Bank Leumi Admits to Tax Evasion

Last month, Bank Leumi, one of Israel's largest banks, signed a settlement admitting it helped numerous wealthy Americans hide assets from tax consideration. The tax evasion started in 2000 and lasted for 11 years, resulting in $400 million of hidden funds, a staggering amount that the bank has agreed to pay back to numerous U.S. institutions. While settlements with foreign holdings like this have become more and more common, this payout marks one of the largest settlements in recent memory.

The Bank Leumi's settlement breaks down as follows:

  • $130 million to the New York State Department of Financial Services
  • $270 million to the Department of Justice
  • Termination of further dealing with associated Swiss bank and Luxembourg subsidiary compliant in the evasion

In addition to signing the agreement, Bank Leumi is said to be making some staff changes, as well. The head of the Bank Leumi Trust has been fired and its stateside chief compliance offer will no longer hold that office.

Aggressive New Tax Evasion Investigations

The federal government is calling the Bank Leumi agreement a huge victory for its tax division and part of an aggressive new campaign to identify which foreign entities are knowingly assisting U.S. citizens in hiding money from the IRS. These foreign companies are frequently found to be actively helping establish phony corporations and loans to further mask the evasions, as well.

The Bank Leumi case has a surprising connection to a similar case from 2009, in which investigators brought charges against Swiss bank UBS AG. U.S. authorities are saying now that, instead of being deterred by UBS AG's $780 million settlement, Bank Leumi actually poached over 260 American clients from the fallout to help perpetuate their tax evasion and cover their tracks.

As U.S. authorities are finding more and more foreign companies to comply with investigations, they predict that more settlements like Bank Leumi's may happen in the near future.

If you are U.S. tax payer with foreign holdings and want to make sure you're in complete compliance with the IRS, then contact us to speak to a proven Palm Beach County tax lawyer today from The Law Office of Michael K. Miller, P.A.! A free consultation is waiting!


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