Wealthy Americans Targeted by U.S. in Panama Tax-Fraud Probe

U.S. authorities obtained a court order allowing them to demand financial information from banks and couriers about wealthy Americans suspected of using a Panamanian law firm to evade taxes.

The Internal Revenue Service can now get information about electronic fund transfers and courier deliveries between the firm, Panama Offshore Legal Services, and its U.S. clients, the Justice Department said in a statement Thursday. The IRS seeks to identify clients who used the law firm to “create or control foreign assets and entities” to evade taxes, the department said.

“We continue our joint efforts with the IRS to investigate tax evaders who use foreign financial accounts and sham foreign entities to hide their assets,” Manhattan U.S. Attorney Audrey Strauss said in the statement.

U.S. District Judge Gregory Woods modified an order Wednesday that authorized the IRS to issue summonses to entities including the Federal Reserve Bank of New York, the Clearing House Payments Co., HSBC Bank USA N.A., Citibank N.A., Wells Fargo N.A., Bank of America N.A., FedEx Corp., United Parcel Service Inc. and DHL Express.

The order requires that they produce information about possible violations of tax laws by people whose identities are unknown, according to the statement. Woods authorized so-called John Doe summonses, which let authorities get names of U.S. taxpayers, records and other information relating to those taxpayers.

The summonses are unrelated to the leak five years ago of more than 11 million documents, known as the Panama Papers, involving offshore entities created by a Panamanian law firm, Mossack Fonseca. The disclosures have led to criminal convictions of at least two Americans.

Panama Offshore Legal Services, or POLS, used HSBC, Bank of America, Wells Fargo and Citibank for U.S. correspondent accounts, according to a May 4 declaration by IRS Revenue Agent Katy Fuentes. The banks cleared dollar-denominated transactions.

‘Free From ... Taxes’

The firm provides “comprehensive entity formation and legal and management services for clients wanting to use Panamanian entities” to hide their ownership of assets, set up bank accounts in Panama, and invest in Panamanian real estate, Fuentes wrote. The firm, which has operated alongside several related entities, was the registered agent for 2,535 Panamanian entities, the agent found.

Fuentes said the firm offered secrecy to its clients, touting that clients could care for “loved ones free from probate, inheritance taxes, and other legal and tax problems.”

The affidavit, filed in the Southern District of New York, cites a 2011 post on the web site escapeartist.com, and written by a person affiliated with POLS. Titled “Asset Protection in Panama,” it discusses investing in “Panamanian credit unions that offer strict banking secrecy.”

POLS’s website includes pages entitled “Why Go Offshore” and “Why US?” It touted the benefits of using Panamanian entities established through the firm for “asset protection” with “100% anonymity, privacy and confidentiality,” in a country that offers “the strongest bank-secrecy laws on earth.”

In 2015, a Westchester County resident named Andre Bernard wired $1.28 million to a Panamanian entity that listed POLS as its agent, Fuentes wrote in another declaration. Bernard pleaded guilty in 2017 to his role in a fraud scheme involving biodiesel fuel credits, court records show.

In other federal courts, the IRS sought summonses to request records from MoneyGram International Inc. and Western Union Financial Services Inc., according to Fuentes.

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