Damian Williams, the United States Attorney for the Southern District of New York, and Thomas Fattorusso, the Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced the indictment of FRANK BUTSELAAR for participating in a conspiracy to engage in tax fraud over the course of over seven years. BUTSELAAR was an advisor to high-net-worth DJs and fashion industry clients who earned income all over the world (the “Clients”). The Clients earned millions of dollars every year. In certain years, these Clients became U.S. tax residents, meaning they had a legal obligation to pay U.S. taxes on their worldwide income. BUTSELAAR, working with other professionals, devised a strategy to unlawfully conceal from the U.S. Government millions of dollars of income the Clients were earning outside the United States during years they were U.S. tax residents. After having been arrested earlier this year following a request from the United States to Italy for provisional arrest for purposes of extradition, BUTSELAAR was taken back into custody earlier this week in Italy following a favorable ruling on the U.S. extradition request.
IRS-CI Special Agent in Charge Thomas Fattorusso said: “Butselaar thought he was above the law. It’s alleged he operated this international fraud scheme to conceal millions of dollars in income earned by his high-profile clients around the world. This wasn’t just a get rich quick scheme, but rather Butselaar sought to play the long game and used a variety of sophisticated techniques to perpetuate this tax fraud over the course of several years. IRS-CI has a global reach, and we thank our J5 collaborators for their valuable partnership on this case. For Butselaar, it’s time to pay the tab.”
As alleged in the Indictment unsealed in White Plains federal court:[1]
FRANK BUTSELAAR conspired to defraud the United States and to conceal from the IRS through fraudulent, deceitful, and dishonest means the existence of millions of dollars of worldwide income generated by various clients, including Client-1 and Client-2, who are internationally renowned DJs (the “DJ Clients”). The DJ Clients, in particular, utilized offshore entities that at all relevant times BUTSELAAR and his co-conspirators knew the DJ Clients beneficially owned and effectively controlled. These entities were, in turn, held by trusts that the DJ Clients established on the advice of BUTSELAAR and others (the “Offshore Structures”). As part of their efforts to conceal the DJ Clients’ worldwide income, BUTSELAAR and his co-conspirators created and implemented a fraudulent scheme to use straw beneficiaries to conceal the income held within the DJ Clients’ Offshore Structures from the IRS.
In addition, FRANK BUTSELAAR and his co-conspirators devised and implemented similar fraudulent schemes for certain fashion industry clients (the “Fashion Industry Clients”) that involved fraudulent transfers of the Fashion Industry Clients’ overseas companies to family members, knowing that the Fashion Industry Clients would maintain beneficial ownership of the overseas companies and the income therefrom.
The tax evasion schemes, created and implemented by FRANK BUTSELAAR and his co-conspirators, caused to be filed Forms 1040 for the DJ Clients and the Fashion Industry Clients (during the time those Clients were U.S. tax residents) that fraudulently omitted over $100 million in worldwide income earned by those Clients.
BUTSELAAR, 63, of Naarden, Netherlands, was charged with one count of conspiracy to defraud the United States, which carries a maximum penalty of five years in prison, and five counts of aiding and abetting the filing of false tax returns, each of which carries a maximum penalty of three years in prison.
The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.
Mr. Williams praised the outstanding investigative work of the IRS-CI and the Joint Chiefs of Global Tax Enforcement (“J5”). Mr. Williams also thanked the Justice Department’s Office of International Affairs and Italy’s Ministero della Giustizia, Arma dei Carabinieri, and Guardia di Finanza for their assistance.
The J5 works together to gather information, share intelligence, and conduct coordinated operations against transnational financial crimes. The J5 includes the Australian Taxation Office, the Canadian Revenue Agency, the Dutch Fiscal Intelligence and Investigation Service, His Majesty’s Revenue and Customs from the United Kingdom, and the IRS-CI from the U.S.
The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth herein constitute only allegations, and every fact described should be treated as an allegation.
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