Offshore Tax Evasion Leads To Guilty Plea By Schechter

U.S. citizens are taxed on their income wherever derived anywhere in the world. Even if a U.S. citizen lives outside the country, they are still liable to report and pay taxes on their income. But nobody likes to pay taxes, and some folks don’t like paying taxes to the point where they will risk crossing the line between legal tax avoidance and illegal tax evasion. Doing this is not particularly difficult, particularly if somebody lives outside the U.S. for the reason that an entire industry known as the offshore sector exists primarily for the purpose of helping folks avoid taxes, legally or illegally. This industry is mostly located in smallish jurisdictions and micronations (Switzerland is the most notable exception), all of which have laws that emphasize financial secrecy, do not recognize the tax judgments of other jurisdictions, and are at best ambivalent about outright tax evasion committed by the patrons of their banks and trust companies. This brings us to today’s true story.

Stephen L. Schechter was a U.S. citizen who was all of a licensed U.S. investment bank, a U.K. corporate finance advisor, and also the owner of a financial investment advisory firm that was U.S.-based. Apparently, Schechter made good money but decided that he could maximize his income if he cut out Uncle Sam. So, Schechter in 2002 created an entity in the British Virgin Islands, a well-known offshore tax haven, called Charles Penn Longview (CPL). Schechter then had CPL open a bank account in Switzerland with Piguet Galland & Cie SA (Piguet), a Swiss bank. The bank manager dealing with the CPL account worked with Schechter to conceal Schecter’s involvement in the bank account documents ― including by falsely telling Piguet that Schechter and his wife had renounced their U.S. citizenship some 20 years previously (they had not). Schechter also told Piguet that he had been born in Kew Gardens in the United Kingdom, although he had really been born in Queens, New York. Anyway, this account lasted until 2013 and Schechter never reported the account or income received into the account, and never paid taxes on that money.