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CEO Gets Prison Time for Hiding Money in Offshore Accounts

Posted in Offshore Account Update on June 26, 2015 | Share

Reporting money in offshore accounts is required. Investors must file a Foreign Bank Account Report (FBAR) with the Treasury Department each year. Failure to file reports and pay income taxes on offshore investments can lead to financial penalties. It can also lead to criminal penal-ties. Just recently, the CEO of Circlenet LLC was sentenced to four months in a federal prison for not filing his reports and concealing income.

There are options available to try to avoid being prosecuted for a crime if you have not filed your FBARs. The Offshore Voluntary Disclosure Program (OVDP) is one choice for people who haven’t submitted annual FBARs, but it may not be the right solution for everyone.

A Washington DC tax attorney can help investors who have not complied with reporting requirements to evalu-ate their options and choose how best to approach potential problems they may face with the IRS. With the help of a lawyer, you may be able to reduce or eliminate penalties and avoid being charged with a crime.

Prison Time for Circlenet's CEO

Circlenet LLC CEO Gregg A. Kaminsky reportedly concealed income and assets in accounts in Thailand, Hong Kong, and Switzerland. Kaminsky had a bank account at UBS AG from 2000 to 2008 and, in 2006, there was almost $1.1 million in the UBS account.

Between 2002 and 2009, Kaminsky moved some funds from this UBS account into other foreign accounts in Thailand and Hong Kong. He also had money from U.S. companies directly deposited into the Swiss UBS account.

Kaminsky didn’t file FBARs or alert the IRS to any of the accounts despite being required to do so by law. He also failed to report income he was earning in Second Life, which is an online virtual world. The allegations against Kaminsky indicated he concealed several hundred thousand dollars in income, dividends and interest that should have been taxed but was not.

In 2007 and in 2009, Kaminsky filed a Free Application for Federal Student Aid (FAFSA) in order to qualify for needs-based federal aid to attend Emory University to get an Executive MBA.

At the time of completing the FAFSA forms, Kaminsky allegedly had more than $500,000 in the undeclared UBS account. This money was not listed on his FAFSA and it would have disqualified him for financial aid had it been disclosed.

Kaminsky was faced with criminal charges and he ended up being convicted. He has now been sentenced to four months in a federal prison and must pay $91,983 in restitution.

Fines and penalties are common in tax evasion cases. Prison is also a real possibility, especially as the government aggressively goes after tax evaders and looks to find scapegoats to make an example of.

Anyone whose money is kept offshore and who has not filed FBARs should be aware that there is a possibility of criminal prosecution and civil penalties when the accounts are brought to the attention of the IRS. Get help from Kevin Thorn, a tax attorney in Washington DC, today to learn about your options for trying to protect yourself from imprisonment, fines and fees.


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