Ex-Mizrahi Octogenarian Banker Acquitted at Tax Trial
A retired senior vice president at Israeli-based Mizrahi Tefahot Bank Ltd. (MZTF) was acquitted in Los Angeles federal court on charges he helped U.S. customers conceal their assets from the Internal Revenue Service.
Jurors deliberated four hours yesterday before clearing Shokrollah Baravarian, 82, of conspiring to defraud the U.S. and helping Mizrahi clients prepare false tax returns. Prosecutors claimed Baravarian helped clients who opened accounts in Israel, didn’t declare them to the IRS and accessed money through loans from the Los Angeles branch.
Six taxpayers testified as government witnesses, including three who pleaded guilty and two who avoided prosecution by entering an IRS disclosure program. On cross-examination, all six admitted they didn’t conspire with Baravarian to cheat on their taxes, defense attorney Marc S. Harris said.
“These taxpayers did what they did on their own, and they didn’t pay taxes on their accounts,” Harris said. “Dr. Baravarian had nothing to do with that. The linchpin of the case was that the loans were fake, and they were a mechanism to access that money. Dr. Baravarian helped people get legitimate loans for legitimate purposes.”
Justice Department attorney Rebecca A. Perlmutter confirmed the verdict in an e-mail. Justice Department representatives Nicole Navas and Peter Carr didn’t return e-mails seeking comment on the case.
Billionaire’s Probation
The acquittal was a setback in the seven-year, U.S. campaign to curtail offshore tax evasion. Prosecutors have charged more than 70 taxpayers and three dozen offshore bankers, lawyers and advisers. More than 45,000 Americans avoided prosecution by voluntarily disclosing their offshore accounts to the IRS, paying $6.5 billion in taxes, penalties and interest.
In January, a U.S. judge in Chicago sentenced H. Ty Warner, the billionaire founder of toymaker Ty Inc. and Ty Warner Hotels & Resorts, to probation. He pleaded guilty to evading almost $5.6 million in taxes on more than $24.4 million in income from accounts with as much as $107 million. Warner faced 46 to 57 months in prison. Prosecutors are appealing.
Last year, a 79-year-old widow who evaded taxes through undeclared Swiss accounts with $43 million was sentenced to less than a minute of probation from a judge who scolded prosecutors.
Federal jurors in Fort Lauderdale, Florida, are hearing a tax conspiracy case against former UBS AG (UBSN) banker Raoul Weil and are expected to begin deliberating next week.
In 1980, Baravarian left his native Iran, where he earned a doctorate in economics, said Harris, of Scheper Kim & Harris LLP. A naturalized U.S. citizen, he came to Los Angeles, where he worked from 1982 to 2009 for Mizrahi, Harris said. He was indicted on April 30.
“We’re extremely gratified by the verdict,” Harris said. “We’ve asserted all along that he’s innocent. The jury’s resounding verdict of not guilty on all counts after such a short deliberation represents total vindication of Dr. Baravarian.”
The case is U.S. v. Baravarian, 14-cr-00248, U.S. District Court, Central District of California (Los Angeles).
