Attorney indicted for alleged tax fraud with offshore accounts in the Caribbean

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The United States Department of Justice (DOJ) says a tax attorney in Texas has been indicted for allegedly facilitating tax fraud linked to offshore bank accounts in the Caribbean.

The DOJ said a US federal grand jury in San Francisco, California returned an indictment on Thursday charging Carlos E. Kepke of conspiring with the chairman and chief executive officer of a private equity firm to defraud the US Internal Revenue Service (IRS) in offshore accounts based in Nevis, Belize and the British Virgin Islands (BVI).

The grand jury further charged Kepke with three counts of aiding and assisting in preparing the CEO’s false tax returns for the 2012 to 2014 tax years, the DOJ said.

According to the indictment, from 1999 to 2014, Kepke helped Robert F. Smith create and maintain offshore entities that were used to conceal from the IRS about US$225,000,000 of capital gains income that Smith had earned.

The indictment states that, in approximately March 2000, Kepke allegedly created a Nevisian limited liability company (Flash Holdings) and a Belizean trust (Excelsior Trust) to serve as the “tax evasion vehicles.”

“When Smith earned capital gains income from his private equity funds, a portion was allegedly deposited into Flash’s bank accounts in the British Virgin Islands and Switzerland,” according to the indictment.

As alleged, “Smith was able to hide this income because Excelsior, and not Smith, was the nominal owner of Flash.”

“Smith then allegedly failed to timely and fully reported his income to the IRS,” the indictment states, adding that Kepke allegedly assisted in the preparation of Smith’s false 2012 to 2014 returns.

For his services, the indictment says Smith allegedly paid Kepke nearly US$1,000,000 since 2007.

“These fees, as charged, included an annual payment for Kepke to purge or ‘securitize’ his records related to Smith, Excelsior and Flash,” the DOJ said.

It said Kepke is scheduled for his initial court appearance on April 22 before US Magistrate Judge Corley of the US District Court for the Northern District of California.

If convicted, the DOJ said Kepke faces up to five years in prison on the conspiracy count and three years in prison for each count of assisting in preparing a false return.

A federal district court judge will determine any sentence after considering the US Sentencing Guidelines and other statutory factors, the DOJ said.

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