Fraud News

Data Mining to Find Tax Cheaters

Author: David Voreacos / Source:

Driven by fear of prison and scandal, tens of thousands of Americans who hid money offshore have taken an amnesty deal offered by the U.S. Internal Revenue Service since 2009. They had to bring the money home, pay the taxes plus penalties, and tell authorities how bankers helped them cheat. In return, they weren’t prosecuted. Some resisted, however. They moved their money from Switzerland to other tax havens such as Singapore and Hong Kong, daring the U.S. government to find them.

Now this high-stakes game of catch-me-if-you-can is heating up, thanks to an avalanche of data handed over by the 80 Swiss banks that made deals with the U.S. to avoid prosecution. As with the Americans, they’ve had to show how the cheating worked, although in deference to Swiss privacy laws they weren’t required to name clients or provide account numbers. Prosecutors have been poring over the information and focusing on “leavers”—the clients who pulled their hidden money and stashed it elsewhere. They’re also looking at companies and middlemen who helped them, say prosecutors and tax lawyers.

Mark Matthews, a lawyer at Caplin & Drysdale, says more of his clients are getting grand jury subpoenas for account records, adding that he thinks it’s because of the trove handed over by the banks. “It’s obvious that the Department of Justice is mining the data,” he says. Prosecutors won’t say if they’ve been able to charge anyone as a result of the data. “There are those who are still attempting to remain in the shadows, and it’s our job to try to find them,” says Justice Department tax prosecutor Nanette Davis.

“A whole bunch of people left when they went after UBS”

Although the accounts remain anonymous unless the client gave permission, the banks have reported how much money flowed in and out of each one from 2008 to 2014, as well as their opening and closing dates and maximum values. Those clues may add up to something when combined with other information. A team of prosecutors and IRS…

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