Spokane man pleads guilty to filing false tax return, concealing $1M held in offshore account
SPOKANE, Wash. — A Spokane man has pleaded guilty to filing a false tax return that failed to report over $1 million held in an offshore Swiss bank account.
According to court documents, 74-year-old John Thomas Blandi held $5,221,514 in an offshore account in Switzerland. The account generated $1,430,000 in income that Blandi did not report on his 2013 income tax return.
As a result, Blandi underreported his 2013 tax liability by nearly $600,000.
A release from the U.S. Department of Justice said Blandi maintained the unreported income in an offshore Swiss “insurance wrapper” policy.
The DOJ said the policy was an insurance product offered by Swiss and other insurance companies and asset managers primarily to U.S. citizens. The policies allowed for asset protection and global investment benefits that were also used by some citizens to evade U.S. taxes.
Insurance wrapper policies, according to the DOJ, were private placement life insurance or annuity accounts that combined the benefits of insurance with those of private banking by funding a life insurance policy or annuity policy with investment assets of the client. Often, the product would not qualify for treatment as life insurance under U.S. law.
The DOJ said offshore insurance companies would maintain the policy assets in an offshore bank account in the name of the insurance, rather than the U.S. citizen, while the U.S. citizen still maintained a level of control over the assets and how they were invested.
The DOJ said Blandi had an obligation to report the offshore financial account to the IRS on his tax return and did not.
Blandi’s insurance wrapper policy involved a Swiss-based External Asset Manager who implemented the investment strategy and managed the assets in a custodial offshore bank account.
Blandi communicated with the EAM about his offshore investments and expressed concerns about creating reportable events that would result in U.S. authorities being notified about his offshore account.
The DOJ said Blandi also concealed his foreign financial account and foreign income from the tax professional who prepared his 2013 income tax return. His tax return falsely claimed he did not have a financial interest in or signature authority over a foreign financial account.
“As he admitted, John Blandi tried to conceal over $1 million in income in an offshore bank account from the IRS. Today’s plea is a reminder that the United States Attorney’s Office for the Eastern District of Washington continues to work with the IRS to investigate and prosecute individuals who may use offshore accounts to engage in conduct violating U.S. tax laws,” said U.S. Attorney William Hyslop. “I commend the outstanding and dedicated work of the IRS Criminal Investigation special agents who worked on this matter.”
Blandi faces a maximum sentence of three years in federal prison, a one-year term of supervised release, restitution and monetary penalties. His sentencing is set for January 21, 2020.
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