As a forensic accountant involved in many tax resolution cases, I have witnessed first-hand the failure to report foreign bank accounts. Filing is simple and straightforward, but not doing so leads to an instant assumption that something doesn’t pass the smell test.
Filing foreign bank accounts is informational. There is a difference between simply not knowing you need to file and being aware of it but not doing so due to potential fraud. I would have to assume that an individual with the wherewithal to build a multi-million-dollar company would have tax advisors who would ensure foreign bank reporting would be handled easily. That is where my first concern begins.
Let’s move on to tax fraud. Every taxpaying American citizen who is selected to a jury that hears a fellow U.S. citizen evaded their responsibility to pay taxes will be hard-pressed to believe it was an “innocent” mistake. A jury of honest taxpayers will rip apart someone with a high net worth (such as, say, at least $28 million) and might even ask for the death penalty.
Well, that last part isn’t true, but I promise you the defense attorneys have a serious uphill battle, especially in the case of Mr. Paul Manafort. The political conversation is something entirely different. When one taxpayer, regardless of their political views, is evading the very taxes paid by other American people, you will absolutely lose the case, almost every time.
We need to look at this two ways, from the viewpoint of the defense and from that of the prosecution. If I am hired to work for the defense, I have one job (and I have been hired by this side multiple times in my career). My duty is to minimize the exposure by forensically providing the attorney with the absolute best-case scenario when it comes to a federal tax loss.
What that means is I must minimize the amount of taxes due from Mr. Manafort to minimize his jail time. I must go through the books with a fine-tooth comb and discover every possible deduction that was not taken to convince the prosecution that Mr. Manafort has substantial backup documentation for the returns filed and there wasn’t any intent on his part to evade his responsibility. Maybe, just maybe, the accounting department was involved in a conspiracy to crush him. The forensic work focuses 100 percent on the truth and facts that will support the attorney’s efforts in minimizing the tax exposure. That is the job, period.
Now, let’s look at being the forensic accountant for the prosecution. In this role, I would have one mission: to prove that Mr. Manafort intended to evade his responsibility to pay his taxes. Providing the prosecution with solid documentation that proves this intention is the primary goal.
I have done this once in a criminal case on the side of the IRS and the U.S. government. Trust me: If someone is under criminal prosecution, you can be entirely certain the government has a substantial case to move forward with. They will work very hard to sentence the defendant in a way that will deter others from evading taxes. After all, they won’t spend (believe it or not) hundreds of thousands of dollars to prosecute a taxpayer unless they are very certain they have a slam dunk. My job as a forensic is to assist the government in proving the intention of the defendant to under-report their gross income.
In the case of Mr. Manafort, regardless of which side the forensic is on, they have one job: to provide the evidence that supports the facts surrounding a position of intent or one of none. The prosecution proves the former, and the defense proves the latter. As a forensic accountant, your job is to present facts. It is one of the reasons I became one. You cannot add one plus one and get 20. Simply put, pigs get fat, and hogs get slaughtered.
Read more from Dawn Brolin on this topic here.