Tax Fraudsters Sentenced In $200 Million Scheme
PHILADELPHIA – Andrew Ahn, 41, of Columbia, Missouri, was sentenced today to 30 months in prison while his co-conspirator, Aviel Faliks, 41, of New York, New York, was sentenced to a year and a day for a multi-million dollar tax fraud scheme. In addition to the prison terms, U.S. District Court Judge Berle M. Schiller ordered Faliks to sell his apartment worth approximately $6.5 million and use half of the proceeds to pay restitution in the amount of $48,457,370 to the IRS. Judge Schiller also ordered Ahn to pay restitution of $113,537,679.
Between at least 2003 and 2011, the defendants, with several co-conspirators, designed and implemented a scheme to evade more than $200 million in corporate taxes by purchasing companies with taxable gains and using fraudulent losses to wipe out the gains. The conspirators then pocketed the corporations’ cash, filed fraudulent returns, and, in some instances, fraudulently sought and obtained refunds from the IRS for prior years. The defendants implemented their fraud scheme through four basic steps: (1) initial purchasers---including MidCoast Financial Inc., a company owned by defendant Chandrakant Shah and operated by defendant Samyak Veera---purchased target corporations with cash assets and large anticipated corporate income tax liabilities; (2) the initial purchasers next transferred these target corporations to “straw buyers” controlled on paper by Andrew Ahn and Aviel Faliks for the benefit of Veera; (3) the defendants then evaded the corporations’ income taxes through the use of fraudulent transactions designed to create the illusion that the corporations had incurred capital and ordinary losses; and (4) finally, the defendants distributed proceeds of the scheme through disguised means.
During the course of the conspiracy, Ahn and Faliks took various actions in furtherance of the conspiracy. For example, both Ahn and Faliks signed false and misleading documentation regarding the transactions, caused fraudulent corporate income tax returns to be filed, and made misrepresentations to the IRS regarding the scheme. In addition, both defendants held themselves out as independent, arms-length participants in the transactions and hid Veera’s role as the architect of the scheme from the IRS and others.
Faliks pleaded guilty on July 27, 2015, to one count of conspiracy and one count of corruptly endeavoring to obstruct and impede the Internal Revenue laws; Ahn pleaded guilty on August 30, 2012, to one count of corruptly endeavoring to obstruct and impede the Internal Revenue laws and one count of structuring transactions. Co-defendant Eric Merl, the in-house counsel for MidCoast Financial, pleaded guilty on October 31, 2013, to one count of conspiracy and one count of making a false statement. Merl was sentenced to 24 months in prison on February 22, 2016 by Judge Schiller.
The case was investigated by IRS Criminal Investigations. It is being prosecuted by Assistant United States Attorneys Patrick J. Murray and James Petkun.