International Financial Law Prof Blog

Editor: William Byrnes
Texas A&M University
School of Law

Tuesday, December 31, 2019

Coutts to Pay Additional $27.9 Million for 311 Undisclosed Accounts, Addendum to Non-Prosecution Agreement

The Department of Justice announced that it has signed an Addendum to a non-prosecution agreement with Coutts & Co Ltd. (Coutts), a private Swiss bank headquartered in Zurich.  The original non-prosecution agreement was signed on Dec. 23, 2015. At that time, Coutts reported that it held and managed 1,337 U.S. related accounts, with assets under management exceeding $2 billion, and paid a penalty of $78,484,000. In reaching today’s agreement, Coutts acknowledges that it should have disclosed additional U.S.-related accounts to the Department at the time of the signing of the non-prosecution agreement.

“This agreement reflects our commitment to ensuring that foreign banks that participated in the Swiss Bank Program fully comply with their obligations to disclose accounts in which U.S. taxpayers have direct or indirect interests,” said Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division. “When any person or entity makes false, incomplete, or misleading disclosures to the Department, the Department will hold those persons or entities accountable.”

The Swiss Bank Program, which was announced on Aug. 29, 2013, provided a path for Swiss banks to resolve potential criminal liabilities in the United States relating to offshore banking services provided to United States taxpayers. Swiss banks eligible to enter the program were required to advise the Department by Dec. 31, 2013, that they had reason to believe that they had committed tax-related criminal offenses in connection with undeclared U.S.-related accounts. As participants in the program, they were required to make a complete disclosure of their cross-border activities, provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers had a direct or indirect interest, cooperate in treaty requests for account information, and provide detailed information about the transfer of funds into and out of U.S.-related accounts, including undeclared accounts, that identifies the sending and receiving banks involved in the transactions.

The Department executed non-prosecution agreements with 80 banks between March 2015 and January 2016. The Department imposed a total of more than $1.36 billion in Swiss Bank Program penalties.  Pursuant to today’s agreement, Coutts will pay an additional sum of $27,900,000 and will provide supplemental information regarding its U.S.-related account population, which now includes 311 additional accounts. 

Every bank that signed a non-prosecution agreement in the Swiss Bank Program had represented that it had disclosed all known U.S.-related accounts that were open at each bank between Aug. 1, 2008, and Dec. 31, 2014.  Each bank also represented that it would, during the term of the non-prosecution agreement, continue to disclose all material information relating to its U.S.-related accounts.  In reaching today’s agreement, Coutts acknowledges that there were additional U.S.-related accounts that it knew about, or should have known about, but that were not disclosed to the Department at the time of the signing of the non-prosecution agreement. Coutts has fully cooperated with the Department with respect to the additional U.S.-related accounts.  

 

December 31, 2019 in GATCA | Permalink | Comments (0)

Monday, December 30, 2019

South Africa: South Africa arrests two former Eskom managers for alleged 745 million rand corruption

Reuters reports that: South African police said on Thursday they had arrested a number of people, including two former senior managers of Eskom, on suspicion of involvement in fraud and corruption worth 745 million rand ($51 million) at the troubled state-run power firm. Read the Reuters report on the full corruption investigation here.

December 30, 2019 in AML | Permalink | Comments (0)

Friday, December 27, 2019

Goldman Sachs Negotiating Guilty Plea and $2 Billion Fine for Assisting with Malaysia 1MDB Theft from Sovereign Wealth Fund, Malaysia May Reduce It $7.5 Billion Claim

Bloomberg reports that (read full article here) Goldman Sachs Group Inc. is negotiating a settlement of the 1MDB scandal that would include an admission of guilt by one of its subsidiaries instead of the parent company, according to people familiar with the matter.

The bank is separately negotiating a settlement with Malaysian authorities, who have in recent discussions floated much lower figures than their public stance of wanting to recover $7.5 billion.   Bloomberg's analysis of the negotiations and the entire 1MDB scandal may be read in full here.

December 27, 2019 in AML | Permalink | Comments (0)

Thursday, December 26, 2019

Risk Management Manual of Examination Policies Updated to Include Examination Documentation Modules

Summary:

To provide greater transparency into the FDIC's examination processes, the FDIC Division of Risk Management Supervision has updated the Risk Management Manual of Examination Policies (Manual) by inserting Part VI, Appendix: Examination Processes and Tools, Examination Documentation Modules. The Examination Documentation Modules were developed in 1997 to provide examiners with tools to identify and assess the range of matters considered during examination activities, and they are updated periodically. The Modules direct examiners to use a risk-focused approach in conducting examination activities, thereby facilitating an efficient and effective supervisory program.

Statement of Applicability to Institutions with Total Assets under $1 Billion: This Financial Institution Letter (FIL) provides information and procedural direction to FDIC supervisory personnel. This FIL is informational and does not require action on the part of insured institutions.

Highlights:

  • The Examination Documentation (ED) Modules have been an examination tool used by FDIC examiners since 1997. The Modules are periodically revised and updated to reflect changes in laws, regulations, and policies.
  • The modules are used in the risk-focused examination framework to tailor examination procedures to the business model, complexity and risk profile of individual financial institutions. The extent to which each module is completed will vary depending on the complexity and risk profile of each institution.
  • The ED Modules are organized by banking activities and processes in three categories: Primary Modules cover examination planning and the assessment of Capital, Asset Quality, Management, Earnings, Liquidity, and Sensitivity (CAMELS) areas; Supplemental Modules cover additional program areas; and Reference Modules provide more detailed procedures for specific banking activities that are addressed at a higher level in the Primary and Supplemental Modules.
  • The ED Modules will be added to the Manual beginning with the Primary and Supplemental Modules. To receive notice of subsequent issuances, subscribe to FDIC updates by email.
  • This FIL will expire 12 months from issuance.

Suggested Distribution:

  • FDIC-Supervised Institutions

Suggested Routing:

  • Chief Executive Officer

Related Topics:

Attachment:

December 26, 2019 in Financial Regulation | Permalink | Comments (0)

Tuesday, December 24, 2019

Former CEO of Israeli Company Sentenced to 22 Years in Prison for Orchestrating Major International Binary Options Fraud Scheme

The former CEO of the Israel-based company Yukom Communications, a purported sales and marketing company, was sentenced to 22 years in prison for orchestrating a scheme to defraud investors who had purchased more than $100 million in financial instruments known as “binary options.”

Lee Elbaz, 38, a citizen of Israel, was sentenced by U.S. District Judge Theodore D. Chuang of the District of Maryland.  On Aug. 7, 2019, after a three-week jury trial, Elbaz was found guilty of one count of conspiracy to commit wire fraud and three counts of wire fraud. 

“This defendant targeted and defrauded thousands of victims, looting monies from retirees, veterans and other individuals, many of whom lost their entire savings,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division.   “Today’s sentence demonstrates that criminals who defraud U.S. investors will face serious consequences, no matter where in the world they commit their crimes.”

“Financial criminals like Elbaz and her co-conspirators are interested in one thing: taking money out of the pockets of unsuspecting investors for their own benefit.  The FBI is dedicated to identifying and investigating fraud, no matter where the criminals are located, or how long it takes,” said Assistant Director in Charge Timothy R. Slater of the FBI’s Washington’s Field Office.  “I’d like to thank our partners in this investigation, specifically the Israeli Police, and to encourage anyone who may have information about binary options fraud to come forward and report it to the FBI.”

According to the evidence presented at trial, Elbaz and her co-conspirators fraudulently sold and marketed binary options to investors located in the United States and throughout the world through two websites, known as BinaryBook and BigOption.  The evidence showed that in her role as CEO of Yukom, Elbaz, along with her co-conspirators and subordinates, misled investors using BinaryBook and BigOption by falsely claiming to represent the interests of investors when, in fact, the owners of BinaryBook and BigOption profited when investors lost money; by misrepresenting the suitability of and expected return on investments through BinaryBook and BigOption; by providing investors with false names and qualifications and falsely claiming to be working from London; and by misrepresenting whether and how investors could withdraw funds from their accounts. 

Representatives of BinaryBook and BigOption, working under Elbaz’s supervision, misrepresented the terms of so-called “bonuses,” “risk free trades” and “insured trades,” and deceptively used these supposed benefits in a manner that in fact harmed investors, the evidence showed. 

Five co-conspirators who worked for Elbaz, including Liora Welles, Shira Uzan, Yair Hadar, Austin Smith, and Lissa Mel, have pleaded guilty to conspiring to commit wire fraud, and have been sentenced.  Welles, Uzan, Hadar, and Smith all cooperated against Elbaz and testified at her trial in July 2019.  In addition, an indictment charging an additional 15 of Elbaz’s alleged co-conspirators was unsealed in November 2019. 

December 24, 2019 in AML | Permalink | Comments (0)

Monday, December 23, 2019

U.S. International Transactions, Third Quarter 2019

Current Account Balance

The U.S. current account deficit, which reflects the combined balances on trade in goods and services and income flows between U.S. residents and residents of other countries, narrowed by $1.1 billion, or 0.9 percent, to $124.1 billion in the third quarter of 2019, according to statistics from the U.S. Bureau of Economic Analysis (BEA). The revised second quarter deficit was $125.2 billion.

The third quarter deficit was 2.3 percent of current dollar gross domestic product, down less than 0.1 percent from the second quarter.

The $1.1 billion narrowing of the current account deficit in the third quarter mainly reflected a reduced deficit on goods and an expanded surplus on primary income.

Quarterly U.S. Current Account and Component Balances

Current Account Transactions (tables 1-5)

Exports of goods and services to, and income received from, foreign residents decreased $4.3 billion, to $944.4 billion, in the third quarter. Imports of goods and services from, and income paid to, foreign residents decreased $5.4 billion, to $1.07 trillion.

Quarterly U.S. Current Account Transactions

Trade in Goods (table 2)

Exports of goods decreased $0.9 billion, to $413.8 billion, and imports of goods decreased $4.5 billion, to $633.4 billion. The decreases in both exports and imports mainly reflected decreases in industrial supplies and materials, primarily petroleum and products.

Trade in Services (table 3)

Exports of services decreased $0.3 billion, to $212.0 billion, reflecting partly offsetting changes across major categories. Decreases were led by travel, mainly other personal travel, and increases were led by other business services, mainly professional and management consulting services. Imports of services increased $1.6 billion, to $149.8 billion, reflecting increases in nearly all major categories. Increases were led by insurance services, mainly reinsurance.

Primary Income (table 4)

Receipts of primary income decreased $4.1 billion, to $282.0 billion, and payments of primary income decreased $6.2 billion, to $213.3 billion. The decreases in both receipts and payments mainly reflected decreases in direct investment income and in other investment income. Within direct investment income receipts, dividends increased $24.9 billion, to $95.3 billion, in the third quarter and remain elevated since the passage of the 2017 Tax Cuts and Jobs Act, which generally eliminated taxes on repatriated earnings beginning in 2018. For more information, see “How do the effects of the 2017 Tax Cuts and Jobs Act appear in BEA’s direct investment statistics?” The decreases in other investment income receipts and payments mainly reflected decreases in interest on loans and deposits.

Secondary Income (table 5)

Receipts of secondary income increased $1.0 billion, to $36.6 billion, mainly reflecting an increase in private sector fines and penalties, a component of private transfer receipts. Payments of secondary income increased $3.7 billion, to $72.0 billion, mainly reflecting increases in U.S. government grants and in insurance-related transfers, a component of private transfer payments.

 

Financial Account Transactions (tables 1, 6, 7, and 8)

Net financial account transactions were −$47.9 billion in the third quarter, reflecting net U.S. borrowing from foreign residents.

Financial Assets (tables 1, 6, 7, and 8)

Third quarter transactions increased U.S. residents’ foreign financial assets by $123.5 billion. Transactions increased direct investment assets, primarily equity, by $33.3 billion; portfolio investment assets, mainly debt securities, by $18.5 billion; other investment assets, primarily loans, by $69.9 billion; and reserve assets by $1.9 billion.

Liabilities (tables 1, 6, 7, and 8)

Third quarter transactions increased U.S. liabilities to foreign residents by $164.9 billion. Transactions increased direct investment liabilities, mainly equity, by $37.6 billion; portfolio investment liabilities, mainly debt securities, by $86.5 billion; and other investment liabilities, mainly bank deposits, by $40.8 billion.

Financial Derivatives (table 1)

Net transactions in financial derivatives were −$6.5 billion in the third quarter, reflecting net borrowing from foreign residents.

December 23, 2019 in Economics | Permalink | Comments (0)

Friday, December 20, 2019

U.S. Country-by-Country Report, Tax Year 2017

Six new tables presenting data from Form 8975, Country-by-Country Report, and Form 8975 Schedule A, Tax Jurisdiction and Constituent Entity Information, are now available on SOI's Tax Stats Web page. The tables present data from the estimated population of corporate and partnership returns filed for Tax Year 2017. Five tables display the number of filers, revenues, profit, income taxes, earnings, number of employees, and tangible assets. The first three tables are classified by major geographic region and selected tax jurisdiction. The fourth table is classified by major industry group, geographic region, and select tax jurisdiction. The fifth table is classified by effective tax rate of multinational enterprise subgroups. A sixth table displays number of constituent entities classified by major geographic region, selected tax jurisdiction, and main business activities.

Statistical Tables

The following tables are available as Microsoft Excel® files. 

Country-by-Country Report: Tax Jurisdiction Information

Data Presented: Number of Filers, Revenues, Profit, Income Taxes, Earnings, Number of Employees, Tangible Assets

Classified by: Major Geographic Region and Selected Tax Jurisdiction
Tax Years: 2017 | 2016
Classified by: Major Geographic Region and Selected Tax Jurisdiction with Positive Profit Before Income Tax
Tax Years:  2017 | 2016
Classified by: Major Geographic Region and Selected Tax Jurisdiction with Negative or Zero Profit Before Income Tax
Tax Years: 2017 | 2016
Classified by: Major Industry Group, Geographic Region, and Selected Tax Jurisdiction
Tax Years: 2017 | 2016
Classified by: Effective Tax Rate of Multinational Enterprise Sub-groups
Tax Years: 2017 | 2016

Country-by-Country Report: Constituent Entities

Data Presented: Number of Constituent Entities

Classified by: Major Geographic Region, Selected Tax Jurisdiction, and Main Business Activities
Tax Years: 2017 | 2016

William Byrnes’ 4th Edition of his industry-leading Practical Guide to U.S. Transfer Pricing treatise was published on December 19, 2019 by Matthew Bender LexisNexis.  William Byrnes is the author or co-author of nine Lexis titles and an advisory board member of Law360’s International Tax journal.

William Byrnes’ completely revised 4th Edition Practical Guide to U.S. Transfer Pricing (2020) has been expanded to 2,000 pages of analyses and practice notes, 47 chapters divided over six parts: Part I: U.S. regulatory analysis, application of transfer pricing methods, and jurisprudence; Part II: OECD; Part III: United Nations; Part IV: European Union; Part V: Industry topics; and Part VI: Country practice and tax risk management. Professor Byrnes brings together 50 of the industry’s eminent transfer pricing counsel, economists, and financial accountants to provide a comprehensive two-volume “go-to” resource for tax risk management.

William Byrnes explained, “I am fortunate to be able to call upon and work with the industry’s leading transfer pricing professionals from firms such as Alston, Covington, Pillsbury, Jones Day, McDermott, Duff & Phelps, Miller Chevalier, PwC, KPMG, and multinational companies like Vertex and Veritas.” Sixty contributors add subject matter expertise on technical issues faced by tax and risk management counsel.

Last chance to join one of the case study teams for TRANSFER PRICING taught live online, using Zoom, by Dr. Lorraine Eden, Prof. William Byrnes, and many industry experts… The courses are for tax attorneys, accountants, or economists and count toward the Texas A&M’s INTERNATIONAL TAX Master degree (taught online).

The class of a maximum of 18 students will be grouped into teams of 3 students each. The 6 teams meet using Zoom to prepare a weekly presentation to respond to a real-world post-BEPS client study. Then all teams meet together online via Zoom twice each week at 8:00am Dallas time Wednesdays and Sundays to discuss and present the case study solutions. Students are provided without charge textbook materials, videos with PPT, and podcasts, and granted access to a large online law & business database library including Lexis, Bloomberg, IBFD, Kluwer/CCH, Thomson, among many other tax resources.

To apply for the transfer pricing courses and international tax courses, contact Jeff Green, Graduate Programs Coordinator, T: +1 (817) 212-3866, E: jeffgreen@law.tamu.edu or contact David Dye, Assistant Dean of Graduate Programs, T (817) 212-3954, E: ddye@law.tamu.edu. Texas A&M Admissions website: https://law.tamu.edu/distance-education/international-tax  (applications and previous university transcripts must be received by Admissions before Wednesday, January 8th at 5pm Texas time). Note that the university is closed for the holidays from Dec. 20 until Jan. 2, 2020.

December 20, 2019 in BEPS | Permalink | Comments (0)

Member of “The Dark Overlord” Hacking Group Extradited From United Kingdom to Face Charges in St. Louis

Defendant Conspired to Steal Sensitive Personally Identifying Information from Victim Companies and Release those Records on Criminal Marketplaces unless Victims Paid Bitcoin Ransoms Download Wyatt Indictment

A United Kingdom national appeared today in federal court on charges of aggravated identity theft, threatening to damage a protected computer, and conspiring to commit those and other computer fraud offenses, related to his role in a computer hacking collective known as “The Dark Overlord,” which targeted victims in the St. Louis, Missouri, area beginning in 2016. 

Nathan Wyatt, 39, was extradited from the United Kingdom to the Eastern District of Missouri and arraigned on Dec. 18 before U.S. Magistrate Judge Shirley Padmore Mensah.  He pleaded not guilty and was detained pending further proceedings.

A federal grand jury indicted Wyatt on Nov. 8, 2017.  According to court records, beginning in 2016, Wyatt was a member of The Dark Overlord, a hacking group that was responsible for remotely accessing the computer networks of multiple U.S. companies without authorization, obtaining sensitive records and information from those companies, and then threatening to release the companies’ stolen data unless the companies paid a ransom in bitcoin.  Victims in the Eastern District of Missouri included healthcare providers, accounting firms, and others. Among other things, Wyatt is alleged to have participated in the conspiracy by creating email and phone accounts that he used to send threatening and extortionate emails and text messages to certain victims, including victims in the Eastern District of Missouri.  

“Today’s extradition shows that the hackers hiding behind The Dark Overlord moniker will be held accountable for their alleged extortion of American companies,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division.  “We are thankful for the close cooperation of our partners in the United Kingdom in ensuring that the defendant will face justice in U.S. court.”

“Cyber criminals who harm victims in the Eastern District of Missouri cannot hide behind international borders to evade justice,” said U.S. Attorney Jeffrey B. Jensen of the Eastern District of Missouri.  “Today’s case demonstrates the United States’ commitment to unmasking criminal hackers and bringing them to justice, no matter where they may be located.”

“Cyber hackers may no longer use territorial borders to shield themselves from accountability,” said Special Agent in Charge Richard Quinn of the FBI’s St. Louis Field Office. “This case is another example of how the FBI successfully works with international law enforcement partners to bring alleged perpetrators to justice.”

The investigation was conducted by the FBI’s St. Louis Field Office.  The FBI’s Atlanta Field Office also provided support.  The Criminal Division’s Office of International Affairs coordinated the extradition of Wyatt. The department thanks law enforcement and international cooperation authorities in the United Kingdom for their substantial assistance in the investigation.

Senior Counsel Laura-Kate Bernstein of the Criminal Division’s Computer Crime and Intellectual Property Section, and Assistant U.S. Attorneys Gwendolyn Carroll and Matthew Drake of the Eastern District of Missouri are prosecuting the case.

December 20, 2019 in AML | Permalink | Comments (0)

Links to Budget Bills and Tax Extenders/Cuts

H.R.1158 - Consolidated Appropriations Act, 2020 https://www.congress.gov/bill/116th-congress/house-bill/1158  

H.R.1865 - Further Consolidated Appropriations Act, 2020 https://www.congress.gov/bill/116th-congress/house-bill/1158

Tax Extenders and Cuts Bill Download 2019 December tax extenders and tax cuts bill

December 20, 2019 | Permalink | Comments (0)

Thursday, December 19, 2019

DOJ hiring even more IRS trial attorneys

About the Office: The Tax Division is looking for Trial Attorneys to join the Civil Trial Sections. Our attorneys have a passion for litigation; a deep interest in public service; and the ability to work both collaboratively and independently. Familiarity with tax law and the use of technology in organizing, developing, and presenting a case at trial is helpful, but not required.

The mission of the Tax Division is to enforce the country's internal revenue laws fully, fairly, and consistently.  Attorneys in the Civil Trial Sections represent the United States in litigation in federal and state courts across the country. Tax Division cases involve a wide variety of substantive legal areas, including federal tax law, bankruptcy law, constitutional law, commercial and state property law, and civil penalties for failure to report foreign financial accounts. Tax cases also present many unique evidentiary, procedural, and jurisdictional issues.

The Tax Division is consistently ranked as “one of the best places to work” in government by the Partnership for Public Service. We seek to create a work environment and organizational culture that reflect the diversity of American society, and to foster the success of every employee by valuing and building upon the unique skills and experiences that each individual brings to the workplace.

We place a high value on diversity of experience and cultural perspective and encourage applications from all interested eligible candidates, including attorneys of all ages from all ethnic and racial backgrounds, all sexual orientations and gender identities, political affiliations, marital or parental status, religious backgrounds, with or without disabilities, and with or without military service. 

For more information about employment with the Tax Division, please see https://www.justice.gov/tax/about-division

Job Description: Trial Attorneys in the Civil Trial Sections are the front-line litigators for the United States for tax disputes in federal district and bankruptcy courts and the Court of Federal Claims. The cases arise all over the United States, and significant travel is required of our attorneys for depositions, hearings, and trials. Most Trial Attorneys carry a docket that includes cases they are assigned to handle alone and others where they work as a member of a litigation team. In either case, our attorneys have front-line responsibility for taking and defending depositions, writing and arguing motions, working with fact and expert witnesses, and trying cases.


Because federal taxes are ubiquitous, our attorneys handle cases that touch all aspects of the American economy and involve litigants ranging from individual sand small businesses up to and including the largest corporations. Trial Attorneys defend the United States in tax refund actions and bring affirmative suits to collect tax - cases that can involve complex commercial transactions or require proof that the taxpayer made a fraudulent transfer of property. Our attorneys defend suits testing the constitutional validity of aspects of the Internal Revenue Code and Treasury Regulations. They obtain injunctions against those who try to bilk the Treasury out of money by selling fraudulent tax shelter schemes or by preparing fraudulent tax returns for customers in order to fulfill a promise of a large refund. Our attorneys represent the United States in bankruptcy, receivership, and probate proceedings. And they handle many other miscellaneous matters touching on tax, like enforcing civil penalties for failure to timely report foreign financial accounts; defending IRS employees in Bivens suits; enforcing IRS' administrative summonses; or protecting the United States' immunity from local taxes.

Qualifications: Our civil trial attorneys must be able to work independently to develop their cases factually and legally. They must be willing to work collaboratively with the Internal Revenue Service, internal supervisors and peers to present those cases in the most effective manner. Excellent communication skills, both oral and written, are essential.


Applicants must have:

  • A strong interest in litigating civil cases in federal court;
  • Strong organizational skills and the ability to handle multiple matters concurrently;
  • A strong interest in developing their litigation skills, in learning about and applying new technologies, and in remaining current on developments in the law;
  • An academic background that demonstrates a commitment to producing professional work of a consistently outstanding caliber; and
  • An ability to adapt to changing circumstances.

We strongly value persuasiveness, judgment, initiative and teamwork. Familiarity with tax law and the use of technology in organizing, developing, and presenting a case at trial is helpful, but not required.

The Tax Division anticipates hiring Trial Attorneys with varying levels of experience. Applicants must have at least 1 year of full-time post-J.D. legal experience by the closing date of this announcement.

  • All applicants must possess a J.D. degree and must be duly licensed and authorized to practice as an attorney under the laws of any state or territory of the United States or the District of Columbia.
  • Active bar membership (of any jurisdiction) is required.
  • Applicants who accept an offer of employment will be required to undergo a background check.
  • Attorneys selected for a position in the Tax Division must commit to working for the Tax Division for three years.
  • Although applicants who are not citizens of the United States but who meet certain criteria may be considered for employment, Department security requirements generally require that most employees be U.S. citizens, with limited exceptions. Applicants who are not U.S. citizens will need to be approved by the Department before they can be approved to enter on duty.
Salary: Years and quality of experience will be considered in determining the appropriate salary level. Positions may be filled at the GS 12-14 levels. Positions may occasionally be filled at the GS-15 level.
 
Travel:  Travel will be required. The location and frequency of travel varies, depending on the attorney’s litigation schedule.
 
Application Process:  Applications must include:
  • a cover letter;
  • resume;
  • law school and any advanced degree transcripts;
  • a list of three professional references; and
  • a completed assessment questionnaire.

All documents should be provided in either PDF or MS Word format. The cover letter, which should not exceed two single-spaced pages, should describe how your background and qualifications make you well suited for the position as a Trial Attorney. Accordingly, you should specifically provide a description of prior litigation experience, and your interest in public service and the Tax Division in particular. If you don't include all of the documents we require, we may not be able to fully consider your application.

Applicants selected for further consideration will be required to submit a writing sample prior to an interview.  Applicants may be asked to submit a short writing sample in response to a standardized prompt.

Applicants who previously applied to the Tax Division must reapply in order to be considered under this job announcement.

To apply for this position, you must apply online through USAJOBS. Please use the following link: https://www.usajobs.gov/GetJob/ViewDetails/554526400

Complete the assessment questionnaire and submit the documentation specified in the Required Documents section of the USAJOBS Vacancy Announcement.

The complete application package must be submitted by 11:59 PM (EST) on the closing date of the announcement to receive consideration.

Applicants who are eligible for veterans' preference or consideration under a special hiring authority (such as programs for individuals with disabilities) must submit appropriate documentation demonstrating eligibility. Please see the description of required documentation in the application section at https://www.usajobs.gov/GetJob/ViewDetails/554526400

Department of Justice attorneys eligible for priority consideration under the Department's Reemployment Priority List Program must include notice to the Division of their eligibility in their application package.

Applicants should familiarize themselves and comply with the relevant rules of professional conduct regarding any possible conflicts of interest in connection with their applications. In particular, please notify this Office if you currently represent clients or adjudicate matters in which this Office is involved and/or you have a family member who is representing clients or adjudicating matters in which this Office is involved so that we can evaluate any potential conflict of interest or disqualification issue that may need to be addressed under those circumstances.

Application Deadline: 
Tuesday, January 28, 2020
Relocation Expenses: 
Relocation expenses are not authorized.
Number of Positions: 
The Tax Division anticipates hiring for several trial attorney positions based in Washington, D.C.

December 19, 2019 | Permalink | Comments (0)

Joint U.S-EU Statement Following the U.S.-EU Justice and Home Affairs Ministerial Meeting

On December 11, the U.S.-EU Ministerial Meeting on Justice and Home Affairs took place in Washington D.C.  The United States of America was represented by Attorney General William P. Barr and Acting Secretary for Homeland Security Chad Wolf.  The Ministerial – which is held twice a year -- aims to oversee transatlantic cooperation in the area of Justice and Home affairs and address common security threats.

Fighting terrorism in all its forms remains our top common priority. We concurred on the importance of continuing and expanding our efforts to identify and hold accountable all those who support or engage in terrorist activity, with a particular emphasis on the sharing of information gathered in zones of combat for use in criminal proceedings as admissible evidence. The importance of using this type of information to improve the security of our borders was also highlighted, especially in the context of returning foreign terrorist fighters. We welcomed achievements in this domain, in particular the U.S. efforts to share information on foreign terrorist fighters with EU Member States and Europol. We called for continued engagement and ongoing operational cooperation between relevant agencies, building on the conclusions of the meeting on these subjects held in Brussels on July 10.  We further discussed various forms of violent extremism, including ethnically- and racially-motivated violent extremism, and we supported further expert exchanges to examine the international linkages among these groups.

The U.S.-EU agreement on Passenger Name Records (PNR) remains an important instrument for enhancing the security of our citizens. In that context, we look forward to the final report following the joint evaluation. We reaffirmed our shared interest in establishing ICAO standards to encourage rapid and effective implementation of UNSCR 2396 for the use of PNR to combat terrorist travel, with full respect for human rights and fundamental freedoms.

Together we acknowledge that threats to security take on increasingly different forms, challenging our collective resilience. We discussed means to enhance cooperation on countering hybrid threats -- including chemical, biological, radiological, and nuclear weapons, as well as explosives – and welcomed the U.S.-EU experts seminar on that issue held in Brussels in September 2019.  We also recognized the challenges to security presented by drones.  We further discussed challenges to cybersecurity and updated each other on our respective efforts to assess and address 5G security challenges, including those impacting the security of our supply chain.  In particular, we discussed the need to work with industry to establish trusted markets for 5G and other telecommunications equipment and services. We will continue to keep each other informed of developments in this area and commit to approaching emerging technologies through a risk-informed perspective.

The United States and the European Union reaffirmed the importance of enhancing judicial cooperation in cyberspace, in particular with regard to cross-border access to electronic evidence. In this context, we welcome the negotiations for an U.S.-EU agreement facilitating access to e-evidence for the purpose of judicial cooperation in criminal matters.  We agreed to review progress in the negotiations at the next Ministerial Meeting in 2020. Furthermore, we exchanged views on the ongoing negotiations for the Second Additional Protocol of the Budapest Convention and discussed the importance of making swift progress, in view of our joint and strong commitment to the Budapest Convention, which remains the instrument of choice for international cooperation on cybercrimes for both the EU and the United States.

We also acknowledged that the use of warrant-proof encryption by terrorists and other criminals – including those who engage in online child sexual exploitation – compromises the ability of law enforcement agencies to protect victims and the public at large. At the same time, encryption is an important technical measure to ensure cybersecurity and the exercise of fundamental rights, including privacy, which requires that any access to encrypted data be via legal procedures that protect privacy and security. Within this framework, we discussed the critical importance of working towards ensuring lawful access for law enforcement and other law enforcement authorities to digital evidence, including when encrypted or hosted on servers located in another jurisdiction.

...

Finally, we welcomed Poland’s designation for the U.S. Visa Waiver Program, which underscores the usefulness of the tripartite process and the encouraging progress made by four other Member States towards reciprocal visa free travel under our respective legal frameworks.  We are committed to continue working together, in the appropriate frameworks, to support the remaining four EU Member States in their efforts towards designation in the Visa Waiver Program.

December 19, 2019 in AML | Permalink | Comments (0)

Wednesday, December 18, 2019

5th Circuit Appeals Rules ACA Tax is Unconstitutional, Remands to District Court to Determine if Entire ACA Now Unconstitutional

Third, the individual mandate is unconstitutional because it can no longer be read as a tax, and there is no other constitutional provision that justifies this exercise of congressional power.

Fourth, on the severability question, we remand to the district court to provide additional analysis of the provisions of the ACA as they currently exist.

Read full 101-page opinion here: Download 5th Cir Rules ACA Tax Unconstitutional

  • First and most fundamentally, the shared-responsibility payment “yield[ed] the essential feature of any tax: It produce[d] at least some revenue for the Government.”
  • Second, the shared-responsibility payment was “paid into the Treasury by taxpayers when they file their tax returns.” 
  • Third, the amount owed under the ACA was “determined by such familiar factors as taxable income, number of dependents, and joint filing status.”
  • Fourth and finally, “[t]he requirement to pay [was] found in the Internal Revenue Code and enforced by the IRS, which . . . collect[ed] it in the same manner as taxes.”

Now that the shared responsibility payment amount is set at zero, the provision’s saving construction is no longer available. The four central attributes that once saved the statute because it could be read as a tax no longer exist. Most fundamentally, the provision no longer yields the “essential feature of any tax” because it does not produce “at least some revenue for the Government.” Because the provision no longer produces revenue, it necessarily lacks the three other characteristics that once rendered the provision a tax. The shared-responsibility payment is no longer “paid into the
Treasury by taxpayer[s] when they file their tax returns” because the payment is no longer paid by anyone. The payment amount is no longer “determined by such familiar factors as taxable income, number of dependents, and joint filing status.” The amount is zero for everyone, without regard to any of these factors. The IRS no longer collects the payment “in the same manner as taxes” because the IRS cannot collect it at all. 

We simply observe that § 5000A was originally cognizable as either a command or a tax. Today, it is only cognizable as a command.

December 18, 2019 | Permalink | Comments (0)

Brazil agrees to change its transfer pricing rules to OECD Guidelines

Brazil has identified a clear pathway for bringing its existing transfer pricing framework into alignment with the international consensus, and is Brazil
weighing two options – immediate or gradual implementation, according to a new joint report by the OECD and Receita Federal, Brazil's federal revenue authority (RFB) .Convergence with the OECD transfer pricing standard requires full alignment with the OECD Guidelines, with a focus on the key areas outlined in Part I, but bearing in mind the need to retain and ensure simplicity, limit tax compliance costs and to ensure effective tax administration. The key consideration is how alignment should occur – immediately or gradually – and the related implications with respect to each option.

The main difference between the two options relates to the timing of the implementation. A similar amount of preparatory work will be necessary to achieve full alignment, but if alignment is achieved under the first option, the new rules will become applicable for all taxpayers immediately, meaning that the leadup to the entry into force of the new system will need to occur within a short timeframe with all different aspects of the system being rolled out simultaneously.

It is envisaged under the first scenario that the adoption of the new system in conformity with the OECD standard will occur in one time and replace in whole the existing framework with a directly effective and operational framework, as opposed to a staged approach in the second scenario.

Transfer Pricing in Brazil: Towards Convergence with the OECD Standard assesses the similarities and differences between Brazil's transfer pricing rules and the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, which is the international consensus on transfer pricing.

 

December 18, 2019 in BEPS | Permalink | Comments (0)

DOJ is Hiring Several IRS Criminal Tax Counsel

About the Office:  The Tax Division is hiring criminal lawyers who have a passion for litigation, a deep interest in public service, and the ability to work both collaboratively and independently. Litigation experience is required, and criminal litigation experience is preferred. Familiarity with tax law and the use of technology in organizing, developing, and presenting a case at trial is helpful, but not required.

The mission of the Tax Division is to enforce the nation's tax laws fully, fairly, and consistently, through both criminal and civil litigation, in order to promote voluntary compliance with the tax laws, maintain public confidence in the integrity of the tax system, and promote the sound development of the law.  The attorneys in the Criminal Enforcement Sections represent the United States in litigation in federal courts across the country.

The U.S. Department of Justice ranked 10th among large size agencies and the Tax Division ranked as the #1 litigating division in the Department of Justice and consistently in the top 10% of sub-agencies surveyed by the Partnership for Public Service for its 2018 "Best Places to Work".  We seek to create a work environment and organizational culture that reflect the diversity of American society, and that foster the success of every employee by appreciating and building upon the skills, experiences, and uniqueness that each employee brings to the workplace.

We place a high value on diversity of experience and cultural perspective and encourage applications from all interested eligible candidates, including attorneys of all ages from all ethnic and racial backgrounds, all sexual orientations and gender identities, political affiliations, marital or parental status, religious backgrounds, with or without disabilities, and with or without military service. 

For more information about the Tax Division, please see https://www.justice.gov/tax

Job Description: The Tax Division's jurisdiction is the United States - accordingly, travel to multiple jurisdictions is an essential component of the job. Travel frequency and location varies and is based on the attorney's litigation schedule.

Trial attorneys in the Criminal Enforcement Sections have a significant amount of responsibility and work in a collegial environment with experienced litigators. Persuasive legal writing, oral advocacy, and ability to analyze and organize significant documentary evidence are critical components of the position.Our attorneys work with federal agents to investigate and prosecute offenses arising under the internal revenue laws and related federal statutes. Our attorneys' responsibilities encompass the investigative use of the grand jury and other investigative techniques, such as search warrants. Attorneys also engage in all facets of criminal litigation, including indictment, motions practice, trial,and sentencing. Besides working with federal agents, a trial attorney usually works with another Criminal Tax Division Trial Attorney or an Assistant United States Attorney (AUSA) in the jurisdiction's U.S. Attorney's Office on litigated matters as the lead attorney, second chair, or consulting attorney. Our cases involve traditional violations of criminal tax laws by taxpayers having legal sources of income, including, for example, tax evasion and the filing of false tax returns, as well as cases involving tax defiers, identity theft, financial institution fraud, securities fraud, health care fraud, public corruption, organized crime activities, and narcotics trafficking.

Qualifications:  The Tax Division anticipates hiring criminal litigators with varying levels of experience. Applicants must have at least 3 years of full-time post-J.D. litigation experience by the closing date of the announcement. Litigation experience is required, and criminal litigation experience is preferred.

Applicants should have a strong interest in federal litigation and trial work; strong writing, oral-advocacy, research, and organizational skills; an academic background that demonstrates a commitment to producing professional work of a consistently outstanding caliber; and the ability to handle multiple matters concurrently. The work of the Criminal Enforcement Trial Sections requires the application of analytical, research, and writing skills to complex and significant issues involving all aspects of criminal law and criminal tax enforcement. Persuasiveness, judgment, initiative and a collaborative orientation are also highly valued. Familiarity with tax law and the use of technology in organizing, developing, and presenting a case at trial is helpful, but not required. Candidates should also have a strong interest in developing their litigation skills, in learning about and applying new technologies, remaining current on developments in the law, and the ability to adapt to changing circumstances. Applicants with an accounting, tax, or business background are encouraged to apply.

All applicants must possess a J.D. degree and must be duly licensed and authorized to practice as an attorney under the laws of any state or territory of the United States or the District of Columbia.

Active bar membership (of any jurisdiction) is required.

Applicants who accept an offer of employment will be required to undergo a background check.

Attorneys selected for a position in the Tax Division must commit to working for the Tax Division for three years.

Although applicants who are not citizens of the United States but who meet certain criteria may be considered for employment, Department security requirements generally require that most employees be U.S. citizens, with limited exceptions. Applicants who are not U.S. citizens will need to be approved by the Department before they can be approved to enter on duty.

Salary:  Years and experience will be considered in determining the salary level. Positions may be filled at the GS-12 - GS-14 levels. Positions may occasionally be filled at the GS-15 level.
Travel: The amount of travel can be significant. Travel frequency and location varies and is based on the attorney's litigation schedule.
Application Process: 

Applications must include a cover letter, resume, law school and any advanced degree transcripts, a list of three professional references, and a completed assessment questionnaire. All documents should be provided in either PDF or MS Word format. The cover letter, which should not exceed two single-spaced pages, should describe how your background and qualifications make you well suited for the position as a Trial Attorney. Accordingly, you should specifically provide a description of prior litigation experience, and your interest in public service and the Tax Division in particular. Failure to include all required documents may affect consideration of your application. Candidates selected for further consideration may be required to submit a writing sample prior to an interview.

To apply for this position, you must apply online through USAJOBS. Please use the following link: https://www.usajobs.gov/GetJob/ViewDetails/554512800.    Complete the assessment questionnaire and submit the documentation specified in the Required Documents section of the USAJOBS Vacancy Announcement.

Applicants who are eligible for veterans' preference or consideration under a special hiring authority (such as programs for individuals with disabilities) must submit appropriate documentation demonstrating eligibility. Please see the description of required documentation in the application section at https://www.usajobs.gov/GetJob/ViewDetails/554512800.

Department of Justice attorneys eligible for priority consideration under the Department's Reemployment Priority List Program must include notice to the Division of their eligibility in their application package.

Applicants should familiarize themselves and comply with the relevant rules of professional conduct regarding any possible conflicts of interest in connection with their applications. In particular, please notify this Office if you currently represent clients or adjudicate matters in which this Office is involved and/or you have a family member who is representing clients or adjudicating matters in which this Office is involved so that we can evaluate any potential conflict of interest or disqualification issue that may need to be addressed under those circumstances.

Application Deadline: Friday, January 24, 2020
Relocation Expenses: Relocation expenses are not authorized.
Number of Positions: The Tax Division anticipates hiring for several positions in the Criminal Enforcement Sections.

December 18, 2019 | Permalink | Comments (0)

Tuesday, December 17, 2019

DOJ is hiring several IRS Tax Counsel for the Tax Division

The Tax Division is hiring civil appellate lawyers who have a passion for litigation, a deep interest in public service, and the ability to work both collaboratively and independently.

The mission of the Tax Division is to enforce the nation’s tax laws fully, fairly, and consistently, through both criminal and civil litigation, in order to promote voluntary compliance with the tax laws, maintain public confidence in the integrity of the tax system, and promote the sound development of the law.  The Appellate Section’s attorneys handle or supervise appeals in all civil tax cases in federal and state appellate courts across the country.  These cases involve a wide variety of substantive legal areas, including federal tax law, bankruptcy law, constitutional law, commercial law and state property law, as well as a panoply of evidentiary, procedural, and jurisdictional issues. 

The U.S. Department of Justice ranked 10th among large size agencies and the Tax Division ranked as the #1 litigating division in the Department of Justice and consistently in the top 10% of sub-agencies surveyed by the Partnership for Public Service for its 2018 "Best Places to Work".  We seek to create a work environment and organizational culture that reflect the diversity of American society and that foster the success of every employee by appreciating and building upon the skills, experiences, and uniqueness that each employee brings to the workplace.

We place a high value on diversity of experience and cultural perspective and encourage applications from all interested eligible candidates, including attorneys of all ages from all ethnic and racial backgrounds, all sexual orientations and gender identities, political affiliations, marital or parental statuses, religious backgrounds, with or without disabilities and with or without military service.

For more information about employment with the Tax Division, please see: https://www.justice.gov/tax

Job Description: The Tax Division's jurisdiction is the United States - accordingly, travel to multiple jurisdictions is an essential component of the job. Travel frequency and location varies and is based on the attorney's litigation schedule.

Attorneys in the Appellate Section have a significant amount of responsibility and work in a collegial environment with experienced litigators. The work of the civil appellate attorney includes preparing briefs and presenting oral arguments in the United States Courts of Appeals nationwide and the various state appellate courts when an appeal is taken from a decision of the Court of Federal Claims, a state trial court, a United States district court, or the United States Tax Court. Civil appellate attorneys review adverse decisions from these courts and prepare recommendations to the Office of the Solicitor General about whether the government should appeal. Attorneys in the Appellate Section also assist the Office of the Solicitor General in preparing briefs in the United States Supreme Court.

Attorneys selected for a position in the Tax Division must commit to working for the Tax Division for three years.

Qualifications: The Tax Division anticipates hiring several civil appellate litigators with varying levels of experience.  Applicants must have at least three (3) years of full-time post-J.D. legal experience by the closing date of this announcement. 

Applicants should have a strong interest in federal litigation and/or appellate work, strong writing and oral-advocacy skills and an academic background that demonstrates a commitment to producing professional work of a consistently outstanding caliber.  The work of the Appellate Section requires the application of analytical, legal research, and writing skills to complex and significant issues.  Persuasiveness, judgment, and a collaborative orientation are also highly valued.  A background in tax law is helpful, but not required.  A judicial clerkship is a plus, but not required.

Salary: Years and experience will be considered in determining the salary level. Positions may be filled at the GS 13-14 levels. Positions may occasionally be filled at the GS-15 level.
 
Travel: Travel will be required. The location and frequency of travel varies, depending on the attorney's litigation schedule.
 
Application Process: 

Applications must include a cover letter, resume, law school and any advanced degree transcripts, a list of three professional references, a writing sample and a completed assessment questionnaire.  The cover letter, which should not exceed two single-spaced pages, should describe how your background and qualifications make you well suited for the position as an Appellate Attorney.  Accordingly, you should specifically provide a description of prior appellate and/or litigation experience, and your interest in public service and the Tax Division in particular.  

The writing sample should reflect your best writing, and be an original piece that has not been extensively edited by a third party. Persuasive writing is preferred because most of the writing we do should persuade its audience. The sample should be no more than 10 pages, double spaced. Whether your sample is an entire document or part of a larger piece, a paragraph on a separate page providing background on the writing sample and enough context for the reader to understand the sample is very useful and will not count against the 10 page limit. Please include your full name at the top of the first page of the document.

Failure to include all required documents may affect consideration of your application. 

Applicants who are eligible for veterans’ preference or consideration under a special hiring authority (such as programs for individuals with disabilities) must submit appropriate documentation demonstrating eligibility.  Please see the description of required documentation in the application section at 

https://www.usajobs.gov/GetJob/ViewDetails/554509400 .

Department of Justice attorneys eligible for priority consideration under the Department’s Reemployment Priority List Program must include notice to the Division of their eligibility in their application package.

The Application Package but must be received by 11:59 PM, Eastern Time, on January 22, 2020.

To apply for this position, you must apply online through USAJOBS.  Please use the following link: https://www.usajobs.gov/GetJob/ViewDetails/554509400 .  Complete the assessment questionaire and submit the documentation specified in the required documents section of the USAJOBS vacancy announcement.  

Applicants should familiarize themselves and comply with the relevant rules of professional conduct regarding any possible conflicts of interest in connection with their applications. In particular, please notify this Office if you currently represent clients or adjudicate matters in which this Office is involved and/or you have a family member who is representing clients or adjudicating matters in which this Office is involved so that we can evaluate any potential conflict of interest or disqualification issue that may need to be addressed under those circumstances.

Application Deadline: Wednesday, January 22, 2020
Relocation Expenses: Relocation expenses will not be authorized.
Number of Positions: The Tax Division anticipates hiring several attorneys.

December 17, 2019 | Permalink | Comments (0)

Monday, December 16, 2019

Attorney for Municipalities in Puerto Rico Convicted of Bribery

A former attorney for three municipalities in Puerto Rico was convicted of bribery.  Alejandro Carrasco, 63, of San Juan, Puerto Rico, was convicted of four counts of bribery with respect to programs receiving federal funds.  

According to the indictment and evidence introduced at trial, at various times between July 2009 and June 2012, Carrasco was an attorney providing legal services to the Puerto Rican Municipalities of Barceloneta, Rio Grande and Juncos.  During that time, he accepted bribes, disguised as legal fees, from a contractor in exchange for assisting the contractor in obtaining contracts with the three municipalities.  The evidence introduced at trial revealed that, in total, Carrasco was paid approximately $180,000 in bribes in exchange for helping the contractor obtain more than approximately $2.3 million in municipal contracts. 

December 16, 2019 in AML | Permalink | Comments (0)

Friday, December 13, 2019

Texas Businessman Convicted of Making Illegal Campaign Contributions to Political Candidates

A Houston, Texas, businessman has pleaded guilty to making illegal political contributions in the names of others to campaign committees for U.S. Senate and House of Representatives in 2017, announced Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and U.S. Attorney Ryan K. Patrick of the Southern District of Texas.

James D. Dannenbaum, 80, pleaded guilty today to violating the Federal Election Campaign Act. 

On Nov. 22, Dannenbaum Engineering Corporation (DEC) and its parent company, Engineering Holding Corporation, entered into a deferred prosecution agreement (DPA) and agreed to pay a $1.6 million criminal fine for its involvement in a multi-year conduit contribution scheme. Dannenbaum is DEC’s former CEO.

As part of the plea, Dannenbaum admitted that from 2015 through 2017, he and DEC made $323,300 in illegal conduit contributions through various employees and their family members to federal candidates and their committees. DEC corporate funds were used to advance or reimburse employee monies for these contributions. Dannenbaum did not reveal to any of the federal candidates that the corporation was the true source of the contributions. The object of the scheme was for DEC, Dannenbaum and a former employee to gain access to, and potentially influence, various candidates for federal office, including candidates for the presidency as well as the Senate and House of Representatives.

December 13, 2019 in AML | Permalink | Comments (0)

Thursday, December 12, 2019

Former COO and CFO of Publicly Traded Transportation Company Charged with Securities Fraud, Bank Fraud and Lying to Auditors

The former chief operating officer (COO) and chief financial officer (CFO) of Celadon Group Inc. (Celadon), a publicly traded transportation and trucking company headquartered in Indianapolis, Indiana, were charged in an indictment for their alleged role in a complex securities and accounting fraud scheme that resulted in a loss of more than $60 million in shareholder value. 

William Eric Meek, 39, and Bobby Lee Peavler, 40, both of Indianapolis were each charged in an indictment filed in the Southern District of Indiana with one count of conspiracy to commit wire fraud, bank fraud, and securities fraud; five counts of wire fraud; two counts of securities fraud; one count of conspiracy to make false statements to a public company’s accountants and to falsify books, records, and accounts of a public company; and one count of making false statements to a public company’s accountants. Peavler was charged with two additional counts of making false statements to a public company’s accountants. 

Meek and Peavler were arrested this morning and appeared before U.S. Magistrate Judge Mark J. Dinsmore of the Southern District of Indiana. Both Meek and Peavler were released on bail. The case is assigned to Chief Judge Jane E. Magnus-Stinson for U.S. District Court of the Southern District of Indiana.

“These senior corporate executives at Celadon allegedly orchestrated a securities and accounting fraud scheme that misled shareholders, banks, accountants, and the investing public,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division. “The Department of Justice and our law-enforcement partners will continue to safeguard market integrity by holding executives who violate the law responsible for their misconduct.”

“Through their scheme of lies, fraud and misrepresentations as alleged in the Indictment, Meek and Peavler damaged the integrity of the market, the corporation, its shareholders and public investors,” said U.S. Attorney Josh J. Minkler of the Southern District of Indiana. “The U.S. Attorney’s Office is committed to prosecuting those individuals in corporate America, who choose to commit corporate fraud, in violation of federal law, and have blatant disregard for those with a financial interest in the corporation.”

“This sends a clear message that those who commit financial fraud will be held accountable. Investors should expect nothing less than complete candor and truth from companies and their executives,” said Special Agent in Charge Grant Mendenhall of the FBI’s Indianapolis Field Office. “The FBI and our agency partners will continue to identify, investigate and pursue those who perpetrate criminal schemes for their own profit.”

“The U.S. Postal Inspection Service has an extensive history of investigating complex financial fraud schemes. A goal of the Postal Inspection Service is to protect investors, as well as the integrity of the financial marketplace from fraudulent activities by trusted insiders who abuse their positions,” said Inspector in Charge Delany De Leon-Colon of the U.S. Postal Inspection Service’s (USPIS) Criminal Investigations Group at National Headquarters. “Anyone who engages in this type of financial fraud scheme should know they will be found and held accountable for their dishonest practices.”

According to the indictment, by approximately 2016, Meek, Peavler, and others at Celadon knew the value of a substantial portion of Celadon’s trucks declined in value in part to a slowdown in the trucking market. In addition, many of those trucks, which were owned by Quality Companies (Quality), one of Celadon’s divisions, had serious mechanical issues that made them unattractive to drivers, further depressing their value. Instead of accounting for this decline in truck values, Meek, Peavler and others allegedly devised a scheme that caused Celadon to conceal tens of millions of dollars in losses to its shareholders, banks and the investing public.

Their scheme involved Quality trading away hundreds of its older and unused trucks to a large truck dealer in exchange for newer used trucks. During the trades, they intentionally inflated the prices on invoices associated with those trades so Celadon’s books would not reflect the fact that Celadon’s trucks were worth significantly less than reported to investors, the indictment alleges. Although they were actually trades, Meek, Peavler, and others allegedly sought to portray the transactions as independent “purchases” and “sales” of trucks in order to avoid heightened scrutiny. 

Meek and Peavler also allegedly structured one of the trades in an effort to artificially improve one of Celadon’s quarterly financial statements..  Quality received approximately $25 million from the truck dealer just before the end of Celadon’s fiscal quarter, which Celadon used to pay down its debt and appear to be in compliance with certain lending agreements. Meek, Peavler, and others allegedly failed to disclose, however, that as part of this deal, Quality had agreed to pay a similar amount of money back to the truck dealer three days after quarter-end. Celadon’s quarterly financial statements made no mention of this secret agreement, the indictment alleges.

In late 2016 and early 2017, Celadon’s independent auditors began to ask questions about the truck trades that Meek, Peavler, and others had used to hide the drop in truck values.  In response, Meek, Peavler and others allegedly made false and misleading statements to the auditors about the nature of the trade transactions, falsely denying they were trades and concealing the terms of these trades, including Quality’s agreement to pay money back to the truck dealer shortly after quarter-end. Peavler also directed a senior executive and co-conspirator to delete certain emails after the auditor had make a request for relevant documents. 

In May 2017, Celadon announced that its financial statements issued for fiscal year 2016, which ended June 30, 2016, as well as the quarters ending in September and December 2016 could no longer be relied on, not could the related reports of the independent auditor for those three time periods.  Following this announcement, Celadon’s share price dropped significantly, causing a one-day loss in Celadon’s market value of approximately $62.3 million.

An indictment is merely an allegation and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law. 

Previously, Danny Williams, 36, of New Palestine, Indiana, the former head of a Celadon subsidiary, pled guilty in April 2019 to conspiracy to commit securities fraud, make false statements to a public company’s accountants, and falsify books, records, and accounts of a public company.  Also in April 2019, Celadon itself entered a Deferred Prosecution Agreement with the government, under which it is obligated to pay restitution of $42.2 million.

The FBI’s Indianapolis Field Office and USPIS are investigating the case. The U.S. Securities and Exchange Commission provided assistance and has also filed a civil complaint against the defendants for related conduct. Trial Attorney Kyle W. Maurer and Assistant Chief L. Rush Atkinson of the Criminal Division’s Fraud Section, and Deputy Chief Steven D. DeBrota and Assistant U.S. Attorney Nicholas J. Linder of the Southern District of Indiana are prosecuting the case. 

December 12, 2019 in AML | Permalink | Comments (0)

Wednesday, December 11, 2019

Deferred Prosecution Agreement with HSBC Bank, Admits Assisting U.S. Taxpayers Conceal Income and Assets; Pays $192.35 Million Penalty

HSBC Private Bank (Suisse) SA (HSBC Switzerland), a private bank headquartered in Geneva, has entered into a deferred prosecution agreement (DPA) with the Department of Justice. HSBC Switzerland admitted to conspiring with U.S. taxpayers to evade taxes and, as part of the agreement, HSBC Switzerland will pay $192.35 million in penalties.

According to court documents, HSBC Switzerland admits that between 2000 and 2010 it conspired with its employees, third-party and wholly-owned fiduciaries, and U.S. clients to: 1) defraud the United States with respect to taxes; 2) commit tax evasion; and 3) file false federal tax returns. In 2002, the bank had approximately 720 undeclared U.S. client relationships, with an aggregate value of more than $800 million. When the bank’s undeclared assets under management reached their peak in 2007, HSBC Switzerland held approximately $1.26 billion in undeclared assets for U.S. clients. 

According to the terms of the DPA, HSBC Switzerland will cooperate fully with the Tax Division and the IRS. The DPA also requires HSBC Switzerland to affirmatively disclose information it may later uncover regarding U.S.-related accounts, as well as to disclose information consistent with the department’s Swiss Bank Program relating to accounts closed between Jan. 1, 2009 and Dec. 31, 2017. Under the DPA, prosecution against the bank for conspiracy will be deferred for an initial period of three years to allow HSBC Switzerland to demonstrate good conduct. The agreement provides no protection for any individuals.

The $192.35 million penalty against HSBC Switzerland has three parts. First, HSBC Switzerland has agreed to pay $60,600,000 in restitution to the IRS, which represents the unpaid taxes resulting from HSBC Switzerland’s participation in the conspiracy. Second, HSBC Switzerland agreed to forfeit $71,850,000 to the United States, which represents gross fees (not profits) that the bank earned on its undeclared accounts between 2000 and 2010. Finally, HSBC Switzerland agreed to pay a penalty of $59,900,000. This penalty amount takes into consideration that HSBC Switzerland self-reported its conduct, conducted a thorough internal investigation, provided client identifying information to the Tax Division, and extensively cooperated in a series of investigations and prosecutions, as well as implemented remedial measures to protect against the use of its services for tax evasion in the future.

According to court documents filed as part of the DPA, the bank assisted U.S. clients in concealing their offshore assets and income from U.S. taxing authorities. To conceal its clients’ assets and income from the IRS, HSBC Switzerland employed a variety of methods, including relying on Swiss bank secrecy to prevent disclosure to U.S. authorities, using code-name and numbered accounts and hold-mail agreements, and maintaining accounts in the names of nominee entities established in tax haven jurisdictions, such as the British Virgin Islands, Liechtenstein, and Panama, that concealed the client’s beneficial ownership of the accounts.

In an effort to attract new U.S. clients, and maintain existing relationships with U.S. clients, HSBC Switzerland bankers took trips to the United States. Between 2005 and 2007, at least four HSBC Switzerland bankers traveled to the United States to meet at least 25 different clients. One banker also attended Design Miami, a major annual arts and design event in Miami, Florida, in an effort to recruit new U.S. clients to open undeclared accounts with HSBC Switzerland. 

In early 2008, in response to a public U.S. criminal investigation into UBS AG, the largest bank in Switzerland, for tax and securities violations in connection with its maintaining undeclared accounts for U.S. clients, HSBC Switzerland began a series of policy changes to restrict its cross-border business with U.S. persons, but the bank did not immediately cease that business. In fact, some HSBC Switzerland bankers assisted clients in closing their accounts in a manner that continued to conceal their offshore assets, such as withdrawing the contents of their accounts in cash.     

 
 

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December 11, 2019 in GATCA | Permalink | Comments (0)

Tuesday, December 10, 2019

Apple Self Discloses and Pays Small Fine for Business Relationship with Narcotics Kingpin Company

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) today announced a $466,912 settlement with Apple, Inc. (“Apple”).  Apple, a corporation based in Cupertino, California, has agreed to settle its potential civil liability for apparent violations of the Foreign Narcotics Kingpin Sanctions Regulations, 31 C.F.R. part 598 (FNKSR). 

Apple appears to have violated § 598.203 of the FNKSR by dealing in the property or interests in property of SIS, d.o.o. (“SIS”), a Slovenian software company previously identified on OFAC’s List of Specially Designated Nationals and Blocked Persons as a significant foreign narcotics trafficker.  Specifically, from on or about February 24, 2015 to on or about May 9, 2017, Apple hosted, sold, and facilitated the transfer of SIS’s software applications and associated content.  OFAC determined that Apple voluntarily disclosed the apparent violations, and that the apparent violations constitute a non-egregious case.

On July 18, 2008, Apple entered into an app development agreement with SIS, a software company located at 19 Spruha, Trzin 1236, Slovenia. On February 24, 2015, OFAC designated SIS and Savo Stjepanovic (“Stjepanovic”), a director and majority owner of SIS, pursuant to the Foreign Narcotics Kingpin Designation Act, 21 U.S.C. §§ 1901-1908, and added them to the SDN List. OFAC’s public announcement of the designation included SIS’s address, registration number, and tax identification number, and further noted that SIS was linked to Stjepanovic. The SDN List provided the following identifying information for SIS:

SIS D.O.O., 19 Spruha, Trzin 1236, Slovenia; Registration ID 5919070 (Slovenia); Tax ID No. SI91729181 (Slovenia) [SDNTK].

OFAC also published a diagram titled “KARNER Steroid Trafficking Network,” which included a photograph of Stjepanovic, SIS, and a SIS logo.

On the same day that OFAC designated SIS and Stjepanovic, Apple, in accordance with its standard compliance procedures, screened the newly designated SDNTKs against its app developer account holder names using its sanctions screening tool. During this screening, Apple failed to identify that SIS, an App Store developer, was added to the SDN List and was therefore blocked. Apple later attributed this failure to its sanctions screening tool’s failure to match the upper case name “SIS DOO” in Apple’s system with the lower case name “SIS d.o.o.” as written on the SDN List. The term “d.o.o.” is a standard corporate suffix in Slovenia identifying a limited liability company. In addition, even though the  address for SIS collected by Apple matched the address for SIS identified and published by OFAC, Apple failed to identify SIS as an SDNTK for over two years after the designation.

On the day of designation, Apple was in possession of Stjepanovic’s full name in its records since he was listed as an “account administrator” in its App Store developer account, though he was not listed as a “developer.” At the time, Apple’s compliance process screened individuals identified as “developers,” but did not screen all of the individual users identified in an App Store account against the SDN List. Apple therefore failed to identify Stjepanovic as an SDNTK.

On the day of designation, any property in which SIS or Stjepanovic had an interest became blocked, and any transactions or dealings in such property by Apple, a U.S. person, were prohibited. Nonetheless, Apple continued to host software applications and associated content (“apps”) owned by SIS on the App Store, allowed downloads and sales of the blocked SIS apps, received payments from App Store users downloading the blocked SIS apps, permitted SIS to transfer and sell its apps to two other developers, and remitted funds on a monthly basis to SIS for the sales of the blocked SIS apps.

On or about April 17, 2015 — approximately two months after the designations — Apple facilitated the transfer of a portion of SIS’s apps to a second software company (the “Second Company”). The Second Company was incorporated several days after OFAC’s designation of SIS. Separately, on or about September 14, 2015, SIS entered into an agreement with a third software company (the “Third Company”) and transferred the ownership of SIS’s remaining apps to the Third Company. The owner of the Third Company took over the administration of SIS’s App Store account and replaced SIS’s App Store banking information with his own banking information. These actions were all conducted without personnel oversight or additional
screening by Apple. After enhancing its sanctions screening tool and related processes, Apple identified SIS as a potential SDNTK in February 2017. Apple’s finance team immediately suspended further payments associated with the SIS account, which was being administered by the Third Company,
and whose owner was receiving payments from Apple. However, Apple continued to make payments to the Second Company for the blocked SIS apps that had been transferred to the Second Company in April 2015, after OFAC’s designation of SIS as a SDNTK.

Apple made 47 payments associated with the blocked apps, including payments directly to SIS, during the period of time that SIS was listed on the SDN List. In total, over 54 months, Apple collected $1,152,868 from customers who downloaded SIS apps.

The statutory maximum civil monetary penalty applicable in this matter is $74,331,860. OFAC determined, however, that Apple voluntarily self-disclosed. Accordingly, under OFAC’s Economic Sanctions Enforcement Guidelines (“Enforcement Guidelines”), the base civil monetary penalty
amount applicable in this matter is $576,434.

The settlement amount of $466,912 also reflects OFAC’s consideration of the General Factors under the Enforcement Guidelines. Specifically, OFAC determined the following to be aggravating factors:

(1) Based on the number of Apparent Violations, the length of time over which the Apparent Violations occurred, and the multiple points of failure within the company’s sanctions compliance program, policies, and procedures, the conduct demonstrated reckless disregard for U.S. sanctions requirements;
(2) Apple’s payments to SIS and for the blocked apps conferred significant economic benefit to SIS and its owner, as Apple’s App Store appears to have been the main business for SIS around the time it was designated; and

(3) Apple is a large and sophisticated organization operating globally with experience and expertise in international transactions.

OFAC found the following to be an aggravating factor with respect to three Apparent Violations that occurred after Apple identified SIS as an SDNTK in February 2017:

(4) Apple failed to take corrective actions in a timely manner after identifying SIS as an SDNTK, and continued to make payments for the download of blocked apps for multiple months.

OFAC determined the following to be mitigating factors:

(1) The volume and total amount of payments underlying the Apparent Violations was not significant compared to the total volume of transactions undertaken by Apple on an annual basis;
(2) Apple has not received a penalty notice or Finding of Violation from OFAC in the five years preceding the date of the transaction giving rise to the Apparent Violations; and
(3) Apple responded to numerous requests for information in a prompt manner.

Additionally, Apple has confirmed that it has terminated the conduct that led to the Apparent Violations and has undertaken the following measures as part of its compliance commitments to minimize the risk of recurrence of similar conduct in the future:

• Increased the role of the Global Export and Sanctions Compliance Senior Manager in the escalation and review process;
• Reconfigured the primary sanctions screening tool to fully capture spelling and capitalization variations and to account for country-specific business suffixes, and implemented an annual review of the tool’s logic and configuration;

• Expanded sanctions screening to include not only app developers, but also their designated payment beneficiaries and associated banks;
• Updated the instructions for employees to review potential SDN List matches flagged by the primary sanctions screening tool; and
• Implemented mandatory training for all employees on export and sanctions regulations.

 

December 10, 2019 in AML | Permalink | Comments (0)