HSBC India Client Indicted by U.S. Over $8.7 Million Account

A Wisconsin neurosurgeon was re-indicted by a U.S. grand jury on new charges that he failed to declare an HSBC Holdings Plc account in India valued in 2009 at $8.7 million.

Arvind Ahuja was indicted again by a federal grand jury in Milwaukee, where he was initially charged June 28 with concealing accounts from the Internal Revenue Service. The nine-count indictment added a charge that Ahuja conspired with two HSBC India bankers to defraud the IRS from 2006 to 2009.

The charges against Ahuja come amid a widening U.S. crackdown on offshore tax evasion that includes grand jury investigations of eight foreign banks. Prosecutors have filed criminal tax charges against more than three dozen former U.S. clients of UBS AG and Credit Suisse Group AG, Switzerland’s two biggest banks, and London-based HSBC, Europe’s biggest bank.

Ahuja took steps to hide his offshore accounts, according to the indictment made public today. In 2007, an HSBC India banker told a colleague that Ahuja “has requested that he does not want any kind of mail at his US or India address,” according to the indictment. “He wants a HOLD on all his accounts.”

Prosecutors said Ahuja failed to report more than $1.2 million in interest income, pay taxes due or file Reports of Foreign Bank and Financial Accounts, or FBARs.

‘Far Off-Base’

Dan K. Webb, Ahuja’s attorney, said in an e-mailed statement that the government’s allegations are “far off-base, and we will continue to present a vigorous, fact-based defense.”

The bank’s failure to issue Ahuja documents stating his interest income “directly caused” the prosecution, Webb said.

“Dr. Ahuja has paid all U.S. income taxes on all monies deposited into these foreign bank accounts as well as his personal income in the U.S.,” he said. “The only issue is taxes owed on the interest earned in these foreign bank accounts.”

After Ahuja became aware that the bank didn’t report interest income to him, he paid all taxes, interest and penalties, according to Webb. The charges “have absolutely nothing to do with Dr. Ahuja’s practice of medicine, and Dr. Ahuja’s primary focus remains on providing his patients with world-class neurological case.”

John Doe

New Jersey businessman Vaibhav Dahake pleaded guilty in April to conspiring with five HBSC bankers to hide his Indian accounts from the IRS. His plea came four days after a U.S. judge in California gave permission to the IRS to serve a so-called John Doe summons on HSBC for information about Americans who may have banked in India to hide accounts from U.S. tax authorities.

In both the Dahake and Ahuja cases, prosecutors said HSBC ran a U.S. division called NRI Services that marketed offshore banking services to U.S. citizens of Indian descent. Through NRI, HSBC India “encouraged U.S. citizens to open undeclared bank accounts in India,” according to the Ahuja indictment.

Ahuja also had an HSBC account on Jersey, a Channel Islands tax haven, according to the indictment. In September 2009, Ahuja told his banker to close the Jersey account and courier the money to his Wisconsin house, according to the indictment. Two months later, he had those funds deposited in his HSBC India account, according to the indictment.

If convicted, Ahuja, who lives in Greendale, Wisconsin, faces as long as 10 years in prison on the FBAR charges, five years on conspiracy and three years on charges of filing false tax returns.

The case is U.S. v. Ahuja, 11-cr-00135, U.S. District Court, Eastern District of Wisconsin (Milwaukee).

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