Washington, DC – A prominent Indian American neurosurgeon has been convicted on federal tax charges stemming from his failure to disclose offshore bank accounts maintained in India and the Bailiwick of Jersey, the Justice Department and Internal Revenue Service (IRS) announced on Thursday.
A jury convicted Arvind Ahuja on Wednesday on the basis of evidence presented at trial, which showed that Ahuja transferred millions of dollars from bank accounts in the United States to undeclared bank accounts located in India at HSBC bank.
“This case is a warning to individuals who still think they can use offshore bank accounts to commit tax crimes,” said John A. DiCicco, Principal Deputy Assistant Attorney General for the Justice Department’s Tax Division.
“Citizens who honestly report their income and pay their taxes can take comfort that the Department of Justice is committed to the prosecution of tax cheats who use these offshore accounts,” added DiCicco.
From his millions hidden abroad, Ahuja earned more than $2.7 million in interest income during the years 2005 through 2009, according to the court documents. Ahuja also maintained an HSBC bank account in the Bailiwick of Jersey, a British Crown dependency located in the Channel Islands off the coast of Normandy, France.
The trial began on Aug. 15, 2012 before US District Judge Charles N. Clevert, Jr., in Milwaukee; after being convicted on Wednesday, Ahuja now awaits sentencing, scheduled for Jan. 18, 2013, according to the court documents.
Ahuja, a prominent neurosurgeon in Milwaukee, was convicted of one count of filing a false 2009 individual income tax return and one count of failing to file a Report of Foreign Bank and Financial Accounts (FBAR).
Ahuja used credit and debit cards linked to this account to pay personal expenses while on trips to London and managed his offshore accounts with the assistance of bankers who worked at an HSBC India representative office in New York.
For tax year 2009, Ahuja filed a false tax return with the IRS that failed to report the interest income earned on his certificates of deposit at HSBC India, and failed to report he had signature authority over bank accounts located in India and Jersey.
Ahuja also failed to file an FBAR for 2009 to report his offshore accounts to the IRS. Ahuja’s accountant testified that Ahuja never disclosed the existence of his offshore accounts during the preparation of his tax returns.
Commenting on the case, James L. Santelle, US Attorney for the Eastern District for Wisconsin said, “This prosecution reflects the continuing commitment of the United States Department of Justice, including my office and the Tax Division, to identify, investigate and prosecute individuals who fail to abide by well-established obligations to report and pay on their tax indebtedness.”
United States citizens and residents who have an interest in, or signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 are required to disclose the existence of such account.
Additionally, US citizens and residents must file an FBAR with the United States Treasury disclosing any financial account in a foreign country with assets in excess of $10,000 in which they have a financial interest, or over which they have signature or other authority.
Ahuja faces a maximum penalty of five years in prison for the conspiracy charge and a $250,000 fine. Each false tax return charge carries a maximum penalty of three years in prison and a $250,000 fine and the failure to file an FBAR carries a maximum penalty of 10 years in prison and a $500,000 fine for each occurrence.