Californian Pleads Guilty to Hiding Funds in Israel
An Encino, California, man pleaded guilty to conspiring to hide as much as $3.4 million in Israeli bank accounts to avoid paying taxes on interest income, the U.S. Justice Department said.
Aaron Cohen had undeclared accounts at two banks based in Tel Aviv, prosecutors said today in an e-mailed statement that didn’t name the banks. The accounts were held in the names of other people to keep them secret from the U.S., they said.
Cohen transferred $2 million from one account, maintained at a Cayman Islands branch of one bank, to an offshore account at a second bank in Israel in 2009, according to the statement.
Cohen began using the funds in the Cayman Islands account as collateral for loans from the Los Angeles branch of the first Israeli bank, thus concealing that he was borrowing his own money, paying tax-deductible interest on the loans and not reporting interest income from the Cayman Islands, prosecutors said. He was first charged with conspiracy to defraud the U.S. in July, according to a filing in federal court in Los Angeles.
James Spertus, an attorney for Cohen, didn’t immediately respond to an e-mail message seeking comment on the plea. Cohen faces as long as five years in prison and a $250,000 fine. He has agreed to pay a civil penalty to the U.S. Internal Revenue Service of half of the high balance of his undeclared accounts, the Justice Department said.
A series of defendants have been charged by federal prosecutors in Los Angeles with failing to report income from hidden bank accounts in Israel, including Guity Kashfi, a businesswoman who, according to her attorney, used accounts at Bank Leumi Le-Israel Ltd. and Mizrahi Tefahot Bank Ltd. (MZTF) to hide assets. Kashfi pleaded guilty in May, according to court filings.
The case is U.S. v Cohen, 13-00498, U.S. District Court, Central District of California (Los Angeles).
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