Friday, July 12, 2013

Alexei Iazlovsky Pleads Guilty to Concealing Foreign Bank Account at Israel-Based on his Tax Return



WASHINGTON – The Justice Department and Internal Revenue Service, Criminal Investigation (IRS-CI) announced that Alexei Iazlovsky of Potomac, Md., pleaded guilty today in the U.S. District Court for the Central District of California to filing a false tax return for tax year 2008.

According to court documents, Iazlovsky, a U.S. citizen, maintained an undeclared bank account held in the name of a foreign corporation at the Luxembourg branch of an Israeli bank. Iazlovsky owned a corporation that produced documentaries for Russian television stations. A tax return preparer suggested to Iazlovsky that he could reduce his taxes by keeping money out of the United States and diverting payments from his Russian clients to a foreign bank account held in the name of a foreign corporation. Iazlovsky met with a banker from the Israeli bank at a New York hotel to open the Luxembourg account.

According to court documents, Iazlovsky diverted a total of $2.6 million in untaxed payments from his Russian clients to his undeclared bank account in Luxembourg. From 2002 through 2009, Iazlovsky filed false individual and corporate tax returns that failed to report his authority over and ownership of the bank account in Luxembourg. He also omitted the income diverted to and generated by the undeclared account in Luxembourg. Iazlovsky has admitted that the tax loss is more than $400,000.

Iazlovsky is the latest in a series of defendants charged in the U.S. District Court for the Central District of California with failing to report income from undeclared accounts held at Israeli banks.

"Individuals who evade their tax obligations cheat their country and their fellow citizens," said Kathryn Keneally, Assistant Attorney General for the Justice Department's Tax Division. "The Department of Justice is committed to using all of the many available tools to find and prosecute those who hide income and assets in offshore bank accounts, and to pursue the taxes and penalties that are due."

"Offshore tax evasion is a top priority for IRS-CI, and the facts in this case are clear. Earned income was placed into foreign bank accounts for the purpose of committing offshore tax fraud," said Richard Weber, Chief, IRS-CI. "Through our efforts, we are gaining access to more and more information on institutions and individuals involved in offshore tax fraud, and you can expect us to use all of our enforcement tools to stop this abuse."

U.S. citizens and residents who have an interest in, signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 are required to disclose the existence of such account on Schedule B, Part III, of their individual income tax returns. Additionally, U.S. citizens and residents must file a Report of Foreign Bank and Financial Reports (FBAR) with the U.S. Treasury disclosing any financial account in a foreign country with assets in excess of $10,000 in which they have a financial interest, or over which they have signature or other authority.

Iazlovsky has agreed to pay a civil penalty in the amount of 50 percent of the high balance of his undeclared account to resolve his civil liability with the IRS for failing to file FBARs. Iazlovsky faces a maximum prison term of three years and a maximum fine of $250,000.


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