Man Pleads Guilty to Filing False Tax Return
Failed to Disclose Interest Income Earned on Israeli Offshore Accounts at Bank Leumi
Israel Birman pleaded guilty yesterday in U.S. District Court for the Central District of California to filing a false federal tax return on which he failed to report interest income he earned from bank accounts at Bank Leumi Le-Israel B.M., announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division.
According to court documents, between 2006 and 2014, Israel Birman held offshore bank accounts in Israel at Bank Leumi and Israel Discount Bank. The accounts had balances over $10,000 each year, which required the filing of Reports of Foreign Bank and Financial Accounts (FBARs) with the Department of the Treasury. In 2013, Israel Birman’s bank accounts at Israel Discount Bank had a total value of over $3.4 million. Israel Birman did not file FBARs for 2006-2014. Israel Birman instructed Bank Leumi to hold bank mail from delivery to the United States, and obtained access to his offshore funds through the use of “back-to-back” loans from Bank Leumi USA collateralized by his undeclared Bank Leumi offshore funds. In 2009 and 2010, Israel Birman earned taxable interest income on his Bank Leumi bank accounts totaling over $187,000. He failed to report that interest income on his 2009 and 2010 federal tax returns.
“The Department of Justice continues to vigorously investigate and prosecute offshore account holders who maintain undeclared accounts and willfully ignore their U.S. reporting and tax obligations,” said Principal Deputy Assistant Attorney General Zuckerman.
In December 2014, Bank Leumi entered into a deferred prosecution agreementafter the bank admitted to conspiring from at least 2000 until early 2011 to aid and assist U.S. taxpayers to prepare and present false tax returns by hiding income and assets in offshore bank accounts in Israel and other locations around the world. Under the terms of the deferred prosecution agreement, Bank Leumi paid the United States a total of $270 million and continues to cooperate with respect to civil and criminal tax investigations.
U.S. citizens, resident aliens, and permanent legal residents with a foreign financial interest in or signatory authority over a foreign financial account worth more than $10,000 are required to file an FBAR each year disclosing the account.
Sentencing is scheduled for January 28, 2019. Birman faces a maximum sentence of three years in prison, as well as a period of supervised release, restitution and monetary penalties. As part of the plea agreement, Israel Birman has agreed to pay a civil penalty of not less than $1,709,883, representing fifty percent of the balance in his Israel Discount Bank account in 2013.
Principal Deputy Assistant Attorney General Zuckerman commended special agents from IRS-Criminal Investigation, who are investigating the case, and Tax Division Trial Attorneys Leslie Goemaat and Melissa Schraibman Grinberg, who are prosecuting the case. The Tax Division thanks the U.S. Attorney’s Office of the Central District of California for its assistance. Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.