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Financial Crimes
12/04/2018

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4 indicted in Panama Papers investigation

4 indicted in Panama Papers investigation

NEW YORK — Four were charged Tuesday for their roles in the Panamanian-based global law firm’s decades-long scheme to defraud the United States.  This following an investigation by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) New York’s El Dorado Task Force working with The Internal Revenue Service’s Criminal Investigation Unit (IRS-CI), the Criminal Division for the Department of Justice and U.S. Attorney’s Office for the Southern District of New York (SDNY).

The indictment charges Ramses Owens, Dirk Brauer, Richard Gaffey, and Harald Joachim Von Der Goltz, with wire fraud, tax fraud, money laundering, and other offenses in connection with their roles in a decades-long criminal scheme perpetrated by Mossack Fonseca & Co. (“Mossack Fonseca”), a Panamanian-based global law firm, and related entities. Three of the four defendants named in the indictment have been arrested. Brauer, who worked as an investment manager for Mossfon Asset Management, S.A., an asset management company closely affiliated with Mossack Fonseca, was arrested in Paris, France, on Nov. 15, 2018. Von Der Goltz, a former U.S. resident and taxpayer, was arrested in London, United Kingdom, on December 3, 2018. Gaffey, a U.S.-based accountant, was arrested in Medfield, Massachusetts, this morning. Owens, a Panamanian attorney who worked for Mossack Fonseca, remains at large.

“Today we announce the indictment of 4 individuals who defrauded the U.S. government through a large scale, intercontinental money laundering and wire fraud scheme, associated to Mossack Fonseca and its affiliates” said Angel M. Melendez, special agent in charge of HSI New York. “HSI’s El Dorado Task Force, together with the IRS, built a case that uncovered a complex trail of offshore shell corporations and bogus foundations used to disguise the beneficial ownership of huge amounts of money. These efforts reflect the commitment of U.S. law enforcement to follow that trail and apprehend these criminal regardless where they are in the world.”

AAG Brian A. Benczkowski stated, “Law firms, asset managers, and accountants play key roles enabling entry into the global financial system. The charges announced today demonstrate our commitment to prosecute professionals who facilitate financial crimes across international borders and the tax cheats who utilize their services.”

IRS-CI Chief Don Fort stated, “The unsealing of this indictment sends a clear message that IRS-CI is actively engaged in international tax enforcement, and more investigations are on the way. IRS-CI specializes in unraveling these intricate offshore tax schemes and following the money around the globe wherever it may lead. Cases like this help maintain the public’s confidence in our tax system by letting them know that we investigate and prosecute those who evade their tax obligation.”

According to the indictment, which was unsealed in Manhattan federal court, from 2000 through 2017, Owens and Brauer conspired with others to help U.S. taxpayer clients of Mossack Fonseca conceal assets and investments, and the income generated by those assets and investments, from the IRS through fraudulent, deceitful, and dishonest means. To conceal their clients’ assets and income from the Irs, Owens and Brauer worked to establish and manage opaque offshore trusts and undeclared bank accounts on behalf of U.S. taxpayers who were clients of Mossack Fonseca. Owens and Brauer marketed, created, and serviced sham foundations and shell companies formed under the laws of countries such as Panama, Hong Kong, and the British Virgin Islands, to conceal from the IRS and others the ownership by U.S. taxpayers of accounts established at overseas banks, as well as the income generated in those accounts. As structured by Mossack Fonseca, the sham foundations typically “owned” the shell companies that nominally held the undeclared assets on behalf of the U.S. taxpayer clients of Mossack Fonseca. The names of Mossack Fonseca’s clients generally did not appear anywhere on the incorporation paperwork for the sham foundations or related shell companies, although the clients in fact beneficially owned, and had complete access to, the assets of those sham entities and accounts.

In furtherance of the scheme, and in exchange for additional fees, Owens and Brauer provided support to clients who had purchased the sham foundations and related shell companies by providing corporate meeting minutes, resolutions, mail forwarding, and signature services. Moreover, Owens and Brauer purposefully established the bank accounts in locations with strict bank secrecy laws, which impeded the ability of the United States to obtain bank records for the accounts. Owens and Brauer also instructed U.S. taxpayer clients of Mossack Fonseca about how to repatriate funds to the United States from their offshore bank accounts in a manner designed to keep the undeclared bank accounts concealed. Among other things, Owens and Brauer instructed clients to use debit cards and fictitious sales to repatriate their funds covertly.

Von Der Goltz was one of Mossack Fonseca’s U.S. taxpayer clients. At all relevant times, Von Der Goltz was a U.S. resident and was subject to U.S. tax laws, which required him to report and pay income tax on worldwide income, including income and capital gains generated in domestic and foreign bank accounts. Von Der Goltz evaded his tax reporting obligations by setting up a series of shell companies and bank accounts, and hiding his beneficial ownership of the shell companies and bank accounts from the IRS. These shell companies and bank accounts made investments totaling tens of millions of dollars. Von Der Goltz was assisted in this scheme by Owens and by Gaffey, a partner at a U.S.-based accounting firm. In furtherance of Von Der Goltz’s fraudulent scheme, Von Der Goltz, Gaffey, and Owens falsely claimed that Von Der Goltz’s elderly mother was the sole beneficial owner of the shell companies and bank accounts at issue because, at all relevant times, she was a Guatemalan citizen and resident, and – unlike Von Der Goltz – was not a U.S. taxpayer. 

Gaffey, in addition to assisting Von Der Goltz evade U.S. income taxes and reporting requirements, also worked closely with Owens to help another U.S. taxpayer client (“Client-1”) of Mossack Fonseca defraud the IRS. Client-1 maintained a series of offshore bank accounts, which Mossack Fonseca helped Client-1 conceal from the IRS for years. In the fall of 2008, Client-1 told Owens that Client-1 was interested in entering the IRS’s Offshore Voluntary Disclosure Program (“OVDP”) and disclosing Client-1’s offshore bank account to the United States, so that Client-1 could repatriate Client-1’s offshore money back to the United States. Owens told Client-1 that joining the OVDP would not be necessary, and recommended that Client-1 instead speak with Gaffey. Owens told Client-1 that Gaffey could help Client-1 repatriate the money to the United States without having to disclose to the IRS the existence of Client-1’s offshore bank account, which was then located in Hong Kong. Client-1 subsequently met with Gaffey, who advised Client-1 that the offshore money could be repatriated through a sham “sale” of a real or made-up company. Thereafter, upon the advice of Owens and Gaffey, Client-1 covertly repatriated approximately $3 million of Client-1’s offshore money to the United States by falsely stating on Client-1’s federal tax return that the money represented proceeds from the sale of a company. After Client-1 repatriated approximately $3 million in this manner, approximately $1 million still remained in Client-1’s offshore account, the existence of which remained hidden from the IRS.

A special thank you to New York High Intensity Financial Crime Area (HIFCA), DOJ’s Money Laundering and Asset Recovery Section (MLARS) and the Federal Bureau of Investigation (FBI) as well as HSI’s international law enforcement partners in France and the United Kingdom for their assistance in securing the arrests of the defendants located overseas.

This case is being handled by the SDNY’s Complex Frauds and Cybercrime Unit and Money Laundering and Transnational Criminal Enterprises Unit, working in partnership with the Money Laundering and Asset Recovery Section of the Criminal Division.

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Last Reviewed/Updated: 12/10/2018