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The Daily Beast

Billionaire tax scammers walk freely, but his lawyer is prosecuted

Photo Illustration by The Daily Beast / Photo via Getty Private equity billionaire Robert Smith is rare with law enforcement after granting a 15-year tax evasion plan to hide $ 225 million from the Internal Revenue Service. Signed a non-indictment agreement. But while Smith attends birthday parties and New York Times meetings, the man he hired to help commit fraud faces federal crime and up to 14 years in prison. A grand jury in San Francisco was charged on Thursday Smith’s longtime lawyer, 82-year-old Carlos Kepke, was charged with colluding with the CEO to scam the IRS. If convicted, the octet may be sentenced to up to five years in prison for conspiracy and up to three years for false declarations. Kepke is said to have submitted three cases. In the complaint, prosecutors said Smith would build a network of offshore trusts and LLCs on the islands of Nevis in Belize and the Caribbean to hide about $ 225 million in income from capital gains since 1999. In the first few months of the 2014. New Millennium, which lawyers claim to have helped, Kepke allegedly founded an LLC on Nevis, called Flash Holdings, and a Belize trust called Excelsior. According to the indictment, neither entity had any purpose other than retaining Smith’s assets. This millionaire wants everyone to move beyond crime. A person who has the authority to appoint and dismiss a trustee). He was later allegedly set up by Trust, not Smith, to officially own Flash Holdings. As a result, when investors deposited funds in Flash’s bank accounts at tax evasion hotspots in Switzerland and the British Virgin Islands, the money was nominally not Smith’s and Smith did not report it. About his tax. “In fact, as Kepke knew, Smith actually earned this income and maintained full control and control over it.” Between 2007 and 2014, Smith gave Kepke 2 It is said that he paid nearly $ 1 million to create and manage one. According to the indictment, at least since 2009, Kepke’s compensation included a fee to “purge” or, as he says, “securitize.” “His file was recorded on Smith or his entity by destroying the record. The invoice arrived on April 15th, Tax Day, shortly after IRS Commissioner Chuck Retig told the Senate panel that tax avoidance in the United States could easily exceed $ 1 trillion a year. .. A source close to Smith said the indictment is the latest in the Department of Justice’s efforts to pursue people who do not pay taxes, as well as “people who enable tax evasion by creating an” infrastructure “for tax evasion.” I told The Daily Beast. “It can include bankers, accountants, notaries, trust advisers, and even lawyers,” sources said. As part of Smith’s non-indictment agreement, he agreed to testify to former business partner Robert Blochman, who was indicted in October. Suspicion of a 20-year plan to hide $ 2 billion in revenue from the Internal Revenue Service, the largest tax evasion cost in US history. The 39-count indictment detailed a cartoon plot that Brockman and his associates communicated under codenames such as “Bonefish.” And “Snapper” used their hidden income to buy a luxury yacht called “Tarmoil” and destroyed the evidence with a hammer. At some point, Brockman allegedly encouraged Wealth Manager to adopt another name to attend the “money laundering conference.” Blockman, who has been acquitted, has avoided trials so far. In a court filing, a lawyer representing Reynolds CEO claimed he was suffering from a rapidly worsening case of dementia. Billionaires will be assessed at a mental capacity hearing in June. Kepke also claims a relationship with Brockman. In Smith’s factual statement filed with the prosecutor in a groundbreaking case, he was identified by Brockman as “Individual A” in the document and became a lawyer who named him only “Individual B.” I showed that I introduced it. .. Neither Kepke nor Smith agreed to comment on this article, but sources close to Smith confirmed Personal B’s identity to The Daily Beast. Robert’s Prosecution Ban Agreement (NPA) includes two individuals interested in the DOJ, Bob Brockman (now known as Individual A) and Carlos Kepke as Brockman’s lawyer (now Individual B). Robert’s cooperation was on behalf of the DOJ. Sources said Kepke could not be prosecuted based on Brockman’s role as a lawyer, and that the indictment focused on Smith by restrictive law. Prosecutors may have wanted Kepke to cooperate like Smith in their proceedings against Brockman. But for former federal prosecutor Paul Peltier, who spent 27 years in the Department of Justice’s tax department, the indictment suggests that Kepke refused to follow Smith’s lead. [in October] And now you know [Kepke’s] He was given enough time to work together, but he didn’t, “Peltier said. “So they had to prosecute him.” There are usually two ways to prosecute someone in the federal system. One is to secure prosecution through a grand jury. With the consent of the defendant. If someone chooses to cooperate, they often plead guilty to the information because they can have a greater impact on what they are being charged with. “If Kepke was working together,” Peltier said. Former IRS investigator Martin Shale, who wrote for The Daily Beast, says prosecutors need to crack down on what he called a “promoter of wealth,” lawyers, accountants, and financial consultants who enable tax avoidance. Claimed to be. “The qualified and wealthy class seems to fully embrace Leona Helmsley’s famous dislike of’only small people pay taxes’,” Shale told The Daily Beast. However, in the juxtaposition of Smith and Kepke’s cases, Peltier saw a clear double standard. “The government seems to have a heavy hand on an 82-year-old child, but apparently did not have the same heavy hand on Smith,” he said. “If you want to prosecute Kepke, prosecute Kepke. But do we know that they didn’t charge Smith? The government needs to treat people on an equal footing equally. Yes. ”Learn more at The Daily Beast. Do you have any hints? Send it to The Daily Beast here. Put your top stories in your inbox every day. Sign up now! DailyBeast Membership: Beast Inside digs deeper into the stories that matter to you. learn more.