TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Friday, March 22, 2013

Government Loses First Offshore Bank Account Prosecution

Press release from Hochman, Salkin Rettig Toscher and Perez, PC (Beverly Hills, CA):

The Federal District Court for the District of Hawaii yesterday acquitted James Pflueger, a retired automobile dealer, on all of the four counts of the indictment alleging tax fraud and conspiracy following a two and one half week trial. At the Government's request the Court previously dismissed the additional count against him alleging a willful failure to file a foreign bank account reporting form (FBAR).

The criminal indictment centered around IRS allegations that Mr. Pflueger engaged in conspiracies with his accountant and others to defraud the Government relating to his personal taxes as well as those of his son and his former auto dealership, including the use of a foreign bank account and a foreign trust. Others included in the indictment previously pled guilty; his former accountant testified at trial as a cooperating witness for the Government. 

The District Court found that the Government failed to establish the evidence supporting the allegations and acquitted Mr. Pflueger of all charges. ...

[T]he Government rarely loses criminal tax prosecutions. This is believed to be the first unsuccessful prosecution relating to the use of foreign bank accounts in the Government's ongoing international enforcement efforts. The Government must objectively and carefully select the cases to prosecute -- the mere presence of a foreign bank account and foreign trust does mean there has been a tax crime -- an assumption which seemed to blindly guide the prosecution of Mr. Pflueger, an innocent man.

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Why / How did they get the "accountant and others" to plead guilty if the case was so weak they couldn't convict the central party? Prosecutorial "deal making" via threats and bullying? Will those who pled-out have a way to recant and reverse their guilt? This case deserves more exposure and a more detailed explanation - and wider distribution. Thanks!

Posted by: michael | Mar 23, 2013 7:29:05 AM

"the mere presence of a foreign bank account and foreign trust does mean there has been a tax crime"

Don't you mean "does not"?

Posted by: tom smithdeal | Mar 23, 2013 8:22:00 AM

From the linked account, he was not proven guilty, but whether he's innocent in this and the other charges is another matter.

Posted by: chuckR | Mar 23, 2013 8:27:22 AM

chuckR, you clearly do not understand what is meant by "presumption of innocence." Or perhaps you're making a joke, referring to the fact that everyone is now guilty of at least one crime in these enlightened United States?

Posted by: Render | Mar 23, 2013 9:34:53 AM

michael, it's probably another in a long list of "who will rid me of this troublesome priest" incidents. King is displeased with Archbishop, exclaims something, overzealous minions take it literally, and then the government is faced with a defendant who claims he didn't intend that as an instruction for an illegal act, gave no instructions for it, and there's not enough evidence of actual intent to sway the jury.

And if the guy understood the arcana, he wouldn't need an accountant.

Posted by: SDN | Mar 23, 2013 9:46:56 AM

Ahh Chucky? What is it that you don't understand about the concept of 'innocent until proven guilty'? Or do you think that the IRS is *always* right?

Posted by: Dyspeptic Curmudgeon | Mar 23, 2013 11:27:16 AM

I think Chuck understands 'innocent until proven guilty' perfectly well. He just doesn't agree with it. I have my doubts sometimes, too.

BUT I agree with Blackstone: "It is better that ten guilty persons escape than that one innocent suffer"

Posted by: Kathy Kinsley | Mar 23, 2013 5:14:19 PM

Caveat to above. I'm pre-supposing an armed and dangerous populous who can take care of the predators...

Posted by: Kathy Kinsley | Mar 23, 2013 5:18:54 PM

Did anybody read the linked article?

This is the least of his problems.

He killed 6 people and is facing manslaugter charges, which could lead to him dying in prison at his age.
He also owes a gajillion dollars for a raft of civil lawsuits, and no doubt faces a civil trial for the taxes and penalties, etc.
This guy is going to die penniliess and in jail.

Posted by: Justin the Lawyer | Mar 25, 2013 12:23:57 PM