East Elmhurst Man Pleads Guilty To Hiding $3.2 Million From The Internal Revenue Service In Foreign Bank Accounts
Defendant Sent Money To Bank Accounts In India, China, Canada, And Filed False Tax Returns In Order To Avoid Paying Taxes
Earlier today at the federal courthouse in Central Islip, New York, Mohanbhai Ramchandani, of East Elmhurst, New York, pled guilty to violating the United States Treasury Department’s Foreign Bank and Financial Accounts Report law (FBAR) and filing false tax returns to conceal $3.2 million that he earned from his Manhattan-based tailoring business – Mohan’s Custom Tailors. According to court filings and facts presented during the plea proceeding, Ramchandani admitted the illegal activity and cooperated with Internal Revenue Service (IRS) agents after being confronted with the evidence against him.
The guilty plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Toni Weirauch, Special Agent-in-Charge, Internal Revenue Service, Criminal Investigation, New York.
Ramchandani built a successful business that made millions. Rather than live up to his financial responsibilities, he sought to conceal in foreign banks $3.2 million of income clearly earned in the United States. Ramchandani tried to evade not just lawful tax reporting obligations but also the laws that protect our economy,” stated United States Attorney Lynch. “Ramchandani not only grossly underreported his true income, he completely underestimated the tenacity of the IRS to ‘follow the money’.”
IRS Special Agent-in-Charge Weirauch stated, “Offshore tax enforcement is a major priority for the Internal Revenue Service. Individuals who chose to hide income outside of the United States expose themselves to a variety of criminal charges, including criminal tax and FBAR violations, and severe penalties. As we continue to gain access to more and more information about individuals involved in offshore tax evasion, potential violators can expect us to use all of our enforcement tools to stop this abuse.”
The government’s investigation revealed that Ramchandani operated a lucrative custom tailoring business specializing in the manufacturing of suits and shirts. Customers paid for their purchases with cash, checks and credit cards, including American Express. Ramchandani sent checks that American Express issued to him for payment of his customers’ purchases to the Bank of India in Hong Kong where he held an account. He then transferred those proceeds to an account held at the same bank in his son’s name, as well as to other banks in India and Canada. Between 2007 and 2009, Ramchandani hid $3.2 million in the foreign bank accounts and, in violation of FBAR laws, failed to report that he had money in those accounts. Ramchandani also filed tax returns that failed to include the money that he sent overseas. The tax loss to the IRS for 2007, 2008 and 2009 was $736,002.00.
Today’s guilty plea took place before United States District Judge Joseph F. Bianco. When sentenced, Ramchandani faces up to five years in prison, a penalty of $1.6 million for the FBAR violation and restitution to the IRS of $736,002.00 for unpaid taxes.
The government’s case is being prosecuted by Assistant United States Attorney Demetri M. Jones.