FOR IMMEDIATE RELEASE
April 11, 2011
TRENTON, N.J. – A Somerset, N.J., businessman admitted today to conspiring to conceal undeclared bank accounts in India, U.S. Attorney Paul J. Fishman and Principal Deputy Assistant Attorney General John A. DiCicco of the Justice Department’s Tax Division announced.
Vaibhav Dahake, 44, pleaded guilty to an Indictment charging him with one count of conspiring to defraud the IRS. He entered his guilty plea before U.S. District Judge Freda L. Wolfson in Trenton federal court.
According to documents filed in this case and statements made during today’s guilty plea proceeding:
Dahake admitted that from 2001 through 2010, he maintained undeclared bank accounts in India that he failed to report on his federal income tax returns. The accounts were maintained at a large international bank which was headquartered in England and maintained offices throughout the world, including in India, Singapore, Hong Kong and the United States.
In 2001, Dahake received from the bank an unsolicited letter advertising bank accounts in India that paid high interest rates. Dahake subsequently met with a banker, employed by the bank’s New York office, who advised Dahake that one of the advantages of opening up a bank account in India was that he would not have to supply the bank with his social security number. After Dahake decided to open an account in India, the banker advised him not to send one large check, but to send five checks, each in the amount of $10,000, in order to “stay below the radar.”
During 2003 and 2004, Dahake wire transferred additional funds from the British Virgin Islands to his undeclared bank account in India. In connection with these wire transfers, a second banker employed by the international bank in New York advised Dahake that he could conceal his undeclared accounts by converting funds from U.S. dollars into either British pounds or euros before wire transferring them. The banker told Dahake that the funds would not be transferred through the U.S. banking system because the international bank had correspondent banks in Europe and around the world that handled transactions in different currencies.
During a subsequent trip to India, Dahake had a telephone conversation with a third banker, employed by the international bank in California, regarding how to conceal the repatriation of funds from India to the United States. The banker advised Dahake that he and his wife should not withdraw more than $18,000 collectively to avoid coming back into the United States with over $10,000 each.
In 2006, Dahake faxed a letter to the international bank in India instructing the bank to issue him five bank checks, each in the amount of $9,500, and to send the checks via courier to his residence in New Jersey. A banker employed by the international bank in India had advised Dahake to purchase multiple checks in that amount when repatriating funds from India to the United States.
Following the publication of news reports that Swiss bank UBS AG had entered into a deferred prosecution agreement with the U.S. Department of Justice, Dahake advised the banker in California that he was considering repatriating all his money from India to the United States. In response, the banker told Dahake he had nothing to worry about because the international bank would not be issuing Forms 1099 on the accounts in India, and that the IRS would be looking for undeclared accounts maintained in the Caribbean rather than in the Far East. The banker also advised Dahake that the international bank operated banks in both Singapore and Hong Kong and that the banker could introduce Dahake to bankers in those countries if Dahake wanted to move his funds there.
Individuals who physically transport, mail or ship – or cause to be physically transported, mailed, or shipped – currency, checks, and other monetary instruments in an aggregate amount exceeding $10,000 into or out of the United States are required to file a FinCen Form 105, Report of International Transportation of Currency or Monetary Instruments (a “CMIR”), with the Bureau of Customs and Border Protection.
United States law prohibits individuals from structuring the importation or exportation of currency, checks and other monetary instruments if the purpose of the structuring is to evade the requirement to file a CMIR for transactions exceeding $10,000.
U.S. Attorney Fishman stated: “New Jersey businessman Vaibhav Dahake admitted today that he conspired to hide his assets from the IRS by stashing them in India. As all taxpayers prepare to file their annual returns, we remind them and their financial institutions not to cheat their fellow citizens by defrauding the IRS.”
“Those who still think they can hide their assets and income offshore to evade taxes need to rethink their strategy. The Department of Justice is committed to prosecuting such individuals, and U.S. taxpayers who honestly report their income and pay their taxes can take comfort in that fact,” said John A. DiCicco, Principal Deputy Assistant Attorney General of the Justice Department’s Tax Division.
“This is another step in our ongoing effort to pursue hidden offshore assets – no matter where they are located,” said IRS Criminal Investigation Chief Victor S.O. Song. “We are continuing our work to crack down on offshore tax evasion. Through our efforts, we are gaining access to more and more information on institutions and individuals involved in offshore tax evasion, and you can expect us to use all of our enforcement tools to stop this abuse.”
At sentencing, Dahake faces a maximum sentence of five years in prison and a maximum fine of $250,000, or twice the amount of financial gain to the defendant or loss to the IRS. Additionally, Dahake has agreed to pay a 50 percent civil penalty for failing to file Reports of Foreign Bank or Financial Account relating to his undeclared bank accounts, for the calendar year, from 2004 through 2009, during which the accounts had the highest balance. Sentencing is scheduled for July 22, 2011.
U.S. Attorney Fishman and Principal Deputy Assistant Attorney General DiCicco commended the special agents of the IRS, under the direction of IRS Criminal Investigation Chief Victor S.O. Song, who investigated the case.
The government is represented by Assistant U.S. Attorney Stacey A. Levine of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark; and Senior Litigation Counsel John E. Sullivan and Kevin M. Downing of the Department of Justice’s Tax Division.
Defense counsel: Lawrence S. Horn, Newark, N.J.