Four Individuals Charged with Conspiring to Defraud the United States by Failing to Comply with Foreign Account Tax Compliance Act
A grand jury in Brooklyn has returned a five-count superseding indictment charging Panayiotis Kyriacou, Arvinsingh Canaye, Adrian Baron, and Linda Bullock with conspiracies to defraud the United States by obstructing the functions of the Internal Revenue Service in its administration of the Foreign Account Tax Compliance Act (“FATCA”). FATCA is a federal law that requires foreign financial institutions to identify their U.S. customers and report information (“FATCA Information”) about financial accounts held by U.S. taxpayers either directly or through a foreign entity. FATCA’s primary aim is to prevent U.S. taxpayers from using foreign accounts to facilitate the commission of federal tax offenses.
Last month, a grand jury in Brooklyn charged Kyriacou, Canaye, Baron, Bullock, and others with conspiracy to commit securities fraud and money laundering conspiracy.
Richard P. Donoghue, United States Attorney for the Eastern District of New York, Richard E. Zuckerman, Principal Deputy Assistant Attorney General of the Justice Department’s Tax Division, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and James D. Robnett, Special Agent-in-Charge, Internal Revenue Service Criminal Investigation, New York (IRS-CI), announced the new charges.
“As alleged in the superseding indictment, Kyriacou, Canaye, Baron, and Bullock agreed to defraud the United States by opening foreign bank and brokerage accounts without collecting FATCA information to report to the IRS,” stated United States Attorney Donoghue. “The charges announced today reflect the commitment of this Office and our law enforcement partners to combat tax evasion by identifying fraudulent offshore safe havens that facilitate hiding financial assets from the IRS and to prosecute those individuals who violate U.S. tax laws.”
Mr. Donoghue thanked the U.S. Securities and Exchange Commission (SEC), both the New York Regional Office and the Washington, D.C. Office, the City of London Police, the U.K.’s Financial Conduct Authority and the Hungarian National Bureau of Investigation for their significant cooperation and assistance during the investigation.
“The Justice Department and the Internal Revenue Service are committed to investigating and prosecuting those who promote and facilitate the use of offshore bank accounts to evade U.S. tax,” said Principal Deputy Assistant Attorney General Zuckerman. “We will continue to pursue those around the globe who seek to violate the Foreign Account Tax Compliance Act and to help U.S. taxpayers conceal such accounts from the Treasury Department and the IRS.”
“Government fraud, in all its many forms, places ethical U.S. taxpayers at a significant disadvantage,” stated FBI Assistant Director-in-Charge Sweeney. “Those charged allegedly thought they could bypass federal laws in order to benefit and enrich themselves. Today, they are being held accountable.”
“Devising schemes to evade the reporting requirements of the Foreign Account Tax Compliance Act is a serious violation of the trust between registered foreign financial institutions and the Internal Revenue Service,” stated IRS-CI Special Agent-in-Charge Robnett. “Criminal Investigation and Large Business & International will continue monitoring compliance with FATCA and will seek prosecution for any registered individuals or entities suspected of willfully aiding U.S. taxpayers with evading reporting requirements.”
The Beaufort Scheme
As alleged in the superseding indictment, between August 2016 and February 2018, Kyriacou, an investment manager at Beaufort Securities, and Canaye, a general manager at Beaufort Management, together with others, conspired to defraud the United States by failing to comply with FATCA. Specifically, in the fall of 2016, an Undercover Agent contacted Kyriacou and stated that he was a U.S. citizen interested in opening brokerage accounts at Beaufort Securities from which he could execute trades in several multi-million dollar stock manipulation deals. In furtherance of the stock manipulation scheme, Kyriacou and Beaufort Securities opened six brokerage accounts for the Undercover Agent. Notwithstanding that a U.S. citizen would be the beneficial owner of each of the accounts, at no time did Kyriacou or Beaufort Securities request FATCA Information from the Undercover Agent.
In July 2017, Kyriacou introduced the Undercover Agent to Canaye and advised that Canaye could assist with the Undercover Agent’s schemes. After meeting with the Undercover Agent and discussing the stock manipulation scheme, in January 2018, Canaye and Beaufort Management opened six global business corporations for the Undercover Agent. The Undercover Agent’s name did not appear on any of the account opening documents.
The Loyal Scheme
In June 2017, the Undercover Agent met with Baron, Loyal Bank’s Chief Business Officer. During the meeting, the Undercover Agent explained that he was a U.S. citizen and was involved in stock manipulation schemes. The Undercover Agent further explained that he was interested in opening multiple corporate bank accounts at Loyal Bank. In July 2017, the Undercover Agent met with Baron and Bullock, Loyal Bank’s Chief Executive Officer. During the meeting, the Undercover Agent described how his stock manipulation deals operated, including the need to circumvent the IRS’s reporting requirements under FATCA. In July and August 2017, Loyal Bank opened multiple bank accounts for the Undercover Agent. At no time did Loyal Bank request or collect FATCA Information from the Undercover Agent.
The charges in the superseding indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
The case is being handled by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Jacquelyn M. Kasulis, Michael T. Keilty and David Gopstein are in charge of the prosecution. The Criminal Division’s Office of International Affairs provided significant assistance in this matter.
PANAYIOTIS KYRIACOU, also known as “Peter Kyriacou”
Residence: London, England
ARVINSIGH CANAYE, also known as “Vinesh Canaye”
Residence: Budapest, Hungary
Residence: St. Vincent/Grenadines
E.D.N.Y. Docket No. 18-CR-102 (S-1) (KAM)