For overseas holdings in excess of $10,000, US residents are required to file a Report of Foreign Bank and Financial Accounts (FBAR). One Connecticut man, with over $28 million in overseas accounts, failed to do so and has pleaded guilty to the crime. Instead he tried to hide his money in homes, cash, and precious stones. Here are the details.
From the Department of Justice press release:
According to court documents and information provided in court, Hyung Kwon Kim, a citizen of South Korea and, since 1998, a legal permanent resident of the United States, resided in Massachusetts and later in Connecticut. Around 1998, Kim traveled to Switzerland to identify financial institutions at which to open accounts for the purpose of receiving transfers of funds from another individual in Hong Kong. Over the next few years, Kim opened accounts at several banks, including Credit Suisse, UBS, Bank Leu, Clariden Leu, and Bank Hofmann. In 2004, the value of the funds in Kim’s accounts exceeded $28 million.
Between 2000 and 2008, Kim took multiple trips to Zurich, Switzerland and withdrew more than $600,000 in cash during these visits. He also brought his offshore assets back to the United States by purchasing millions of dollars’ worth of jewelry and loose gems. For example, in 2008, Kim purchased an 8.6 carat ruby ring from a jeweler in Greenwich, Connecticut, which he financed by causing Bank Leu to issue three checks totaling $2.2 million to the jeweler.
He also funnelled his money through a myriad of sham accounts to purchase several homes in New England. When advised that he needed to take action in advance of the IRS seizing his assets, he decided to buy more diamonds in lieu of filing an FBAR.
As part of his plea agreement, Kim will pay a civil penalty of over $14 million dollars to the United States Treasury for failing to file, and filing false, FBARs, which is separate from any restitution the Court may order.
From the IRS, “Mr. Kim’s plea is another example of what happens to those who dodge their tax obligations by utilizing offshore tax havens,” said Chief Don Fort, IRS Criminal Investigation. “We owe it to the vast majority of honest U.S. taxpayers to tirelessly search for and prosecute those who avoid paying their fair share, regardless of how they may try to disguise their income.”
Taxpayers in the U.S. and in foreign nations must take their offshore tax issues and filing obligations seriously. The IRS has made compliance with foreign asset reporting requirements a top priority.
For those who have yet to return to compliance, a confidential conversation with a tax law attorney experienced in offshore taxes and resolving FBAR-related concerns, like Robert J. Fedor Esq., LLC, can begin the process of securing a non-prosecution agreement and filing required documents.
