Preet Bharara, the United States Attorney for the Southern District of New York, and Shantelle P. Kitchen, the Acting Special Agent-in-Charge of the New York Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced that VIKTOR KORDASH pled guilty today to willfully failing to file Reports of Foreign Bank and Financial Accounts (“FBARs”) with the IRS regarding a secret Swiss bank account that he maintained and controlled at Wegelin & Co. (“Wegelin”), a Swiss bank formerly headquartered in St. Gallen, Switzerland, which separately pled guilty in January 2013 to assisting U.S. taxpayers in maintaining undeclared accounts. During the time that KORDASH maintained his undeclared account at Wegelin, KORDASH received tens of thousands of dollars in cash distributions from his undeclared account. KORDASH entered his guilty plea before U.S. District Judge Ronnie Abrams.
Manhattan U.S. Attorney Preet Bharara said: “For over a decade Viktor Kordash lived in this country, shirking his legal obligation to pay his fair share of taxes from over a million dollars he kept in a Swiss bank account. With his guilty plea today, Kordash has been held to account for his crime, as was Wegelin, the Swiss bank where he kept his money, which in January 2013, became the first Swiss financial institution to plead guilty to its role in assisting U.S. taxpayers cheat on their taxes.”
IRS Acting Special Agent-in-Charge Shantelle P. Kitchen said: “Individuals who chose to hide income outside of the United States are again warned that they expose themselves to a variety of criminal charges and severe penalties when they fail to notify the government about their foreign bank accounts or report the income from them. Offshore tax enforcement remains a top priority for the Internal Revenue Service and we continue to gain access to more and more information about individuals involved in offshore tax evasion.”
According to the Information filed today in Manhattan federal court:
In the early 1980s, KORDASH opened an account at Wegelin. At that time, KORDASH was living in Russia and was a Russian citizen. In 1984, however, KORDASH emigrated to the United States, and in 1986, KORDASH applied for and was granted citizenship in the United States. After emigrating to the United States, and after becoming a United States citizen, KORDASH continued to maintain his account at Wegelin, and failed to declare it to the IRS, up until approximately November 2010. KORDASH used the undeclared account as an operating and investment account for his antique reproductions business, which he operated out of New York, New York.
During the time period that KORDASH maintained his undeclared account at Wegelin, capital gains and losses were generated in the account from KORDASH’s investments in foreign securities. Between 2007 and 2010, the high value of KORDASH’s undeclared account was over $1.5 million. Further, between at least April 2008 and June 2010, KORDASH received a series of cash distributions from the undeclared account from Wegelin’s correspondent account in Stamford, Connecticut, which totaled over $168,000. In November 2010, KORDASH closed the undeclared account and transferred the balance to his wife. The balance of the undeclared account at the time of its closure and transfer was nearly $1 million.
For each of the calendar years from at least 1986 through 2010, Kordash was required to, but failed to, file an FBAR with the IRS disclosing his signatory or other authority over his undeclared account at Wegelin. He was required to identify the financial institution with which his account was held, the type of account, the account number, and the maximum value of the account during the calendar year for which the FBAR was being filed. He willfully failed to do so.
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KORDASH, 64, of Cliffside Park, New Jersey, faces a maximum sentence of five years in prison. As part of his plea, KORDASH has agreed to pay back taxes of over $268,000, and to pay a civil penalty of over $750,000. He is scheduled to be sentenced by U.S. District Judge Ronnie Abrams on September 12, 2014, at 12:30 p.m. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Bharara praised the outstanding efforts of IRS-CI in the investigation. Mr. Bharara also thanked U.S. Department of Justice’s Tax Division for their assistance in the investigation.
This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Sarah E. Paul and Jason H. Cowley are in charge of the prosecution.