Failed to Report Foreign
Financial Accounts with Value Exceeding $28 Million A Greenwich, Connecticut, man was sentenced to six months in
prison today for failing to report over $28 million in funds he maintained in
Swiss bank accounts to the Department of Treasury, announced Principal Deputy
Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax
Division, U.S. Attorney Dana J. Boente for the Eastern District of Virginia,
and Chief Don Fort, IRS Criminal Investigation (IRS CI). In pronouncing
the sentence, U.S. District Court Judge Brinkema took into consideration Kim’s
cooperation with the government, which occurred for more than a five-year span.
According to documents and
other information provided in court, Hyong Kwon Kim, a citizen of South Korea
and, since 1998, a legal permanent resident of the United States, resided in
Massachusetts and later in Connecticut. Kim, a sophisticated business
executive who ran family businesses with operations in the United States and
internationally, inherited tens of millions of dollars that he stashed in
secret accounts at Credit Suisse, its subsidiaries, and another Swiss
bank. Kim deliberately violated the U.S. bank secrecy laws by failing to
report his foreign financial accounts to the Treasury Department. U.S.
citizens, resident aliens, and permanent legal residents with a foreign
financial interest in or signatory authority over a foreign financial account
worth more than $10,000 are required to file a Report of Foreign Bank and
Financial Accounts, commonly known as an FBAR, disclosing the account.
Kim conspired with a host of
foreign enablers, including Dr. Edgar H. Paltzer, his Swiss attorney who
pleaded guilty in 2013 in the Southern District of New York, and bankers to
conceal his assets and income in Swiss accounts held in his own name, the name
of a relative, and in the names of sham corporate entities. Kim schemed
with Paltzer and his bankers to structure financial transactions in a manner
that allowed him to utilize the funds in the United States, while concealing
his ownership and control of the offshore funds. For example, Kim had
checks issued to third parties in the United States in order to purchase a
luxury home in Greenwich, Connecticut, a waterfront vacation retreat in
Chatham, Massachusetts, and jewelry adorned with multi-carat diamonds,
emeralds, and rubies. In order to conceal his ownership of the vacation
home, Kim and Paltzer created a sham entity to hold title to the home.
Kim and Paltzer acted as if Kim rented the home from a fictitious owner.
In 2008, as Credit Suisse
closed accounts held in the names of sham entities owned by persons residing in
the United States, Kim refused to bring his assets to the United States.
Instead, he transferred his assets to another Swiss bank. Kim send coded
messages from the United States to his Swiss banker in order to maintain
control of his account.
Kim ultimately brought his
assets to the United States by paying a Swiss jeweler millions of dollars for a
ring with a 13.9 carat sapphire and three loose diamonds totaling 13 carats.
Along with failing to report
his foreign accounts, Kim also filed false income tax returns for 1999 through
2010 with the IRS, failing to report investment income and failing to disclose
the earnings from his holdings in the offshore accounts.
In addition to his term of
incarceration, U.S. District Court Judge Brinkema ordered Kim to pay a fine of
$100,000 and $243,542 in restitution to the IRS. Kim, in accordance with
his plea agreement, also paid a civil penalty of over $14 million dollars to
the U.S. Treasury for his willful failure to file, and willfully filing false,
FBARs.
Principal Deputy Assistant
Attorney General Zuckerman, U.S. Attorney Boente and IRS CI Chief Fort
commended special agents of IRS CI, who investigated the case, and Senior
Litigation Counsel Mark F. Daly and Trial Attorney Robert J. Boudreau of the
Tax Division and Assistant U.S. Attorney Mark Lytle of the Eastern District of
Virginia, who prosecuted this case.
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