Credit Card Tax Evasion Attacked
A common illegal tax evasion scheme is when U.S. taxpayers divert money earned to offshore bank accounts titled in the name of offshore corporations . The taxpayer does not pay tax on the money on the theory that he did not receive the money, but then the same taxpayer uses the money for personal expenses by charging expenses on credit cards issued by the offshore bank. The following news release issued by the Department of Justice describes how the government attacked another one of these operations. Why do people think they can get away with these tricks? Again, legitimate asset protection should not be confused with criminal tax evasion.
TWO BUSINESSMEN PLEAD GUILTY TO TAX FRAUD
IN OFFSHORE CREDIT CARD SCHEME
Credit Cards Were Used To Spend Untaxed Income
Stashed In Foreign Accounts
" Herbert Greaves and Kurt Greaves own Greaves, Inc. (the "company"), which operates roofing and other businesses. They admitted that, from 1999 through 2001, they used offshore entities run by tax scam promoters to hide much of their income. They admitted filing fraudulent individual income tax returns that falsely reported no interest in a financial account in a foreign country. In fact, they each had interests in numerous foreign bank accounts.
In one scheme, the Greaves admitted they caused their company to make payments to Nevada shell corporations, and fraudulently deducted them as "professional fees" and/or "outside fees." In fact, the payments were deposited in bank accounts controlled by the scheme's promoters, who then wire-transferred the funds offshore to bank accounts maintained in Nevis, West Indies. The Greaves admitted they controlled those accounts. The promoters arranged for issuance of a credit card by Bahamas-based Leadenhall Trust Company Ltd., and for untaxed income held in the foreign accounts to be used to pay the credit card bills. The Greaves used the credit card to pay their personal expenses.
In a second scheme, the Greaves caused their company to wire transfer $230,000 to an offshore Nevis-based bank account controlled by the promoters. The company deducted the entire payment on its tax returns as an "insurance" expense. To substantiate the fraudulent deduction, the promoters provided the Greaves with a bogus insurance policy purportedly issued by Grenada-based Sovereign Life & Casualty Ltd. The Greaves had executed a secret indemnification agreement whereby, through a Nevis-based corporation, they agreed to indemnify the insurance company from any claims which might be made under the policy. The promoters received six percent of the total funds as a fee for holding the funds for one year, after which the Greaves were entitled to receive the balance. "
