`Web of Lies' Hid Assets of Florida Father-Son Hotel Developers, U.S. Says
A father and son who built hotels used a “web of lies” to hide income and assets including Miami Beach mansions, luxury cars, a yacht and a helicopter from U.S. tax authorities, a Florida federal prosecutor told jurors.
Mauricio Cohen Assor, 77, and his son, Leon Cohen Levy, 46, concealed their wealth behind nominee owners of companies in tax havens while reporting annual income of no more than about $46,000 a year, Assistant U.S. Attorney Jeffrey Neiman said today in federal court in Fort Lauderdale, Florida.
“This is a case of greed, deception and manipulation,” Neiman said at the start of the trial. The men cheated the U.S. Internal Revenue Service “through a web of lies, forged documents and false statements,” he said.
An attorney for Cohen Assor and his son countered that the evidence will show that the men never thought they broke the law. He denied charges that they hid ownership of one Miami Beach home valued at $26 million and another worth $20 million, and that they failed to declare $45 million in investments, commercial properties worth $55 million and cars including a Rolls-Royce Phantom and a Porsche Carrera GT.
Michael Pasano, a defense attorney, said foreign companies employing the men owned the assets, and they paid taxes on their income. They were “idea-rich but cash- and asset-poor” while helping other people make money, Pasano said in his opening statement. One owner of their companies was Cohen Assor’s brother-in-law in Venezuela, Pasano said.
‘Big Payday’
“Why would Mauricio Cohen and Leon Cohen work for so little while managing so much?” Pasano asked jurors. “You will hear that more money was promised. A big payday was promised.”
“Wealth is not a crime” and “wealth does not mean taxes are owed,” Pasano said. He said prosecutors must show “you have to have income, you have to receive something” to owe taxes.
Cohen Assor and his son were arrested April 15 and have been in jail since. Neiman said they operated hotels in Europe under the “Flatotel” brand, as well as one in New York, which they owned through nominees and sold in 2000.
They put proceeds of $33 million in a Swiss account of London-based HSBC Holdings Plc, Europe’s largest bank by market value, and failed to tell the IRS of the sale, Neiman said. He said both men lived in Florida through the last decade and so owed taxes. He promised that nominees and bankers will testify the men controlled the companies that owned their assets.
Pasano said Cohen Assor was born in Algiers, spent most of his life in France, and retired to Monaco. Cohen Levy was born in Morocco, was schooled in Paris and moved to the U.S. in 1990 to develop the Flatotel in New York, Pasano said.
Denied Ownership
Pasano denied that Cohen Assor and his son owned the New York hotel. Rather, he said, they worked for companies like American Leisure Resorts Inc., which sought to develop properties in the Miami area.
He said criminal charges recycle failed claims made in a civil case by CDR Creances SA, a company set up by the French government to sell unprofitable businesses of Credit Lyonnais SA.
The first witness was Michel Palacci, an ex-senior vice president in the private banking division of the former Republic National Bank. Palacci testified that Cohen Assor held accounts at the bank and was a “sophisticated investor” who was the beneficial owner or had power of attorney over offshore corporations.
‘Enormously Complex’
The next witness, New York attorney George Pavia of Pavia & Harcourt, described his work on behalf of the buyer of the New York Flatotel hotel in 2000. Cohen Assor controlled the negotiations of the seller, which include offshore entities, Pavia told jurors. The talks were “enormously complex,” said Pavia, who said that Cohen Assor owned the hotel.
“He indicated at a certain point that it was not his practice to ever sign any documents,” Pavia said.
On cross-examination, Pasano questioned Pavia about a lawyer in his firm who had previously done work for Cohen Assor. Pavia said both parties waived a potential conflict of interest.
Prosecutors said Cohen Levy filed IRS returns reporting income of $45,000 in 2004 and 2005, and $46,101 in 2007. His father reported income of $10,399 in 2004 and $41,821 in 2007, according to the indictment. All were false, prosecutors claim. If convicted of all counts, Cohen Levy faces as much as 14 years in prison and his father 11 years.
The case is USA v. Assor, 10-cr-60159, U.S. District Court, Southern District of Florida (Fort Lauderdale).
To contact the reporters on this story: David Voreacos in Fort Lauderdale, Florida at dvoreacos@bloomberg.net; Mort Lucoff in Fort Lauderdale at morsybil@bellsouth.net.
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