MAN FROM N.H. PLEADS GUILTY TO FILING FALSE FEDERAL INCOME TAX RETURN

FROM:  U.S. JUSTICE DEPARTMENT 

Monday, October 20, 2014

New Hampshire Man Pleads Guilty to Filing False Tax Return

A Hampton, New Hampshire, man pleaded guilty in the U.S. District Court for the District of New Hampshire to filing a false federal income tax return for tax year 2009, the Justice Department and Internal Revenue Service (IRS) announced.

According to court documents, Menashe Cohen, an oriental carpet dealer, and his sister maintained an undeclared bank account at UBS in Switzerland that had a balance of approximately $1.3 million.  Cohen also maintained bank accounts in Israel and in Jersey, a British Crown dependency located in the Channel Islands off the coast of Normandy, France.  Although Cohen’s return for tax year 2009 reported that he had a financial interest in a bank account in Jersey, the return failed to report that he had financial interests in the accounts located in Switzerland and Israel.  In addition, Cohen’s return only reported $350 in interest income, when in fact he had received approximately $66,500 in interest income during 2009.

In total, for tax years 2006 through 2009, Cohen failed to report approximately $170,000 in income earned from offshore bank accounts.  In addition, Cohen filed a false and fraudulent Report of Foreign Bank and Financial Accounts (FBAR) for 2009, wherein Cohen reported he had bank accounts in Israel and Jersey on the FBAR, but failed to report his financial interest in the UBS account in Switzerland.

According to the law, U.S. citizens and residents who have an interest in, or signature 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 account on Schedule B, Part III, of their individual income tax returns (Forms 1040).  Additionally, U.S. citizens and residents must file a FBAR with the U.S. Treasury disclosing any financial account in a foreign country with assets in excess of $10,000 in which they have a financial interest or signature or other authority.

Cohen faces a statutory potential maximum sentence of three years in prison and a maximum fine of $250,000 at his Jan. 26, 2015, sentencing.  In addition, Cohen has agreed to resolve his civil liability for failing to report his financial interest in the UBS account on a FBAR by paying a 50 percent civil penalty to the IRS based on the high balance of his one-half interest in the account.

This case was investigated by special agents of IRS-Criminal Investigation and is being prosecuted by Senior Litigation Counsel John E. Sullivan of the department’s Tax Division and Assistant U.S. Attorney Robert M. Kinsella for the District of New Hampshire.