Connecticut Man Pleads Guilty to Concealing Income from Undeclared Panamanian Bank Account
Defendant to Pay Full Restitution to IRS and Civil Penalty of More Than $850,000
A Weston, Connecticut man, who used a Panamanian bank account to conceal over $1.5 million in income from the sale of duty-free alcohol and tobacco products pleaded guilty today to one count of conspiring to conceal assets and income from the Internal Revenue Service (IRS), announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division and U.S. Attorney Paul J. Fishman for the District of New Jersey.
Saul Hyatt, 53, pleaded guilty today before U.S. District Judge Freda L. Wolfson of the District of New Jersey to an Information charging him with conspiracy to conceal assets in an undeclared bank account held in Panama for his benefit. According to documents filed with the court, Hyatt conspired with another individual in the United States and others to conceal his assets and income derived from the sale of duty-free alcohol and tobacco products. To execute the scheme, Hyatt used a registered Panamanian corporation, Centennial Group, to buy and sell the duty-free products. The alcohol shipped through a customs-bonded warehouse in the Foreign Trade Zone in Fort Lauderdale, Florida. The tobacco products, Chinese-brand cigarettes sold under the names “Chung Hwa” and “Double Happiness,” passed through a customs-bonded warehouse in North Bergen, New Jersey. From 2006 to 2012, Hyatt directed that $1,627,832 in profits from the sale of duty-free alcohol and tobacco products be wired to his undeclared bank account in Panama. Hyatt repatriated money from the Panamanian bank account to buy a Mercedes Benz SL 550R automobile and to pay for $19,000 in interior design goods and services.
U.S. persons are required to report to the IRS on Schedule B of a U.S. Individual Income Tax Return any financial interest in, or signature authority over, a financial account in a foreign country by checking “Yes” or “No” in the appropriate box and identifying the country where the account was maintained. U.S. persons also must report all income earned from foreign financial accounts and, if the accounts have an aggregate value of more than $10,000 at any time during the calendar year, file with the Department of the Treasury a Report of Foreign Bank and Financial Accounts (FBAR).
Hyatt failed to report income earned on his Panamanian account, and failed to file an FBAR for the years at issue. Hyatt admitted that this scheme resulted in a tax loss of $521,986.
“The Department continues to vigorously pursue and prosecute those who conceal their assets and income in offshore accounts in an effort to evade paying their fair share of taxes,” said Principal Deputy Assistant Attorney General Ciraolo. “Nearly eight years after the IRS announced its first offshore voluntary disclosure program, individuals who fail to disclose their interests in foreign accounts and report income earned on these accounts should be well aware that there are significant consequences for this criminal conduct.”
“The Panamanian banking system should not be a haven to hide profits made from United States businesses,” said U.S. Attorney Fishman. “When American taxpayers use foreign bank accounts to hide their assets, we will investigate and prosecute them to the fullest extent of the law.”
“Concealing income and assets offshore is not tax planning,” said Special Agent in Charge Jonathan D. Larsen of IRS-Criminal Investigation, Newark Field Office. “Plain and simple, this is international tax fraud. The facts in this case are clear. Mr. Hyatt earned income through the sale of duty-free alcohol and tobacco products and intentionally had over $1.6 million of profits wired into an undeclared offshore bank account in Panama. Today’s plea shows how determined we are at the IRS and Department of Justice in uncovering this type of international tax fraud and putting a stop to it.”
Judge Wolfson set sentencing for Jan. 6, 2017. Hyatt faces a statutory maximum sentence of five years in prison, as well as a term of supervised release and monetary penalties. Hyatt has agreed to file true and accurate tax returns and to pay the IRS all taxes and penalties owed, in addition to paying an $854,465.50 penalty for failure to disclose his foreign accounts.
Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Fishman commended special agents of IRS-Criminal Investigation, who conducted the investigation, and Assistant U.S. Attorney Joseph Mack and Tax Division Trial Attorney Michael C. Vasiliadis, who are prosecuting the case.