Since Mr. Jack Stephen Pursley’s tax evasion case showed methods for hiding assets, I discussed his case at my August 16, 2020 post . Then on January 12, 2022, The U.S. Court of Appeals vacated Mr. Pursley’s criminal conviction. Meanwhile, on March 28, 2023 Mr. Pursley pleaded guilty to Count One of his September 20, 2018 indictment. Today’s post discusses Count One.1 Based on Count One, there were two tax evasion schemes in USA v. Pursley. The first scheme started in 2001 while the second one was carried out from 2007-2013.
I. CO-CONSPIRATOR 1’S METHODS FOR HIDING ASSETS STARTING 2001
Co-Conspirator 1 was a U.S. taxpayer with earnings from his offshore business, Southeastern Shipping Company Limited, (hereinafter “SSCL“). SSCL supplied workers for oil rigs in the Middle East. Co-Conspirator 1 first formed SSCL as a business in Nevis and Panama. Next, in 2001, Co-conspirator 1 established SSCL on the Isle of Man. In 2001, Co-Conspirator 1 also apparently started hiding earnings from SSCL. According to the indictment, Co-Conspirator 1 hid the earnings from the IRS in an offshore account at the Royal Bank of Scotland on the Isle of Man. Moreover, Co-Conspirator 1 employed a Brazilian citizen as the straw owner, (i.e. nominee owner), of SSCL. This hid Co-Conspirator 1’s beneficial ownership of SSCL.
Co-Conspirator 1 also formed a suspected shell company in Texas known as Hudson International Management Group, LLC. It issued Co-Conspirator 1’s invoices showing Co-Conspirator 1’s supposed annual income, which Co-Conspirator 1 did pay taxes on. This might have provided Co-Conspirator 1 with a cover story that Co-Conspirator paid all required taxes. Meanwhile, Co-Conspirator 1 reportedly evaded paying taxes on most of the earnings hidden at SSCL’s offshore Royal Bank of Scotland account. Additionally, Co-Conspirator 1 failed to file foreign bank account reports, (“FBAR reports), with U.S. Treasury about the Royal Bank of Scotland account. Nor did Co-Conspirator 1 disclose this account as required, at annual tax filings.
Based upon the foregoing and the allegations at Count One, Co-Conspirator 1 reportedly headed a tax evasion scheme which relied on these methods:
- a straw person, (i.e. nominee), who was a Brazilian citizen;
- multiple jurisdictions such as the Isle of Man, Brazil and Texas;
- an offshore bank account on the Isle of Man;
- and shell companies.
II. MR. PURSLEY’S TAX EVASION SCHEME FROM 2007-2013
In 2007 Co-Conspirator 1’s offshore Royal Bank of Scotland account was valued at $18 million. Seeking to secretly transfer the $18 million to the United States, Co-Conspirator 1 asked Mr. Pursley for help. Consequently, Mr. Pursley devised ways Co-Conspirator 1 could send this money to the U.S. while hiding it from the IRS. In exchange for Mr. Pursley’s help, Mr. Pursley charged Co-Conspirator 1 $4.8 million and a 25% ownership interest in Co-Conspirator 1’s business. One of Mr. Pursley’s methods for hiding assets was transferring money from SSCL’s offshore Royal Bank of Scotland account to a Houston, Texas-based attorney. The Houston attorney then deposited the monies into an attorney client trust account, (i.e. IOLTA Account), at Wells Fargo. Between August 2009 and September 2010 Mr. Pursley could have hidden / laundered as much as $15 million via the IOLTA Account. Mr. Pursley’s other methods for hiding assets included employing:
- Offshore bank accounts like SSCL’s Royal Bank of Scotland account on the Isle of Man;
- a shell company in Australia, and several in Texas and other jurisdictions;
- stock purchases in U.S-based shell companies as a pretext for transferring money;
- bank accounts titled in the names of intermediaries (a.k.a nominee bank accounts).
- 3 Houston, Texas-based attorneys who were gatekeepers.
- and multiple jurisdictions including the Isle of Man, Australia and the U.S.
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Copyright 2024 Fred L. Abrams