by Brian Mahany
Just a few days ago I posted an article about an organization touting Ras al-Khaimah international business corporations as a way to protect assets. Although the promotional materials were very carefully wordsmithed, there was a clear hint that purchasers of their product could avoid U.S. income taxes. Just this week another promoter was sentenced to prison for doing the same thing.
Earlier this year, the feds indicted Boyce Richard “Rick” Griffin. Griffin had worked for a company in Panama called The Harris Organization and had his own firm, Offshore Management Alliance, Ltd. Prosecutors say Griffin conspired with his clients to create fictitious offshore (Panamanian) entities, conceal income and disguise transactions, all to the detriment of the IRS. Griffin apparently went one step beyond most promoters of offshore scams – the IRS says he worked with an attorney in the U.S., Robert Payne, to prepare false tax returns.
Although facing many years in prison, Griffin did what so many fraudsters do. He pled guilty and offered to turnover all the records of his clients in exchange for a recommendation of a reduced sentence. The plea agreement says Griffin agrees to full cooperation to “include providing… to the IRS all client files… pertaining to all U.S. citizens or any individuals with ties to the U.S…”
What does this mean? In blunt terms, Griffin decided to throw all his clients under the bus in exchange for a reduced sentence. His former clients are out tens of thousands of dollars they spent for his business and tax services and now face huge IRS audits, penalties and potential criminal charges.
For his part, Griffin’s lawyers told the court he was a “pawn” utilized by the clients and Attorney Payne. He also says that he only helped a few people with his offshore services. Ultimately Judge Ursula Ungaro sentenced Griffin to 33 months in prison. The fate of his former clients remains unknown.
Before you invest in a complex offshore tax shelter scheme, consider getting a second opinion – an opinion from a tax lawyer. While there are many valid reasons to set up foreign accounts or business structures, many of these schemes don’t work. Many do not provide the advertised asset protection benefit and they certainly can’t be used to evade taxes.
If you have one of these structures already, seek advice from a competent tax attorney immediately. Criminal penalties can usually be avoided if the taxpayer makes first contact with the IRS. If an IRS criminal division special agent knocks on your door first, however, all bets are off.
The tax lawyers at Mahany & Ertl have helped many people with a wide variety of tax issues including abusive tax shelters, offshore tax compliance, offshore voluntary disclosure and criminal tax investigations. For a completely confidential consultation, contact attorney Brian Mahany at (414) 704-6731 or by email at brian@mahanyertl.com
Mahany & Ertl, LLC – America’s Tax Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine & San Francisco, California. Services available in most locations.
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