The Justice Department just publicized this plea relating to FBAR at the same time that Paul Manafort has a jury deciding whether or not he willfully failed to file an FBAR. This may satisfy some pundits who claim that no one is ever prosecuted for failing to file an FBAR. This recent case relates to a bank with U.S. branches that had already signed a deferred prosecution agreement. The bank had likely been cooperating to reveal U.S. customers with foreign accounts.
On August 20, 2018, Ben Zion Birman pleaded guilty in U.S. District Court in Los Angeles to
willfully failing to file a Report of Foreign Bank and Financial Accounts
(FBAR), which would have disclosed his foreign bank accounts.
According to court documents, Mr. Birman held offshore accounts in Israel
at Bank Leumi Le-Israel B.M. ("Leumi") from 2006 to 2011. Mr. Birman indicated in his plea that he willfully failed to file
with the Department of Treasury an FBAR for calendar year 2010, despite having
over $1 million in Bank Leumi accounts.
The factual basis of the plea agreement alleges that in an effort to further hide his money, Mr. Birman instructed Bank Leumi to hold bank mail from delivery to the United
States, and obtained access to his offshore funds through the use of
“back-to-back” loans, which were designed to enable borrowers to tap their
concealed accounts. These lending arrangements permitted Mr. Birman to have funds
issued by Leumi’s U.S. branch that were secretly secured by funds in his undeclared
accounts in Israel.
In December 2014, Bank Leumi entered into a deferred prosecution agreement after the bank admitted to conspiring from at
least 2000 until early 2011 to aid and assist U.S. taxpayers to prepare and
present false tax returns by hiding income and assets in offshore bank accounts
in Israel and other locations around the world. Under the terms of the deferred
prosecution agreement, Bank Leumi paid the United States a total of $270
million and continues to cooperate with respect to civil and criminal tax investigations.
What is the disclosure rule? The rule is that U.S. citizens, resident aliens, and permanent legal residents with a foreign
financial interest in or signatory authority over a foreign financial account
worth more than $10,000 are required to file an FBAR each year disclosing the
account.
Mr. Birman faces a maximum sentence of five years in prison, as well as a period of
supervised release, restitution and monetary penalties. Birman's sentencing is
scheduled for December 10, 2018. The federal judge has discretion to sentence anywhere from probation to house arrest to prison time but it would be unusual that the maximum sentence would be given in a plea case.
Posted by Tracy Green, Esq.
