.S. taxpayers—thereby avoiding the need to report to the IRS.
For U.S. taxpayers around the world, ownership interest in a foreign bank or offshore account(s) that exceed $10,000 at any time during a calendar year triggers the need for a Report of Foreign Bank and Financial Account (FBAR). The report alerts the IRS to offshore taxable assets. Not surprisingly, people with significant offshore tax holdings sometimes fail to file those reports, which often leads to expensive compliance penalties.
In this case, the DOJ documented that Mr. Butselaar was informed by at least six different tax professionals that the holdings of his clients were taxable and reportable under U.S. tax regulations. Regardless, Mr. Butselaar apparently advised his clients otherwise for years and helped to conceal more than $100 million in taxable income from IRS view.
And the result? Following seven days of trial, Mr. Butselaar pled guilty to the charge against him. The strategy of mounting an expensive defense at trial which culminates in a guilty plea is interesting. The charge to which Mr. Butselaar pled is punishable by a maximum sentence of three years in prison, and he will be sentenced in February 2025.
Engaged in offshore tax fraud? The sooner you speak with an experienced criminal tax defense attorney, the better your odds of a favorable outcome that is not writ large in headlines around the world.
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Serving local and international clients from offices in Chicago and Cleveland, the legal team at Robert J. Fedor, Esq., LLC delivers strategic representation and guidance with compliance questions, tax litigation, or criminal tax defense. Call 800-579-0997 or contact us online today.
