Tax Preparers Charged with Hiding Funds in Israeli Banks

A trio of tax preparers have been charged with helping their clients evade taxes by hiding millions of dollars in secret accounts at two Israeli banks.

David Kalai, Nadav Kalai and David Almog were indicted by a federal grand jury in the Central District of California and charged with conspiring to defraud the United States, the Justice Department and the Internal Revenue Service said Friday. A superseding indictment, which was returned late Thursday, was unsealed following the defendants’ arrests.

According to prosecutors, David and Nadav Kalai were principals of United Revenue Service Inc., a tax preparation business with 12 offices across the country. David Kalai worked primarily at URS’s former headquarters in Newport Beach, Calif., and later at URS’s location in Costa Mesa, Calif. Nadav Kalai, who is David Kalai’s son, worked out of URS’s headquarters in Bethesda, Md., along with URS locations in Newport Beach and Costa Mesa, Calif. David Almog was the branch manager of the New York office of URS and supervised tax return preparers for URS’s East Coast locations.

The three men allegedly prepared false individual income tax returns that did not disclose their clients’ foreign financial accounts nor report the income earned from those accounts. To conceal their clients’ ownership and control of assets and conceal the clients’ income from the IRS, they allegedly incorporated offshore companies in Belize and elsewhere and helped clients open secret bank accounts at the Luxembourg locations of two unidentified Israeli banks.

One of them is described as a large financial institution headquartered in Tel-Aviv, with more than 300 branches across 18 countries worldwide, which matches the description of Bank Leumi, and the other is a mid-size financial institution also headquartered in Tel-Aviv, with a worldwide presence on four continents. Bank Leumi did not immediately respond to a request for comment.

The tax preparers allegedly incorporated offshore companies in Belize and elsewhere to act as named account holders on the secret accounts at the Israeli banks. They then facilitated the transfer of client funds to the secret accounts and prepared and filed tax returns falsely reporting the money sent offshore as a false investment loss or a false business expense, according to prosecutors. They also allegedly failed to disclose the existence of their clients’ secret accounts, and the clients’ financial interest in and authority over those accounts, and caused the clients to fail to file FBARs, or reports of foreign bank accounts, with the Treasury Department. If convicted, each of the defendants faces up to five years in prison and a fine of up to $250,000.

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