Unreported Offshore Tax Holdings Catch Up to California Businessman

Nov 21, 2019, 10:51:00 AM

IRS investigationFiling false tax returns and failure to file reports on wealth held in foreign bank accounts netted a California businessman almost two years in prison.

 

Of interest to readers in this space is the almost perfect storm created by Beverly Hills resident, Teymour Khoubian  with regard to FBAR reporting and FATCA requirements.

 

According to the Department of Justice (DOJ), Mr. Khoubian possesses significant wealth.  He and his mother were joint owners on several accounts at Bank Leumi in Israel that held at times between $15 and $200 million.  As well, Mr. Khoubian had money in a German bank, Commerzbank AG.  During the tax period between 2005 and 2011, Mr. Khoubian did not accurately disclose these accounts, or the interest income he earned from them.  The DOJ points out the account in Israel paid out about $4 million in interest between 2005 and 2010.

 

While the ownership of offshore tax accounts is not a crime, failing to report them can be.  Particularly sticky for Mr. Khoubian is evidence gathered through an IRS criminal tax investigation that turned up the following points:

  • The IRS notes Mr. Khoubian had knowledge of the Offshore Voluntary Disclosure Program (OVDP) since 2009, but made no use of the opportunity.  The program was a service to US taxpayers that permitted the disclosure of previously undisclosed offshore wealth.  In exchange for bringing their accounts in line, taxpayers paid reduced penalties and kept their affairs civil—rather than face criminal prosecution by the IRS for tax fraud.  The program is now closed.
  • Apparently, Bank Leumi, in following through with FATCA reporting requirements, requested that Mr. Khoubian sign a W-9 form.  In a recorded telephone conversation, Mr. Khoubian noted he would not sign the W-9 because of the tax he would have to pay.
  • While under investigation by the IRS, Mr. Khoubian also made several false statements to IRS Special Agents, like denying ownership of the accounts in Israel and Germany, among other falsehoods.

 

As a result, Mr. Khoubian is going to prison, paying an FBAR fine of $7,686,004 and paying $612,310 in restitution to the IRS.

 

This narrative, though unfortunate, again drives home the need to stay on the right side of your FBAR reports and to contact a tax attorney experienced with criminal tax defense in the moment after you learn the IRS is interested in you or your wealth.  Mistakes and errors happen, but it is difficult to undo a lie to the IRS.  If you get a call from the IRS, get experienced legal help.

 

Skilled Guidance from Experienced Tax Litigation Attorneys in Cleveland

If you have an offshore tax question, or are facing a civil or criminal tax audit, our tax lawyers can help.  Serving international and domestic clients from offices in Chicago and Cleveland, we provide confidential, smart solutions to tax allegations involving private wealth or corporate assets.  Contact us or call 800-579-0997 today.

 

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