Florida Husband and Wife Indicted by a Federal Grand Jury Alleging Federal Tax Crimes

May 16, 2013

The U.S. Department of Justice Office of Public Affairs on May 16, 2013 released the following:

Doctors Maintained Offshore Bank Accounts at UBS and Other Foreign Banks That Concealed Income and Assets from the IRS

Drs. David Leon Fredrick and Patricia Lynn Hough, of Englewood, Fla., were indicted by a federal grand jury in Fort Myers, Fla., for conspiring to defraud the Internal Revenue Service (IRS) by concealing millions of dollars in assets and income in offshore bank accounts at UBS and other foreign banks, the Department of Justice and IRS announced today.

According to the indictment, Fredrick and Hough, married doctors, served on the Board of Directors of two Caribbean-based medical schools – one located on Saba, Netherlands Antilles, and one located on Nevis, West Indies. Fredrick had an ownership interest in the medical school on Nevis until 2007, when both medical schools were sold.

The indictment alleges that Fredrick and Hough conspired with each other and with Beda Singenberger, a citizen and resident of Switzerland who is under indictment in the Southern District of New York, and a UBS banker to defraud the IRS. They carried out the conspiracy by creating and using nominee entities and undeclared bank accounts in their names and the names of the nominee entities at UBS and other foreign banks to conceal assets and income from the IRS, including the sale of real estate associated with the medical school on Saba and shares they owned in the medical school on Nevis. The real estate was sold for more than $33 million, all of which was deposited into one of their undeclared accounts in the name of a nominee entity.

It is further alleged in the indictment that Fredrick and Hough used emails, telephone and in-person meetings to instruct Swiss bankers and asset managers to make investments and transfer funds from their undeclared accounts at UBS. It is alleged that Fredrick and Hough caused funds from the medical schools’ undeclared accounts to be transferred to undeclared accounts in their individual names or in the names of nominee entities. Fredrick and Hough then used the funds in their undeclared accounts to purchase an airplane, two homes in North Carolina and a condominium in Sarasota, Fla. Fredrick also transferred more than $1 million to his relatives.

Fredrick and Hough were also charged with four counts of filing false tax returns for 2005, 2006, 2007 and 2008. The indictment alleges that Fredrick and Hough filed false tax returns which substantially understated their total income and failed, on Schedule B, Parts I and III, to report that they had an interest in or signature or other authority over bank, securities or other financial accounts located in foreign countries. U. S. citizens, resident aliens and legal permanent residents of the United States have an obligation to report to the IRS on the Schedule B of a U.S. Individual Income Tax Return, Form 1040, whether they had a financial interest in, or signature authority over, a financial account in a foreign country in a particular year by checking “Yes” or “No” in the appropriate box and identifying the country where the account was maintained. U. S. citizens and residents also have an obligation to report all income earned from foreign bank accounts on their tax returns.

A trial date has not been scheduled. An indictment is merely an accusation, and every defendant is presumed innocent unless and until proven guilty.

The conspiracy charge carries a maximum potential penalty of five years in prison and a $250,000 fine. The false return charges each carry a maximum potential penalty of three years in prison and a $250,000 fine.

This case is being prosecuted by Trial Attorney Caryn Finley of the Justice Department’s Tax Division and was investigated by IRS – Criminal Investigation.”

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Douglas McNabb – McNabb Associates, P.C.’s
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To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Rapper Ja Rule Sentenced in Federal Tax Return Case

July 18, 2011

The Associated Press (AP) on July 18, 2011 released the following:

“By SAMANTHA HENRY
Associated Press

NEWARK, N.J. (AP) — Rapper and actor Ja Rule was sentenced Monday to more than two years in federal prison for failing to file income tax returns, and said a combination of youthful inexperience, bad advice and an inability to manage fame and fortune lead to his financial troubles.

“I in no way attempted to deceive the government or do anything illegal,” he said, minutes before being sentenced in a New Jersey federal court. “I was a young man who made a lot of money – I’m getting a little choked up – I didn’t know how to deal with these finances, and I didn’t have people to guide me, so I made mistakes.”

The multiplatinum-selling artist, whose real name is Jeffrey Atkins, admitted in March that he failed to pay taxes on more than $3 million that he earned between 2004 and 2006 while living in Saddle River. Although he pleaded guilty to three counts of unfiled taxes, he admitted he hadn’t filed for five years, according to U.S. Attorney Paul Fishman.

Ja Rule was sentenced in New York City last month to up to two years in prison after he pleaded guilty to attempted criminal weapon possession. The case stemmed from a gun found in his car in 2007. Police said they stopped Ja Rule’s $250,000-plus Maybach sports car for speeding and found a loaded .40-caliber semiautomatic gun in a rear door. The gun wasn’t registered. He was charged under a New York law that generally bars people from having firearms outside their homes or workplaces.

In the federal case, U.S. Magistrate Patty Shwartz in Newark ruled that the majority of his 28-month federal sentence could be served at the same time as the New York state prison sentence.

Depending on his release date for his New York sentence – he could serve as little as 18 months in that case by meeting good behavior requirements and other standards – he could serve from four to 12 months of the federal sentence. The federal time will be served at the Oneida Correctional Facility in upstate New York, where he is serving the state sentence.

He has also been ordered to pay $1.1 million in unpaid taxes.

Assistant U.S. Attorney Joseph Mack had asked the judge not to let Ja Rule off with no jail time on the federal charges, saying a message had to be sent.

“The court should impose the same sentence it would impose on someone who is not a celebrity,” Mack said.

Now 35, Ja Rule first emerged as a hardcore rapper in the late 1990s but then became known for his collaborations with female pop singers, including Jennifer Lopez and Ashanti. He scored a best rap album Grammy Award nomination in 2002 with “Pain Is Love” and has sold nearly 20 million albums during his career.

He also has appeared in more than a dozen movies, including the 2001 film “The Fast and the Furious” and 2003’s “Scary Movie 3.”

On Monday, he wore a bright yellow prison jumpsuit and was handcuffed at the wrists. He turned to look at his wife, seated in the courtroom behind him, after the sentence was read. His wife, who was his high school sweetheart, declined to comment after the hearing, saying only that it was a stressful time. The couple have three children and still live in Saddle River.

Ja Rule’s attorney, Stacy Richman, said her client was a talented high-school dropout who had not had the business prowess to handle sudden fame. When his business empire began to crumble, he became paralyzed by fear and inaction, she argued. She added that the Queens, N.Y., native never forgot his roots and made it a point to give back to his community after becoming famous.

In asking the judge for leniency, Ja Rule said he wanted to get back to work as soon as possible.

“My business is very `out of sight, out of mind,'” he told the judge. “The longer I’m away, the longer it’ll take me to get back to doing what I need to do to actually pay these taxes.””

To find additional federal criminal news, please read The Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN List Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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