Tags: Pflueger | tax | offshore | fraud

US Loses Offshore Bank Account Case

Monday, 25 Mar 2013 08:01 AM

By Denis Kleinfeld

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As part of the U.S. government’s latest effort to tax accounts and investments held in supposed tax havens, the U.S. government had charged a retired automobile dealer, James Pflueger, with hiding nearly $15 million in a Swiss bank account.

From the government's point of view, merely having an offshore account has become tantamount to being engaged in tax evasion. To avoid criminal prosecution, a web of information and tax returns must be filed.

Pflueger was charged with tax conspiracy and filing false tax returns in two separate transactions: one dealing with paying personal expenses from his business and failing to report that as income, and the second based on underreporting the sale of a real estate property.

His defense was based on the fact that he had sent his money overseas after he was sued in a negligence case involving a failed dam and the resultant death of seven people. Basically, he did not have an intention to evade taxes, but rather to protect his money from potential creditors.

This was the first criminal case the government has lost in this latest pogrom to prosecute Americans who they claim have offshore bank accounts.

A charge for failing to file the Foreign Bank Account Report form (reporting a foreign account to the Treasury) was dropped before trial, but after the court had ruled that the issue of "willfulness" should be decided at trial.

The U.S. District Court found that the government did not meet its burdens in proving its case against Pflueger primarily because the government could not prove at trial the willful or intent element.

However, the government nailed four others, including Pflueger 's son and his accountant, who all testified at the trial. Normally, with this kind of testimony a guilty finding would be assumed. Obviously, there was compelling testimony or other evidence that proved otherwise.

Unfortunately for Pflueger, he still faces plenty of legal troubles. He is indebted to the State of Hawaii for at least $15 million for polluting a beach and the bay on the North Shore of Kauai and was convicted of 10 felony pollution counts. In addition, back taxes and fines could exceed, it has been reported, another $5 million.

Then there is another $4 million he owes to the victims of the dam breach from the verdict in the civil trial.

His legal bills outstanding have been reported to be as much as $20 million and he still has to face the seven felony counts of manslaughter for the people who died from the flood caused by the breach in the dam.

While Pflueger does not look like someone who will be having a quiet retirement, at least for whatever time is left for him, he will not be spending it in Club Fed.

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