Businessman Jailed for Using Nevis Bank Account to Conceal Income

On May 7, 2014, the IRS and the DOJ announced the Robert C. Sathre was sentenced to serve thirty-six months in federal prison for tax evasion; Mr. Sathre was also ordered to pay $3,113,882 in restitution to the IRS and to serve three years of supervised release. Sathre pleaded guilty on February 26, 2014, to willfully evading the payment of his 1995 and 1996 tax liability.

Facts of the Case

According to court documents and proceedings, Mr. Sathre sold a Minnesota business and received installment payments in 1995 and 1996 of more than $3 million. Mr. Sathre concealed his income by filing a 1995 tax return in which he reported only $64,928 in total income. Mr. Sathre then purchased land and set up another business, a gas station and convenience store in Sheridan, Wyoming, known as the Rock Stop.

According to the DOJ, Mr. Sathre concealed assets by opening a foreign bank account in the Caribbean island of Nevis and by using purported trusts. During the ten-month period during 2005-2006, Mr. Sathre sent over $500,000 to the account in Nevis to keep the funds out of reach from the IRS. When Mr. Sathre sold the Rock Stop in 2007, he wired over $1,250,000 from the sale proceeds to the trust account of a Wyoming law firm. He later directed the law firm to wire $900,000 from the trust account to his account at the Bank of Nevis. Mr. Sathre also provided a false declaration and false promissory note to the Bank of Nevis to conceal the source of this transfer and obtained a debit card linked to the foreign account to access funds locally. In addition, Mr. Sathre provided the Bank of Sheridan with an IRS form on which he falsely claimed that he was neither a citizen nor a resident of the United States.

Analysis of Relevant Facts

The first interesting detail here is the period of time involved – 1995 and 1996. This is something to keep in mind for U.S. taxpayers with undisclosed offshore accounts – the IRS can look beyond the three- and six-year statutes of limitations in certain cases involving fraud and other criminal conduct.

Second, this seems to be one of the cases that would not have come out had the defendant not broken the U.S. tax laws again. It appears that the under-reporting on the 1995 and 1996 returns was not detected originally. However, when Mr. Sathre appears to have engaged in tax evasion with the second sale of Rock Stop in 2007 and commenced to transfer money to Nevis, he must have triggered an IRS investigation.

In fact, this case is an excellent illustration of the difference in the international tax enforcement between the pre-2001 period (i.e. prior to the IRS enforcement of FBAR and the DOJ campaign to enforce U.S. tax laws internationally) and the post-2001 period, especially after the UBS case and FATCA global enforcement.

Finally, as in many other criminal cases involving foreign accounts, the engagement in complex planning (i.e. using foreign trusts) to conceal the transaction must have greatly contributed to the decision by the IRS and the DOJ to pursue criminal penalties.

A Warning to U.S. Taxpayers with Undisclosed Nevis Bank Accounts

The Sathre case should be considered a warning to the U.S. taxpayers with undisclosed Nevis bank accounts. The IRS was able to retrace all of the transactions between the United States and Nevis. With FATCA global enforcement gaining steam, it is highly important for these taxpayers to realize that their undisclosed Nevis bank accounts may be discovered by the IRS and it may happen soon.

The consequences of such an investigation by the IRS may be grave as the present Sathre case demonstrates: large monetary penalties and incarceration.

This is why it is highly important for U.S. taxpayers with undisclosed Nevis Bank accounts to consider their voluntary disclosure options as soon as possible. My strong suggestion is to retain an international tax lawyer for this process.

Contact Sherayzen Law Office for Help With the Voluntary Disclosure of Your Nevis Bank Accounts

If you have an undisclosed Nevis bank account, contact Sherayzen Law Office for professional help. Our international tax law firm is highly experienced in the matters of offshore voluntary disclosures. We have helped hundreds of taxpayers around the world and we can help you!

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