Prominent Indian-American neurosurgeon convicted of tax fraud

A prominent Indian-American neurosurgeon has been convicted of failing to disclose to US federal authorities that he maintained offshore HSBC bank accounts in India and France and hid about USD eight million in these secret accounts.

Arvind Ahuja of Wisconsin was convicted by a jury on federal tax charges stemming from his failure to disclose offshore bank accounts maintained in India and in Bailiwick of Jersey, France, the Justice Department and Internal Revenue Service (IRS) said.

Ahuja managed his offshore accounts with the assistance of bankers who worked at an HSBC India representative office here.

Ahuja's trial began last week before US District Judge Charles Clevert in Milwaukee and sentencing has been scheduled for January 18, 2013.

He was convicted of one count of filing a false 2009 individual income tax return and one count of failing to file a Report of Foreign Bank and Financial Accounts (FBAR).

According to evidence presented at trial, Ahuja transferred millions of dollars from bank accounts in the US to undeclared accounts located in India at HSBC bank. He also maintained an HSBC bank account in the Bailiwick of Jersey, a British Crown dependency located off the coast of Normandy, France.

Ahuja invested the funds in these accounts in certificates of deposit, which earned more than USD 2.7 million in interest income from 2005 to 2009. He used credit and debit cards linked to his accounts to pay personal expenses while on trips to London.

According to trial evidence, Ahuja filed a false tax return in 2009 with the IRS that failed to report the interest income earned on his certificates of deposit at HSBC India and also failed to report he had signature authority over bank accounts located in India and France. 

Ahuja failed to file an FBAR for 2009 to report his offshore accounts to the IRS. Ahuja's accountant testified that he never disclosed the existence of his offshore accounts during the preparation of his tax returns.

"This prosecution reflects the continuing commitment to identify, investigate and prosecute individuals who fail to abide by well-established obligations to report and pay on their tax indebtedness," US Attorney for the Eastern District for Wisconsin James Santelle said.

Santelle said that underreporting income and failing to report foreign bank accounts will not be tolerated.

Principal Deputy Assistant Attorney General for the Justice Department's Tax Division, John DiCicco said the case is a warning to individuals who think they can use offshore bank accounts to commit tax crimes.

HSBC had been at the core of a US crackdown on offshore tax evasion and had faced pressure from federal authorities to provide information about account holders who may be evading taxes by using offshore accounts, particularly in India.

Last year, the IRS had served a summons on the bank seeking information with regard to financial accounts of US persons maintained with its branches in India.

US citizens and residents who have an interest in or authority over a financial account in a foreign country with assets in excess of 10,000 dollars are required to disclose the existence of such account in their individual income tax returns.

Additionally, US citizens and residents are also obligated to file an FBAR with the United States Treasury disclosing any financial account in a foreign country with assets in excess of 10,000 dollars in which they have a financial interest, or over which they have signature or other authority.

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