Skip to comments.Tax Shelters: Why Israel Could Be the Next Switzerland
Posted on 06/20/2012 5:41:25 AM PDT by 1010RD
It looks like Israel is going to be the next Switzerland at least as far as the Department of Justices investigation into offshore tax avoidance is concerned.
On June 14, the Department of Justice unsealed an indictment against three American tax preparers for helping clients avoid taxes by moving money to Israel.
The transgressions detailed in the indictment were relatively small-time. The indictment said the father and son duo of David and Nadav Kalai and their colleague David Almog at a firm called United Revenue Service helped several clients duck taxes by moving money to two Israeli banks, identified only as Bank A and Bank B.
Most of the financial transactions detailed were small in the tens or hundreds of thousands of dollars. The men could not be reached for comment.
But the indictment revealed the existence of a grand jury that is almost surely going after much bigger fish. And the details provided in it appear to suggest that Bank A is Bank Leumi, whose private banking operation is headquartered in Tel Aviv, and Bank B is Bank Hapoalim, which also maintains its global private banking center in Israels second-biggest city.
Calls to Bank Leumi for comment were not returned. Bank Hapoalim provided CNBC with a statement from its chief spokesperson, Ofra Preuss, who said, we read the press reports and are checking into them.
To date, the U.S. government has successfully cracked the code of Swiss bank secrecy, forcing UBS, Switzerlands largest bank, to turn over thousands of names of American account holders to investigators, and taking similar actions against other Swiss institutions.
Sources tell CNBC the new case is just the beginning of a potential series of indictments, which may snare some of the wealthy American clients who have hidden money in Israel, many for generations. Thats likely to be politically controversial, especially at a time when the U.S. and Israel are working closely together to contain a geopolitical threat from Iran.
Add to that the political sensitivity of an Obama administration Department of Justice in an election year targeting a group of clients of whom many are likely to be Jewish or have historical family ties to Israel.
There are a substantial number of Americans with unreported assets in Israel, said Scott Michel, a partner at the law firm Caplin & Drysdale who specializes in criminal tax fraud investigations. I wouldnt be surprised if it is on a par with Switzerland.
Attorney Bryan Skarlatos, a partner at the firm Kostelanetz & Fink LLP, said that he has clients who are being questioned in the wide-ranging investigation into Israeli bankers.
I have special agents asking questions about specific banks, Skarlatos said. They need evidence that somebody spoke to a banker and the banker had a sense that they were dealing with a U.S. person theyre asking did you give them your U.S. passport?
Both Michel and Skarlatos spoke of allegations of cash-transfer banking, in which overseas bankers match up American clients who want to withdraw and deposit the same amount of cash with the foreign bank.
The bankers appear in the U.S., typically at a hotel, and arrange for couriers to bring the cash to the hotel from the depositing customer, and later turn it over to the withdrawing customer, only later crediting each account for the transaction back in the foreign bank offices.
It can be a dangerous way to avoid taxes, Skarlatos said.
Some people dont want to pay taxes, but theyll risk their lives having someone show up on their doorstep with $3 million in cash, he said.
In a highly technical and global economy, its getting more and more difficult for Americans to hide their assets overseas and keep it hidden from the IRS. And that means the days of $3 million cash transfers may be coming to an end.
It's corruption top to bottom, but enforcement only at the top.
I’m a contrarian, and I’ve always felt that Israel would be the safest place to be in the event of war because of the simple idea that they know exactly what they face and have prepared for it.
It makes sense than that they would also become a financial haven.
Haha, looks familiar. You just can't make this stuff up.
35. And the people of Israel did according to the word of Moses; and they borrowed from the Egyptians jewels of silver, and jewels of gold, and garments:
36. And the Lord gave the people favor in the sight of the Egyptians, so that they lent them such things as they required; And they carried away the wealth of the Egyptians:
[Im a contrarian,and Ive always felt that Israel would be the safest place to be in the event of war because of the simple idea that they know exactly what they face and have prepared for it.
It makes sense than that they would also become a financial haven. ]
Yes, you Nailed It! Better to be the one everyone calls a fool for building a boat when there isn’t a cloud in the sky and to have that boat when the downpour starts.
Thanks justiceseeker93. G’night all.
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