An Indian-American businessman on Monday pleaded guilty to conspiring to defraud U.S. tax authorities by hiding his bank accounts in HSBC India, a case which has led U.S. Internal Revenue Service to probe NRIs holding accounts in the bank.
Vaibhav Dahake, 44 of Somerset, New Jersey pleaded guilty before U.S. District Judge Freda Wolfson to an indictment charging him with one count of conspiracy to defraud the Internal Revenue Service (IRS) and concealing undeclared bank accounts in India, a statement by the U.S. Attorney’s Office, District of New Jersey said.
Dahake, who was indicted in January this year, is scheduled to be sentenced on July 22, 2011.
He faces a maximum sentence of five years in prison and a $250,000 fine, or twice the amount of financial gain accrued to him or loss to the IRS.
Additionally, Dahake has agreed to pay a 50 per cent civil penalty for failing to file reports of foreign bank or financial account relating to his undeclared bank accounts for the calendar years 2004-2009, during which the accounts had the highest balance.
“New Jersey businessman Vaibhav Dahake admitted today that he conspired to hide his assets from the IRS by stashing them in India. As all taxpayers prepare to file their annual returns, we remind them and their financial institutions not to cheat their fellow citizens by defrauding the IRS,” U.S. Attorney Paul Fishman said.
The guilty plea comes just four days after the U.S. Department of Justice sought a federal court order requiring HSBC Bank to provide information about U.S. residents, particularly non-resident Indians, who may be using HSBC India accounts to evade income taxes.
In its petition to a San Francisco court, the Justice Department had cited Dahake’s case, saying he conspired to defraud the U.S. by using undeclared accounts in the British Virgin Islands and at HSBC India.
The U.S. government asked the court to allow the IRS to serve a ‘John Doe’ summons on HSBC under which the bank would have to produce records identifying U.S. taxpayers with accounts at HSBC India, many of whom are believed by the government to have hidden their accounts from the IRS.
“Those who still think they can hide their assets and income offshore to evade taxes need to rethink their strategy.
The Department of Justice is committed to prosecuting such individuals,” Principal Deputy Assistant Attorney General of the Justice Department’s Tax Division John DiCicco said.
According to documents filed, Dahake was helped by five HSBC employees in concealing his accounts in India in order to avoid paying taxes in the U.S.
Dahake admitted that from 2001 through 2010, he maintained undeclared bank accounts in India that he failed to report on his federal income tax returns.
The accounts were maintained at a “large international bank” which was headquartered in England and maintained offices throughout the world, including in India, Singapore, Hong Kong and the US.
