An alleged tax fraud scheme by Victor Lipukhin, the former president of a large Russian steel company resulted in a recent grand jury indictment. According to court papers, he hid between $4 million and $7.5 million dollars in Swiss bank accounts at UBS from 2002 through 2007. If convicted, he faces a potential maximum sentence of three years imprisonment on each count. Presumably, Lipukhin's name was one of the more than 4,000 names that were turned over to the IRS several years ago in response to a John Doe summons served on UBS. In 2013, the IRS used similar tactics to obtain names of customers of Wegelin & Co., Switzerland's oldest bank.
Lipukhin, a Russian national, became a lawful permanent U.S. resident in 2002. He served as the president of Severstal, Inc. (USA), which is a subsidiary of AO Severstal, the largest steel producer in Russia. Allegedly, he used shell companies based in the Bahamas to conduct transactions in his offshore accounts. He was later able to bring funds to the U.S. to purchase real estate, pay for personal expenses, and to withdraw cash for personal use.
In 2002, he and another individual, opened a UBS bank account, in the name of sham Bahamian entities (Old Orchard and Lone Star) transferring over $47 million from previous UBS accounts. In 2003, Lipukhin became the sole owner and signatory on the account. He was able to control all transactions in the accounts with the help of a Bahamian national, who served as the nominee director. He also used the services of a Canadian attorney to create fictitious mortgages, through an entity called Dapaul Management, to conceal his purchases of real estate in the U.S. with the funds from the offshore accounts. In addition, he had the Canadian attorney transfer funds to a domestic entity, Charlestal, LLC, to purchase real estate in the U.S., which included a historic building in Illinois for $900,000. He also used the domestic entity to withdraw cash for personal use and to pay for his personal expenses.
Although Lipukhin reported income and paid tax in 2002, his reported income consisted primarily of W-2 wages and not the money earned from his foreign bank accounts. Lipukhin failed to file a tax return in 2003, and, surprisingly, he showed a loss on his tax returns from 2004 through 2006. He also failed to disclose his offshore bank accounts to the IRS by failing to file Foreign Bank Account Reports (FBARs) or to report the existence of the offshore accounts on Schedule B, Part III of his individual tax returns. The disclosure of the offshore accounts was required because he had over $10,000 in assets and had authority over the accounts. The fact that he was a non-citizen didn't change anything since lawful permanent residents, i.e. green card holders, as well as "tax residents," also have an FBAR filing requirement.
Lipukhin was also charged with obstructing the tax laws by attempting to prevent an automobile dealer from filing a Form 8300 (Report of Cash Payments Over $10,000 Received in a Trade or Business).
If you have any offshore bank accounts or other tax problems, call the tax litigation attorneys at Brager Tax Law Group, A P.C.