Many are called; few are chosen. And I strongly advise you not to choose this route; however, every year my advice is ignored. Yes, it’s time for the annual award I give, the Tax Offender of the Year. As usual, there are many deserving candidates but there can only be one winner.
A reader nominated Minnesota Governor Tim Walz and Minnesota Attorney General Keith Ellison for turning a blind eye towards the rampant fraud in the state. If you haven’t seen the video done by citizen journalist Nick Shirley, watch it. You will be disgusted. Yes, it’s likely a few of the organizations are real (and just happened to be closed on the day that Mr. Shirley visited), but the denial by Minnesota officials looks to be, shall we say, learing. Unfortunately, this is not a case of tax fraud (yet), just ordinary fraud.
Another nomination went to the 324 defendants charged in the “2025 National Health Care Fraud Takedown.” The alleged fraud is over $14 billion, definitely enough to get my attention. But once again we’re looking at mostly health care fraud, not tax fraud.
Not eligible was a very large French tax evasion case against UBS. UBS Group AG agreed to pay an €835 million (nearly $1 billion) settlement in long-running tax evasion case in France. French officials alleged that UBS helped French clients hide funds in Switzerland. Tax evasion is worldwide; however, I look at only US tax evasion and related crimes for this award.
In third place we find John Walker. Mr. Walker was the owner of Hansen Helicopters, and his company built helicopters that weren’t airworthy. He took discarded frames, counterfeit parts, and, voila!, a sort-of-working helicopter. These helicopters were used by the tuna industry but caused injuries and death. Mr. Walker also used “at least 48 shell companies…to operate his business.” Both Mr. Walker and his business were found guilty in 2022 on 110 counts involving conspiracy, aircraft parts fraud, wire fraud, and money laundering. Mr. Walker forfeited over $58 million (representing the proceeds of aircraft and wire fraud) plus paid $11.8 million (the amount involved in money laundering). Mr. Walker was sentenced this past September to 33 years and 9 months at ClubFed.
Second place went to Rafael Alvarez of the Bronx, New York. Mr. Alvarez was known as “The Magician;” he made your taxes vanish. His business, ATAX New York, prepared around 90,000 tax returns from 2010 through 2020 (definitely a high-volume practice). Of course, his methods were less than magical: phony itemized deductions, capital losses, business expenses, and tax credits; a true potpourri of non-magical fraud. Mr. Alvarez was ordered to pay $145 million in restitution, forfeit $11.84 million in fraudulent proceeds, and will spend four years at ClubFed.
Credit Suisse (formally, Credit Suisse Services AG) is a unit of UBS; it’s one of the largest Swiss Banks. It was founded in 1856, and was acquired by UBS in May 2024. For this story, we must go back in time to the first decade of this century.
The IRS, Treasury Department, and Justice Department filed a criminal indictment in 2014 alleging that Credit Suisse AG conspired and assisted US taxpayers through 2009 by creating sham entities, preparing false forms regarding foreign accounts, destroying records, and basically covering up foreign (to the US) financial accounts in violation of the federal conspiracy law. Credit Suisse settled by pleading guilty to conspiracy, paying $2 billion, respond to US requests for information, close recalcitrant account holders, and implement procedures with its employees so that this would never happen again. Surely $2 billion made sure this never happened again, right?
Well, Singapore is a long way from Switzerland (about 6,400 miles). Apparently, the 2014 plea agreement didn’t make it into the hands of the Singapore subsidiary. Even worse for Credit Suisse, the US figured out that basically the same things noted in the first criminal indictment were happening in Singapore:
- Falsifying bank records;
- Falsifying US account owners as not US persons;
- Fictitious paperwork removing the US owners from filings;
- Using a Swiss lawyer as a nominee for 104 accounts;
- Servicing more than $1 billion of US accounts without full documentation of tax compliance;
- Held $2 billion in US assets without adequately identifying the US owners; and
- Transferring paper ownership of an account to an alleged sham Swiss trust company.
The alleged activity occurred from 2010 into 2023. It would be one thing if the activity stopped in 2014 (as it should have); it’s quite another to go nine more years doing things you said you wouldn’t do in a plea agreement you voluntarily signed in 2014.
And it’s not just the $2 billion I noted above; Credit Suisse Services AG pleaded guilty to hiding more than $4 billion in at least 475 accounts. As part of the plea agreement, Credit Suissse agreed to pay $510,608,09 in penalties, restitution, forfeiture, and fines and will also fully cooperate in US investigations of the accounts.
There is nothing wrong with having a non-US financial account. But if you do, you must disclose the account in up to three ways: on Schedule B of your tax return, on an annual FBAR filing (Form 114 with FinCEN), and on Form 8938 of your tax return. There are various thresholds for reporting, and there are extreme penalties for willful non-reporting. As I tell clients, “Just file the FBAR.”
As for Credit Suisse, presumably I won’t have to write (in the future), “The third time is the charm.” I have a feeling the US Department of Justice really expects Credit Suisse (and UBS) to have learned their lesson here; only time will tell if that’s the case.
That’s a wrap on 2025. I wish you and yours a Happy, Healthy, and Prosperous New Year!
