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Founder of Russian Bank Charged with Tax Fraud Allegedly Concealed $1 Billion in Assets and Income when Renouncing U.S. Citizenship ^ | March 5, 2020 | DOJ

Posted on 03/06/2020 10:13:55 AM PST by ransomnote

The founder of a Russian bank was arrested last week in London in connection with an indictment charging him with filing false tax returns, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division, U.S. Attorney David L. Anderson for the Northern District of California, and Internal Revenue Service (IRS) Criminal Investigation, Special Agent in Charge Kareem Carter.  The Sept. 26, 2019, indictment was unsealed today. 

According to the indictment, Oleg Tinkov was the indirect majority shareholder of a branchless online bank that provided its customers with financial and bank services.  The indictment alleges as a result of an initial public offering (IPO) on the London Stock Exchange in 2013, Tinkov beneficially owned more than $1 billion worth of the bank’s shares.  The indictment further alleges that three days after the IPO, Tinkov renounced his U.S. citizenship – a taxable event requiring Tinkov to report to the IRS the constructive sale of his worldwide assets, report the gain on the constructive sale of those assets to the IRS, and pay tax on such gain to the IRS.  Although Tinkov allegedly beneficially owned more than $1 billion of TCS shares at the time of his expatriation through a British Virgin Island structure, the indictment charges that Tinkov filed a false 2013 tax return with the IRS that reported income of less than $206,000, and a false 2013 Initial and Annual Expatriation Statement reporting that his net worth was $300,000.

If convicted, Tinkov faces a maximum sentence of three years in prison on each count.  He also faces a period of supervised release, restitution, and monetary penalties.

An indictment merely alleges that crimes have been committed. The defendant is presumed innocent until proven guilty beyond a reasonable doubt.

Trial Attorney Christopher S. Strauss of the Tax Division and Assistant U.S. Attorneys Michelle J. Kane and Katherine Lloyd-Lovett , are prosecuting the case with the assistance of Katie Turner and Rebecca Shelton.  The prosecution is the result of an investigation by IRS–Criminal Investigation. The Criminal Division’s Office of International Affairs of the Justice Department is assisting with the extradition. 

Additional information about the Tax Division and its enforcement efforts may be found on the Division’s website.

Financial Fraud
Press Release Number: 

TOPICS: Miscellaneous
KEYWORDS: russianbank; taxfraud

1 posted on 03/06/2020 10:13:55 AM PST by ransomnote
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To: ransomnote

I object to the notion that when someone renounces their US citizenship that they have any obligation whatsoever to report to any US agency, let alone the IRS.

2 posted on 03/06/2020 10:16:48 AM PST by MeganC (There is nothing feminine about feminism.)
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To: ransomnote

I actually have an account with Tinkoff Bank. They have always been quite reliable and paid almost 7% interest on deposits.

3 posted on 03/06/2020 11:06:47 AM PST by billakay
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To: billakay

7% interest rate is a red flag for ponzi scheme. That rate of return cannot be supported by traditional banking in today’s global rate and currency markets. I’m a 28 yr finance professional.

4 posted on 03/06/2020 11:14:30 AM PST by Professional
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To: Professional

It’s not atypical in the Ruble markets. 5+% is very common, especially with larger balances. The base rates for the Central Bank of Russia are pretty high compared to the dollar. The downside is that Ruble mortgages can be over 10%.

5 posted on 03/06/2020 1:28:26 PM PST by billakay
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To: billakay

When you take the economic activity of one currency that has higher rates, you also need to accept the devaluation of that currency, since the higher rate is associated with a certain element of inflation. When you then translate those dollars to a lower interest rate currency, you’d lose the premium of the return. 7% there, compared to 1% here, would be gobbled up by currency deterioration. There is no free lunch, interest rates/currency are like a nearly perfect functioning clock. Trust me, if it was that easy...those of us in Finance would cash in on that all day long.

6 posted on 03/06/2020 4:16:25 PM PST by Professional
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To: Professional
Thanks for your insight. I do understand these basic economic concepts. However, I've been observing the Russian economy for a while, and I am comfortable with leveraging it where I can.

Not sure if this site is reliable, but puts USD inflation at 2.5% in Feb 2020, while shows RUB at 2.4% and dropping for the same period.

Indeed, I read the CBR (Central Bank of Russia) reports often, and inflation has been under control for quite some time now. My understanding is that the high rates are being maintained, and slowly decreased, to prevent the economy from heating up too quickly.

Another consideration is that in recent history (after they allowed it to free-float in 2014), the USD-RUB rate has fluctuated quite a but. The last couple years have seen it trade in a pretty narrow band though.

My strategy to is keep a non-trivial amount of money in Rubles, but only that money that I plan to spend in Rubles anyway (I spend a good amount of time in Russia), this way I don't have to worry about losing any gains in the FX rate.

7 posted on 03/07/2020 6:05:07 AM PST by billakay
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