James F. McDonough
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732-568-8360 jmcdonough@sh-law.comFirm Insights
Israeli Banks May Be Target of U.S. Tax Evasion Case
Author: James F. McDonough
Date: March 11, 2013
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The U.S. has entered into agreements with several countries to help curb the incidence of tax law violations on the part of Americans. While many foreign banks have admitted to facilitating Americans in hiding income, the U.S. government may soon set its sights on two Israeli banks for complicity in tax evasion.
Zvi Sperling, an American, is facing charges from federal prosecutors for hiding taxable income in offshore accounts in Israel. During Sperling’s guilty plea, he noted that he had conspired with workers at Mizrahi Tefahot Bank – or Bank A, in the court documents – and Bank Leumi Le-Israel – or Bank B – to hide income from the IRS, according to Bloomberg. A representative at Leumi declined to comment on the specifics of the case, but no Israeli banks have yet been charged.
“The bank has a long-standing policy of not discussing customer relationships,” Orit Reuveni, a spokeswoman for Bank Leumi, told Bloomberg in an email. “We have previously stated that we are among the international banks within the scope of a U.S. inquiry into tax matters involving U.S. customers.”
Sperling, who co-owns a business with his brother, failed to disclose his offshore assets between 2003 and 2010, Bloomberg reports. According to court documents, he set up back-to-back loans between the banks and created an offshore account with the sole intent of hiding income and making it difficult for U.S. authorities to detect the income, Sperling said in his plea agreement. The news source notes that Sperling held roughly $4 million in his offshore account, the amount and interest earnings of which he never reported.
No charges have yet been brought against the two banks, but federal authorities have no ruled out a case.
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