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Israeli Bank Client Sentenced for Hiding Income From Undisclosed Account

by Igor Drabkin | Aug 6, 2014 | Criminal Tax, FBAR, Internal Revenue Service, Offshore Income

Israeli flag

Another victory for the government in their fight against hidden offshore accounts was announced today in Los Angeles.  Monajem Hakimijoo (aka Manny Hakim), a Beverly Hills, California resident, was sentenced today in the U.S. District Court for the Central District of California to six months in prison and one year of home confinement for filing a false federal income tax return for the taxable year 2007, according to the announcement by the Department of Justice and the Internal Revenue Service.

According to court documents, Hakim, 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 hide true ownership of the account. Hakim 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. Hakim and his brother failed to report the interest income earned in their undeclared account in Israel, and at the same time, claimed the interest paid on the back-to-back loans as a business deduction. In total, Hakim failed to report interest income of approximately $282,000. The highest balance in the Kalamar Enterprises account was approximately $4.03 million. Hakim has agreed to pay a civil penalty to the IRS in the amount of 50% of the highest balance of his one-half interest in the Kalamar account. He is also ordered to pay a $30,000 fine.

As a reminder, 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 accounts on Schedule B of their individual income tax returns and must also file a Report of Foreign Bank and Financial Reports with the U.S. Treasury, disclosing such foreign accounts.

Former IRS Attorneys of Holtz, Slavett & Drabkin can assist you with questions related to foreign bank account reporting obligations, Offshore Voluntary Disclosure Program, or other foreign asset compliance issues. To schedule a consultation, please call (310) 550-6200.

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Internal Revenue Service > Criminal Tax > Israeli Bank Client Sentenced for Hiding Income From Undisclosed Account

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