A father-and-son team of Miami-based property developers was sentenced to 10 years in jail on Friday for failing to report more than $49 million of income in a case that marked the first trial since the start of an intensified US crackdown on offshore tax evasion.
Mauricio Cohen and his son, Leon Cohen Levy, both clients of HSBC Holdings Plc, Europe's largest bank, were convicted in October of using shell entities and offshore tax havens to hide tens of millions of dollars from the US Internal Revenue Service. A federal judge in Fort Lauderdale, Florida, handed down the sentence.
The sentencing came several months after US authorities ended their probe of Switzerland's UBS AG, which admitted helping thousands of wealthy Americans evade taxes through offshore accounts. Since the settlement of the UBS case, the US government has said it would pursue other banks if it found similar wrongdoing and last year sent letters to some HSBC clients, notifying them that they were targets of a criminal probe.
Previous tax evasion cases, after UBS became the focus of US efforts to crack down on financial firms helping Americans hide income, have ended in plea agreements, officials say. The Cohens, who owned and operated several hotels under the Flatotel brand, were arrested in New York in April and later found guilty of conspiring to defraud the United States and filing false tax returns.
According to court documents, the Cohens' crimes included failing to pay taxes on the sale of a New York hotel over 10 years ago that generated proceeds of $33 million. Most of the money was eventually routed through bank accounts belonging to tax-haven shell companies based in the Bahamas, Panama and other locations, and the income was never reported on US tax returns by the Cohens or any of their related businesses or entities, prosecutors said in documents presented in the case.
The Cohens also stole and used the identities of unwitting employees and relatives to open and operate accounts using their names, prosecutors said. At the time of their arrest, the Cohens told authorities they had combined assets of just over $15,000. "The defendants have maintained the fiction that they are penniless and not obligated to pay United States taxes," a court document presented by the prosecution said. "They maintain this fiction despite living in multimillion dollar homes, driving luxury vehicles, vacationing on yachts, getting through traffic in a helicopter and being chauffeured in a limousine," it said.