FATCA Violation Underlies Latest US Tax and Securities Fraud Charges
Indictment demonstrates the strength of US law enforcement efforts to combat offshore fraud and is the first to charge a FATCA violation.
On September 9, 2014, in US v. Robert Bandfield, et al., federal prosecutors in the Eastern District of New York announced the indictment of a US citizen and others, including offshore corporate service providers (CSPs) and investment managers, for conspiring with numerous US citizens to violate securities and tax laws, including evading reporting obligations under the recently implemented Foreign Account Tax Compliance Act (FATCA).1 According to US prosecutors, the defendants engaged in a US$500 million offshore securities fraud, tax avoidance and money laundering scheme. The indictment describes a sophisticated multi-agency undercover operation and clearly demonstrates the United States’ commitment to use a wide variety of law enforcement tools to combat offshore tax evasion and financial fraud. Notably, this week’s indictment is the first time a FATCA violation has been charged as an “overt act” in furtherance of a tax conspiracy and securities fraud and strikes a cautionary note for financial institutions and financial service providers that may be used as instrumentalities of crime.
