Four Defendants Charged In Panama Papers Investigation

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Brian A. Benczkowski, Assistant Attorney General of the Criminal Division of the U.S. Department of Justice, Don Fort, Chief, Internal Revenue Service-Criminal Investigation (“IRS-CI”), and Angel M. Melendez, the Special Agent-in-Charge of the New York Field Office of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), announced today the unsealing of an indictment charging RAMSES OWENS, DIRK BRAUER, RICHARD GAFFEY, and HARALD JOACHIM VON DER GOLTZ, with wire fraud, tax fraud, money laundering, and other offenses in connection with their roles in a decades-long criminal scheme perpetrated by Mossack Fonseca & Co. (“Mossack Fonseca”), a Panamanian-based global law firm, and related entities.

Three of the four defendants named in the indictment have been arrested.  BRAUER, who worked as an investment manager for Mossfon Asset Management, S.A., an asset management company closely affiliated with Mossack Fonseca, was arrested in Paris, France, on November 15, 2018.  VON DER GOLTZ, a former U.S. resident and taxpayer, was arrested in London, United Kingdom, on December 3, 2018.  GAFFEY, a U.S.-based accountant, was arrested in Medfield, Massachusetts, this morning.  OWENS, a Panamanian attorney who worked for Mossack Fonseca, remains at large.    

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, these defendants went to extraordinary lengths to circumvent U.S. tax laws in order to maintain their wealth and the wealth of their clients.  For decades, the defendants, employees and a client of global law firm Mossack Fonseca, allegedly shuffled millions of dollars through off-shore accounts and created shell companies to hide fortunes.  In fact, as alleged, they had a playbook to repatriate un-taxed money into the U.S. banking system.  Now, their international tax scheme is over, and these defendants face years in prison for their crimes.”

AAG Brian A. Benczkowski said:  “Law firms, asset managers, and accountants play key roles enabling entry into the global financial system.  The charges announced today demonstrate our commitment to prosecute professionals who facilitate financial crimes across international borders and the tax cheats who utilize their services.”

IRS-CI Chief Don Fort said:  “The unsealing of this indictment sends a clear message that IRS-CI is actively engaged in international tax enforcement, and more investigations are on the way.  IRS-CI specializes in unraveling these intricate offshore tax schemes and following the money around the globe wherever it may lead.  Cases like this help maintain the public’s confidence in our tax system by letting them know that we investigate and prosecute those who evade their tax obligation.”

HSI Special Agent-in-Charge Angel M. Melendez said: “Today we announce the indictment of four individuals who allegedly defrauded the U.S. government through a large scale, intercontinental money laundering and wire fraud scheme, associated with Mossack Fonseca and its affiliates.  HSI’s El Dorado Task Force, together with the IRS, built a case that uncovered an alleged complex trail of offshore shell corporations and bogus foundations used to disguise the beneficial ownership of huge amounts of money.  These efforts reflect the commitment of U.S. law enforcement to follow that trail and apprehend these criminal regardless where they are in the world.”

According to the Indictment, which was unsealed today in Manhattan federal court[1]:

From 2000 through 2017, OWENS and BRAUER conspired with others to help U.S. taxpayer clients of Mossack Fonseca conceal assets and investments, and the income generated by those assets and investments, from the IRS through fraudulent, deceitful, and dishonest means.  To conceal their clients’ assets and income from the IRS, OWENS and BRAUER worked to establish and manage opaque offshore trusts and undeclared bank accounts on behalf of U.S. taxpayers who were clients of Mossack Fonseca.  OWENS and BRAUER marketed, created, and serviced sham foundations and shell companies formed under the laws of countries such as Panama, Hong Kong, and the British Virgin Islands, to conceal from the IRS and others the ownership by U.S. taxpayers of accounts established at overseas banks, as well as the income generated in those accounts.  As structured by Mossack Fonseca, the sham foundations typically “owned” the shell companies that nominally held the undeclared assets on behalf of the U.S. taxpayer clients of Mossack Fonseca.  The names of Mossack Fonseca’s clients generally did not appear anywhere on the incorporation paperwork for the sham foundations or related shell companies, although the clients in fact beneficially owned, and had complete access to, the assets of those sham entities and accounts.

In furtherance of the scheme, and in exchange for additional fees, OWENS and BRAUER provided support to clients who had purchased the sham foundations and related shell companies by providing corporate meeting minutes, resolutions, mail forwarding, and signature services.  Moreover, OWENS and BRAUER purposefully established the bank accounts in locations with strict bank secrecy laws, which impeded the ability of the United States to obtain bank records for the accounts.  OWENS and BRAUER also instructed U.S. taxpayer clients of Mossack Fonseca about how to repatriate funds to the United States from their offshore bank accounts in a manner designed to keep the undeclared bank accounts concealed.  Among other things, OWENS and BRAUER instructed clients to use debit cards and fictitious sales to repatriate their funds covertly.

VON DER GOLTZ was one of Mossack Fonseca’s U.S. taxpayer clients.  At all relevant times, VON DER GOLTZ was a U.S. resident and was subject to U.S. tax laws, which required him to report and pay income tax on worldwide income, including income and capital gains generated in domestic and foreign bank accounts.  VON DER GOLTZ evaded his tax reporting obligations by setting up a series of shell companies and bank accounts, and hiding his beneficial ownership of the shell companies and bank accounts from the IRS.  These shell companies and bank accounts made investments totaling tens of millions of dollars.  VON DER GOLTZ was assisted in this scheme by OWENS and by GAFFEY, a partner at a U.S.-based accounting firm.  In furtherance of VON DER GOLTZ’s fraudulent scheme, VON DER GOLTZ, GAFFEY, and OWENS falsely claimed that VON DER GOLTZ’s elderly mother was the sole beneficial owner of the shell companies and bank accounts at issue because, at all relevant times, she was a Guatemalan citizen and resident, and – unlike VON DER GOLTZ – was not a U.S. taxpayer. 

GAFFEY, in addition to assisting VON DER GOLTZ evade U.S. income taxes and reporting requirements, also worked closely with OWENS to help another U.S. taxpayer client (“Client-1”) of Mossack Fonseca defraud the IRS.  Client-1 maintained a series of offshore bank accounts, which Mossack Fonseca helped Client-1 conceal from the IRS for years.  The indictment further alleges that upon the advice of OWENS and GAFFEY, Client-1 covertly repatriated approximately $3 million of Client-1’s offshore money to the United States by falsely stating on Client-1’s federal tax return that the money represented proceeds from the sale of a company.  After Client-1 repatriated approximately $3 million in this manner, approximately $1 million still remained in Client-1’s offshore account, the existence of which remained hidden from the IRS.   

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A chart outlining the charges against each defendant is below.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants will be determined by the judge.  The charges in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

Mr. Berman praised the outstanding investigative work of IRS-CI and HSI, and thanked the Justice Department’s Tax Division and the Federal Bureau of Investigation for their significant assistance in the investigation.  Mr. Berman also thanked the U.S. Justice Department’s Office of International Affairs and law enforcement partners in France and the United Kingdom for their assistance in securing the arrests of the defendants located overseas.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit and Money Laundering and Transnational Criminal Enterprises Unit, working in partnership with the Money Laundering and Asset Recovery Section of the Criminal Division.  Assistant United States Attorneys Sarah E. Paul, Thane Rehn, Kristy Greenberg, and Andrew Adams, along with Trial Attorneys Michael Parker and Parker Tobin of the Money Laundering and Asset Recovery Section, are in charge of the prosecution.