3 Accused of Using Israeli Banks' European Branches in Alleged American Tax Scam

According to the indictment, the three men allegedly helped clients in setting up undeclared accounts.

Reuters
Reuters
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Reuters
Reuters

Three executives of an American tax preparation company have been charged with conspiracy and tax evasion by establishing undeclared bank accounts for clients at Swiss and Luxembourgen branches of Israeli banks.

United Revenue Service's former chief executive officer, David Kalai, his son and former president Nadav Kalai, and David Almog, who was a manager at the company's New York branch, were charged with conspiracy in a grand jury indictment filed Thursday in federal court in Los Angeles. The Israeli banks were not identified.

According to the indictment, the three men allegedly helped clients in setting up undeclared accounts from about April 2000 to March 2011 at the branches of two Israeli banks, identified as Bank A Luxembourg and Bank B Switzerland-Luxembourg.

The three, along with an unindicted coconspirator, created offshore companies in Belize and elsewhere to hide the clients' ownership and conceal the clients' income from the Internal Revenue Service, the indictment said.

The phone number for the Costa Mesa, California, branch of the tax preparation firm, where David Kalai worked, was disconnected.

A spokeswoman for the Consulate General of Israel in Los Angeles had no immediate comment. Sandra Brown, head of the tax division at the U.S. attorney's office in Los Angeles, was not immediately available. In September, it was reported that U.S. authorities were scrutinizing three of Israel's largest banks over suspicions that their Swiss outposts helped American clients evade taxes.

At the time, people briefed on the matter said the banks under scrutiny by the U.S. Justice Department's criminal tax division were Bank Hapoalim, Bank Leumi and Mizrahi-Tefahot.

The shift to Israel from Switzerland - for years the main focus of the Justice Department's campaign against offshore private banking secrecy - signaled the broadening of a landmark probe by the agency that began in 2007 with UBS AG, Switzerland's largest bank.

United Revenue Service was incorporated in the state of Nevada, with multiple locations in the United States.

BankCredit: Reuters

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