US businessman with Caribbean offshore accounts jailed for conspiring to commit tax, bank fraudWednesday, July 19, 2017
WASHINGTON, DC, USA (CMC) — The United States Department of Justice (DOJ) says a Florida businessman with offshore accounts in Belize and the Cayman Islands has been sentenced to 57 months in prison for conspiring to commit tax and bank fraud.
According to documents filed with the US District Court for the Middle District of Florida, Casey Padula, 48, of Port Charlotte, was the sole shareholder of Demandblox, Inc, a marketing and information technology business.
The documents say Padula conspired with others to move funds for his benefit from Demandblox to offshore accounts in Belize and disguised these transfers as business expenses in Demandblox's corporate records.
Padula created two offshore companies in Belize: Intellectual Property Partners Inc (IPPI) and Latin American Labor Outsourcing Inc (LALO).
According to court documents, Padula opened and controlled bank accounts in the names of these entities at Heritage International Bank & Trust Limited (Heritage Bank), a financial institution located in Belize.
From 2012 through 2013, Padula caused periodic payments to be sent from Demandblox to his accounts at Heritage Bank and deposited about US$2,490,688.
Padula, according to court documents, used the funds to pay for personal expenses and purchase significant personal assets.
However, the DOJ said he falsely recorded these payments in Demandblox's corporate books as intellectual property rights or royalty fees, and deducted them as business expenses on Demandblox's 2012 and 2013 corporate tax returns.
As a result of these false deductions, Padula created a tax loss of more than US$728,000, the DOJ said.
It said Padula also conspired with investment advisors Joshua VanDyk and Eric St-Cyr at Clover Asset Management (CAM), a Cayman Islands investment firm, to open and fund an investment account that he would control, but that would not be in his name.
DOJ said Heritage Bank had an account at CAM in its name and its clients could get a subaccount through Heritage Bank that would not be in the client's name, but rather would be a numbered account.
Padula transferred US$1,000,080 from the IPPI bank account at Heritage Bank in Belize to CAM to fund a numbered account that concealed his financial interest in it.
The DOJ said Padula failed to disclose this account to the US Department of Treasury and the Internal Revenue Service (IRS) despite being required to do so under the law.
In addition to the tax fraud, Padula also conspired with others to commit bank fraud, the DOJ said, stating that Padula had a mortgage on his Port Charlotte, Florida home of about US$1.5 million with Bank of America (BoA).
In 2012 the DOJ said, he sent a letter to the bank stating that he could no longer repay his loan. At the same time, Padula provided Robert Robinson III, 43, who acted as a nominee buyer, with more than US$625,000 from his IPPI bank account in Belize to fund a short sale of Padula's home, the DOJ said.
It said Padula and Robinson signed a contract, which falsely represented that the property was sold through an “arms-length transaction”, and agreed that Padula would not be permitted to remain in the property after the sale.
“Padula, in fact, never moved from his home; and less than two months after the closing, Robinson conveyed it back to Padula by transferring ownership to one of Padula's Belizean entities for US$1,” the DOJ said.
It said Robinson was also sentenced on Monday to five years of probation for signing a false Form HUD-1 in connection with his role in the scheme.
“Casey Padula used secret numbered bank accounts, foreign shell companies and phony deductions to hide millions and evade US taxes,” said Acting Deputy Assistant Attorney General Stuart M Goldberg. “His 57-month sentence makes clear that there is no place safe in the world for tax cheats to hide their money and feel secure that the Department of Justice and the IRS will not uncover their scheme and hold them fully accountable.”
“As Mr Padula has learned, using shell companies and offshore accounts is not tax planning; it's tax fraud,” said Chief Don Fort of IRS Criminal Investigation (CI). “The use of sophisticated international financial transactions does not prevent IRS CI from following the trail of money back to the person breaking the law. In conjunction with our law enforcement partners, we will continue our ongoing efforts to pursue individuals who use these offshore schemes to circumvent the law.”
In addition to the term of prison imposed by US District Court Judge Sherri Polster Chappell, Padula was ordered to serve three years of supervised release and to pay a fine of US$100,000, and to pay restitution of US$728,609 to the IRS and to BOA in the amount of US$739,459.90, the DOJ said.
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