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Justice News

Department of Justice
U.S. Attorney’s Office
Western District of Missouri

FOR IMMEDIATE RELEASE
Monday, July 17, 2017

Mission Hills Woman Sentenced for Lying About Cayman Islands Businesses

Must Pay $1.7 Million Restitution for Hiding Income From the IRS

KANSAS CITY, Mo. – Tom Larson, Acting United States Attorney for the Western District of Missouri, announced that a Mission Hills, Kan., woman was sentenced in federal court today for impeding the work of the IRS by lying under oath about her Cayman Islands businesses, which were used in a scheme to hide millions of dollars in secret offshore accounts.

Verna Cheryl Womack, 66, of Mission Hills, was sentenced by U.S. District Judge Gary A. Fenner to one year and six months in federal prison without parole. The court also ordered Womack to pay $1,704,421 in restitution to the IRS, which she paid today.

For nearly 20 years, Womack engaged in a multi-faceted tax fraud involving offshore accounts designed to cheat the IRS. That cheating involved numerous forms of concealment, including sham nominees and trusts as well as false statements made under oath.

On April 5, 2016, Womack pleaded guilty to testifying falsely while under oath with the corrupt intent to impede the due administration of the Internal Revenue Code. According to court documents, Womack failed to report her offshore holdings as required by law in an effort to hide more than $6 million in income from the IRS.

According to court documents, Womack orchestrated the creation of an intricate web of offshore accounts, trusts, nominees and shell companies to conceal millions of dollars in unreported income. She hid her ownership of shell companies and trusts in the Cayman Islands to conceal income earned in the United States, transfer it to the Cayman Islands, and grow it tax-free until she chose to repatriate it to the United States. This resulted in a criminal tax loss of $1,704,421.

Womack began her business dealings in the Cayman Islands in 1995 when she formed the captive reinsurance company MFC Insurance Company in that country, but elected to have it file United States tax returns. She also opened personal checking and savings accounts in her own name at the Bank of Butterfield in the Cayman Islands. Womack failed to disclose the accounts on her tax returns. Womack created several trusts at the Bank of Butterfield. Womack used her Cayman Islands’ shell companies and trusts to evade reporting income to the IRS.

Womack, through her Cayman Islands companies, owns condominiums on Grand Cayman (to which she purported to pay rent as a means of concealing her income) and in Trump Tower in New York, N.Y. (which she purchased for $2.5 million).

Womack used a Cayman Islands company to hide over $500,000 in income from the sale of her wine collection at auction. Since the mid-1990s, Womack maintained two wine cellars in her home in Mission Hills that she used to store her personal collection of investment-grade wine. In 1996 she formed Lucy Limited in the Cayman Islands and began transferring funds to Lucy Limited, fraudulently concealed as consulting fees. Womack then used those funds to purchase wine for her collection. Lucy Limited kept the wine collection as an asset on its balance sheet but Womack never disclosed to the IRS her interest in Lucy Limited. In March 2008 Womack sold approximately half of her wine collection through an auction house in New York for approximately $1.6 million but did not include the revenue from that wine sale on her 2008 tax return.

In 2009, Womack was served with a subpoena to testify at a deposition in a civil enforcement action brought by the U.S. Department of Justice. This civil enforcement action sought to permanently enjoin Allen R. Davison from providing tax advice. Davison had previously served as Womack’s tax advisor, and later, as her business employee.

Womack complied with the subpoena and testified under oath at a deposition on May 19, 2009. Womack admitted that she answered questions falsely and with the corrupt intent to impede the due administration of the Internal Revenue Code.

During the deposition, the Dept. of Justice attorney asked Womack if she knew when a company called JoJoDi Insurance Company of Cayman was started. Instead of answering truthfully, Womack responded to the question by falsely stating that she did not know when JoJoDi was started. In fact, she knew that she had personally caused it to be started in 1997.

During the deposition, the Dept. of Justice attorney also asked Womack who owned Lucy Limited, another Cayman Islands business. Womack was the settlor and 1/3 beneficiary of the trust that owned Lucy Limited. Instead of answering truthfully, however, Womack falsely stated that Lucy Limited was owned by a group of investors. In fact, she knew that there were no such investors. Womack knew that she had caused the creation of both Lucy Limited and the trust that owned Lucy Limited.

This case was prosecuted by Assistant U.S. Attorneys Brian P. Casey and Stacey Perkins Rock. It was investigated by IRS-Criminal Investigation and the FBI.

Topic(s): 
Tax
Updated July 17, 2017