Group Of Five Charged In $200 Million Tax Fraud Scheme
PHILADELPHIA – A superseding indictment, charging five people in a complex, multi-million dollar tax fraud scheme, was unsealed today following the arrest of one of the defendants. The indictment alleges that the conspirators caused more than $200 million in losses to the United States through a massive scheme. Named in the 49-count indictment are: Samyak Veera, 39, of Singapore, Aviel Faliks, 39, of New York City, Chandrakant Shah, 65, of India, Donald Stevenson, 56, of North Palm Beach, Florida, and Eric Merl, 61, address unknown. Faliks was arrested this morning in New York City. John Ivsan, 44, Andrew Ahn, 39, and Helen Del Bove, 53, have pleaded guilty in related cases and are awaiting sentencing. The indictment and informations filed against these defendants were also unsealed today. The charges were announced by United States Attorney Zane David Memeger, Assistant Attorney General for the Department of Justice Tax Division Kathryn Keneally, and Chief of the Internal Revenue Service Criminal Investigations Richard Weber.
The defendants named in the superseding indictment are charged with conspiracy to defraud the United States, conspiracy to commit wire fraud, and corruptly endeavoring to obstruct and impede the due administration of the Internal Revenue laws. In addition to those charges, Veera is also charged with 11 counts of tax evasion and 19 counts of wire fraud; Faliks is also charged with five counts of tax evasion and eight counts of wire fraud; Shah is also charged with 11 counts of tax evasion; and Merl is also charged with four counts of making materially false statements to government officials. The indictment contains a notice of forfeiture for up to $150 million from Veera and Faliks.
Between at least 2003 and 2011, the defendants allegedly designed and implemented a scheme to evade more than $200 million in corporate taxes by purchasing companies with taxable gains and using fraudulent losses to wipe out the gains. The defendants then allegedly pocketed the corporations’ cash, filed fraudulent returns, and, in some instances, fraudulently sought and obtained refunds from the IRS for prior years. According to the superseding indictment, the defendants implemented their fraud scheme through four basic steps: (1) initial purchasers - including MidCoast Financial Inc., a company owned by Chandrakant Shah and operated by Samyak Veera - purchased target corporations with cash assets and large anticipated corporate income tax liabilities; (2) the initial purchasers next transferred these target corporations to straw buyers controlled on paper by Andrew Ahn and Aviel Faliks; (3) the defendants then evaded the corporations' income taxes through the use of fraudulent transactions designed to create the illusion that the corporations had incurred capital and ordinary losses; and (4) finally, the defendants distributed proceeds of the scheme through disguised means.
Defendant Donald Stevenson was the head of the acquisition team at MidCoast Financial and its successor and allegedly led the effort to identify ripe targets for the conspiracy. Helen Del Bove provided bookkeeping services to Veera, Ahn, and Faliks, tracking the target corporations purchased, the gains that needed to be eliminated, and the losses used to wipe them out. She allegedly provided this information to a tax return preparer so that the false returns could be prepared and filed. It is further alleged that Del Bove attempted to destroy key evidence after the IRS began to investigate the transactions. Eric Merl and John Ivsan both served as counsel to Veera and MidCoast Financial and other entities used to implement the fraud. Later, after the IRS began to look into MidCoast Financial's transactions, it is alleged that Merl and Stevenson started and operated Private Capital Resource Group Inc. (PCRG), a new company to carry on the scheme. Aviel Faliks allegedly served as the straw buyer of the target corporations identified by PCRG, but he also played an instrumental role in setting up the fraudulent options transactions used to wipe out the corporations' gains.
If convicted of all charges, the sentencing guidelines call for a minimum sentence of at least 188 months imprisonment for Veera, Shah, and Stevenson, at least 151 months for Faliks, and at least 121 months for Merl. For Ivsan, Ahn, and Del Bove, the maximum years of imprisonment are ten years, eight years, and three years, respectively.
The case was investigated by IRS Criminal Investigations. It is being prosecuted by Assistant United States Attorneys Patrick J. Murray and Nancy E. Potts, and Tax Division Trial Attorney Andrew P. Young.
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