Florida Man Pleads Guilty to Hiding Millions Offshore

Last week, a Florida man pled guilty to conspiracy to commit tax and bank fraud stemming from the use of his wholly-owned corporation to among other things, hide money outside of the United States and take phony tax deductions in the process. According to a Department of Justice press release, Casey Padula, 48, of Port Charlotte, owned Demandblox, a marketing and information technology business. Prosecutors alleged that Padula established phony entities in Belize that “received royalties” from Demandblox. Padula caused millions of dollars to be transferred from Demandblox to the Belizean entities and wrote the transfers off as deductions for tax purposes.

Prosecutors alleged that Padula caused Heritage International Bank & Trust Limited (Heritage Bank) to create accounts in the name of the Belizean entities. Padula had access to, and used nearly $2.5 million through Heritage bank and used the money to pay for personal expenses. Additionally, Padula transferred over a million dollars from Heritage Bank to Clover Asset Management (CAM), a Cayman Islands investment firm. The purpose of the transfer was to open an investment account in the name of the bank, even though Padula was receiving the benefit of income derived from such account.

Federal law requires U.S. residents to disclose the existence of a foreign bank account with a high balance of $10,000 or more at any point in the year. Willful failure to comply with the Foreign Bank Account Reporting (FBAR) law can result in the individual being charged with a felony. A felony conviction for willful failure to file an FBAR can bring with it a lengthy federal prison sentence as well as a penalty of up to 50% of the high-balance of the undeclared account for each year of noncompliance.

The Obama administration ramped up the hunt for Americans with undeclared foreign bank accounts. In 2010, Congress passed and President Obama signed the Foreign Account Tax Compliance Act (FATCA), a law that requires foreign banks to transmit identifying account information relating to Americans with accounts overseas to the IRS. Banks that do not comply with FATCA are subject to a 30% withholding on any payments made from a U.S. payor to the foreign bank.

Needless to say, banks from all around the world began working diligently to integrate the Information Data Exchange Service (IDES) into their existing processes. The IDES allows foreign banks to send information about American account holders directly to the IRS.

Americans with foreign bank accounts that have not yet been disclosed have the opportunity to come forward and disclose the existence of their account in exchange for the government’s agreement to not criminally prosecute for willful noncompliance. The Offshore Voluntary Disclosure Program (OVDP) requires that the applicant provide detailed information about the foreign bank account and pay any back taxes, interest, and a penalty to receive a deferred prosecution agreement. Though, those who are already being investigated by the IRS for any reason may not be eligible to participate in the OVDP. With foreign banks anxious to provide the IRS with incriminating information, it is in the best interest of anyone with an undeclared foreign bank account to contact an experienced tax attorney as soon as possible.

The tax and accounting professionals at the Tax Law Offices of David W. Klasing have extensive experience in representing those with tax troubles, including those with undeclared foreign bank accounts looking to get right with the government. Our team of advocates are ready to zealously fight for your physical and financial freedom. Don’t let the fear of a federal prison sentence keep you awake at night. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.

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