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Will Offshore Tax-Evasion Case Ensnare Wealthy Americans?

By       Message Roger Shuler     Permalink
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Cross Posted at Legal Schnauzer

Republicans have tried to make deficit reduction a major political issue, but they rarely discuss one reason the United States struggles to balance its books: Wealthy Americans get away with hiding huge amounts of taxable income in offshore accounts.

That might be about to change. A client of the British banking giant HSBC has pleaded guilty to conspiring to conceal accounts in India. Vaibhav Dahake, a native of India who now lives in Somerset, New Jersey, admitted to his role in a scheme that could wind up making some deep-pocketed Americans extremely uncomfortable.

We would not be surprised if this story winds up having Alabama connections. Bradley Arant, which claims to be our state's largest law firm, has represented HSBC affiliates.

With many Americans focusing on events in Wisconsin and a possible government shutdown, the feds'  investigation of offshore accounts has floated under many radars. But it could become a story with widespread impact. It first surfaced in late January when Dahake was indicted  on charges of conspiring to defraud the United States by hiding bank accounts in India and the British Virgin Islands.

How far might the story go? Reports The New York Times:

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The defendant, Vaibhav Dahake, admitted in United States District Court in New Jersey to conspiring to conceal accounts in India.

Mr. Dahake is an Indian native who became an American citizen in 2006 and now lives in Somerset, N.J.

The plea comes days after federal prosecutors said that an HSBC unit in India potentially helped thousands of Americans to dodge taxes. Prosecutors are expanding the government's inquiry of offshore tax evaders and their banks.

"HSBC does not condone tax evasion and is cooperating with law enforcement in this matter," an HSBC spokeswoman, Juanita Gutierrez, said.

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Could HSBC wind up revealing the names of wealthy Americans who have defrauded their own country? The answer appears to be yes:

Government lawyers cited Mr. Dahake in their request last week for permission to get information from HSBC about American residents who may be using HSBC India accounts to evade federal taxes.

"Dahake is not an isolated incident," the government said in a court filing last week, which detailed solicitations by several HSBC bankers to clients with the promise of secrecy.

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I live in Birmingham, Alabama, and work in higher education. I became interested in justice-related issues after experiencing gross judicial corruption in Alabama state courts. This corruption has a strong political component. The corrupt judges are (more...)

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