“Panama Papers” is the name given to a trove of more than 11 million documents from the Mossack Fonseca firm, which a consortium of journalists made public in April 2016, leading to criminal investigations throughout Europe into possible tax evasion and money laundering.
The 11-count indictment unsealed in New York marks the first time the U.S. government has charged anyone with tax crimes related to the firm — and authorities suggested others could soon be charged.
“More investigations are on the way,” said IRS criminal investigations chief Don Fort.
The head of the Justice Department’s criminal division, Brian Benczkowski, issued a warning to law firms, asset managers and accountants that they can be arrested if they help their clients evade taxes.
“The charges announced today demonstrate our commitment to prosecute professionals who facilitate financial crimes across international borders and the tax cheats who use their services,” he said.
The charges include wire fraud, money laundering conspiracy, conspiracy to defraud the United States and false statements.
The indictment suggests investigators were looking at Mossack Fonseca’s activities years before the Panama Papers were released, noting that one unnamed client grew uneasy about the arrangement and went to authorities in 2013 under a voluntary program to report previously undeclared assets being held in overseas accounts. That client is identified in court papers as a U.S. citizen currently living in Manhattan who made millions of dollars as a liaison between investors and money managers and for years hid that money from the IRS.
The indictment describes an ambitious effort by Mossack Fonseca and people associated with the firm to hide assets from the IRS, while still giving their American clients access to the money the tax agency couldn’t reach.
The Justice Department charged Ramses Owens, a lawyer who worked for Mossack Fonseca, who remains at large. Also charged was Dirk Brauer, who worked as an asset manager for Mossfon Asset Management, a company closely affiliated with Mossack Fonseca. Brauer was arrested in Paris last month. Richard Gaffey, an accountant in Massachusetts, was arrested Tuesday morning, and Harald Von Der Goltz, a former U.S. resident now living in London, was arrested Monday.
The indictment charges that Owens, Brauer and Gaffey spent years setting up complex entities that allowed their clients to hide and invest millions of dollars controlled by American clients who did not report that money to the IRS. The indictment also charges that the men created new schemes and cover stories for their clients’ secret accounts as the Justice Department began in 2008 to more closely scrutinize banks in Switzerland and elsewhere that had long served as hiding places for such money.
At one point in early 2017, according to the indictment, one of their clients decided to cooperate with the Justice Department’s investigation, setting up a meeting between Brauer and an undercover agent posing as a financial adviser.
“Brauer proposed having the undercover’s U.S. clients send money overseas and setting up a fake investment for them. Then, Brauer would create a fake ‘loss’ to the clients from the investment, so that if anyone questioned where the money had gone, it would look like the money had been placed in an investment that had done poorly,” the indictment charges. “Brauer then stated . . . he and the undercover could move the money back to the United States for the undercover’s U.S. clients without the IRS discovering it.”