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Mizrahi Bank Client Sentenced for Filing False Tax Return

By August 9, 2014December 14th, 2023No Comments

Department of Justice
Office of Public Affairs
Monday, August 4, 2014
Mizrahi Bank Client Sentenced for Filing False Tax Return
California Resident the Latest in Series of Defendants Prosecuted for Concealing Accounts at Israeli Banks

A Beverly Hills, California man was sentenced today in the U.S. District Court for the Central District of California to serve six months in prison and one year of home confinement for filing a false federal income tax return for tax year 2007, the Justice Department and Internal Revenue Service (IRS) announced.

According to court documents, Monajem Hakimijoo aka Manny Hakimi, a U.S. citizen, and his brother maintained an undeclared bank account at Mizrahi Bank in Israel in the name of Kalamar Enterprises, a Turks and Caicos entity that was used to conceal their ownership of the account. Hakimijoo and his brother used the funds in the Kalamar account as collateral for back-to-back loans obtained from the Los Angeles branch of Mizrahi Bank. Although Hakimijoo and his brother claimed the interest paid on the back-to-back loans as a business deduction for federal tax purposes, they failed to report the interest income earned in their undeclared account in Israel as income on their tax returns. In total, Hakimijoo failed to report interest income of approximately $282,000. The highest balance in the Kalamar Enterprises account was approximately $4.03 million. Hakimijoo has agreed to pay a civil penalty to the IRS in the amount of 50 percent of the highest balance of his one-half interest in the Kalamar account. Hakimijoo is also ordered to pay a $30,000 fine.

According to court documents, in March 2013, Hakimijoo was scheduled to be interviewed by Justice Department attorneys and IRS special agents. Prior to the interview, Hakimijoo, through counsel, provided the attorneys and special agents with copies of his amended tax returns for 2004 and 2005. When asked if the amended tax returns had been filed with the IRS, Hakimijoo indicated that the returns had been filed. Shortly thereafter, the IRS determined there was no record of the amended returns being filed with the IRS. When Hakimijoo was asked to provide copies of cancelled checks to prove that the taxes reflected on the amended returns had been paid, none were provided.

U.S. citizens and residents who have an interest in, or other authority over, a financial account in a foreign country with assets in excess of $10,000 are required to disclose the existence of such account(s) on Schedule B, Part III, of their individual income tax returns. They must also file a Report of Foreign Bank and Financial Reports with the U.S. Treasury disclosing the aforementioned financial account(s).

Deputy Assistant Attorney General Ronald A. Cimino of the department’s Tax Division and U.S. Attorney André Birotte Jr.for the Central District of California thanked special agents of IRS-Criminal Investigation, who investigated the case, Senior Litigation Counsel John E. Sullivan and Assistant Chief Elizabeth C. Hadden for the Tax Division, who prosecuted the case, and Assistant U.S. Attorney Sandra A. Brown for the Central District of California, who assisted with the prosecution.



In the past, the Streamlined Program was narrow in its application to individuals who would ultimately quality and the penalties were quite high. Now, as we approach the second half of 2014, the IRS has revised the StreamlinedProgram to allow a wider acceptance of individuals who apply and a lessening of penalties that may apply.

Do you fit the Streamlined Program definition?

The new Streamlined Program is open to individuals who “certify”, a term yet to be defined by the IRS, that failure to report foreign financial assets and pay all tax due with respect to those assets did not result from willful conduct on their part. Although the IRS heavily implied that the long-running OVDP provided protection from criminal prosecution, in reality, neither the OVDP nor the Streamlined Program provides any protection from criminal prosecution, refer to my earlier articles.

The individuals aim at by the IRS for acceptance to the Streamlined Program are:

U.S. Citizens, Green-Card Holders and US Residents residing in the U.S., which was not allowed earlier; and
U.S. Citizens, Green-Card Holders and US Residents who previously had filed U.S. tax returns can now be eligible.

Tax Situations That Are Now Qualified are:

1. The $1,500 tax threshold has now been eliminated. Under the prior program, a qualified individual who owed more than $1,500 of tax during any of the three prior tax years was not eligible for the program; and

2. The “risk assessment” process and Streamlined questionnaire have been eliminated. However, an eligible individual now must submit a certification where he or she certifies that non-compliance was not willful. NB: This is the major obstacle in the program and should be enter with the full commitment of a qualified Tax Professional!

To participate in the program, “qualified” individual must submit, but certainly not limited to, the following:

1. Delinquent or amended tax returns for the previous three years,

2. Foreign Bank Account Reports for the previous six years,

3. Certification that the “qualified” individual’s non-compliance was not willful, and

4. Full payment of all tax, interest and (for individuals residing inside the United States) the 5% offshore penalty.

If you reside outside of the U.S., then:

1. Qualified Individuals must send all the submission materials in paper form to a special IRS office in Austin, Texas

2. Qualified Individuals who reside outside the U.S. and participate in the Streamlined Program are not required to pay any offshore penalty

3. All tax returns submitted under the Streamlined Program must include a valid TIN (generally, a social security number or, for taxpayers who are not eligible for a social security number, an Individual Taxpayer Identification Number (“ITIN”)).

If you reside inside the U.S., then:

1. Qualified Individuals who reside inside the U.S. and participate in the Streamlined Program are required to pay a 5% offshore penalty.

2. Qualified Individuals must pay the 5% penalty at the time of submitting the application and the other required materials, such as tax returns, amended tax returns and FBAR.

3. “Other required materials” mentioned above in 2., also must be certain to becompletely and accurately filed which included the many newly created formssuch as 3520, 3520A, 5471 and many others. You should seek the assistance to an International U.S. Tax Attorney.

Michael Nelson

Michael has great depth of experiences and skills that evolved from over 35 years of representing international businesses, executives, expatriates and multi-national families. From these years of successful legal representations of CEOs of Fortune 500 Companies to family clients with needs from complex estate planning to international trusts and private foundations. He is committed to his clients, always finding better alternatives or options for his clients. Dedication to the client is synonymous with his name.