BEVERLY HILLS-The former senior vice president of an Israeli bank was indicted on conspiracy charges on April 30.

 

Shokrollah Baravarian was charged with conspiracy to defraud the United States, according to a statement from the Department of Justice. The bank that employed Baravarian was not named by the indictment, but Bloomberg reported that Baravarian, a resident of Beverly Hills, had worked for Mizrahi Tefahot Bank of Israel, which was noted by the indictment as having over 100 branches across the world including one in Los Angeles.

 

The 18-page indictment alleged that Baravarian had conspired to defraud by hiding the assets of select
U.S. customers by opening undeclared bank accounts in Israel under code names and pseudonyms established in places like the British Virgin Islands. He would then assist these customers by helping them apply for what the indictment calls “back-to-back loans.” These loans would be secured by using the funds in these undeclared accounts in Israel as collateral and then issued by the Los Angeles branch to Baravarian’s customers.

 

“The defendant assisted others to hide the true ownership of offshore bank accounts through the use of code names and nominee entities,” said Richard Weber, Chief of IRS-Criminal Investigation. “Those who help others commit tax evasion risk prosecution and substantial monetary penalties.”

 

In addition, Baravarian would further aid his customers in hiding their foreign assets by purposefully not keeping account-related information in files at the Los Angeles branch. He would also make sure to keep account statements from being mailed to his customers and would instead have them sent to the
Los Angeles branch where these customers could pick them up in person. Another unidentified agent for the branch in Tel Aviv, where the funds were held, would periodically come to the United States to discuss the state of the customers’ accounts with statements that had the customers’ names already redacted.

 

In one instance, Baravarian helped an unidentified female customer change the name of an account in
Israel to hide the assets from the U.S. government in 2001. Between 2006 and 2007, this female customer managed to secure at least three separate back-to-back loans totaling $1,750,000.

 

Reuters reported on May 1 that the United States and Israel had agreed to take part in the Foreign Account Tax Compliance Act of 2010, where foreign banks and other financial institutions are required to hand over account information belonging to U.S. Citizens should these accounts hold over $50,000 in assets.

 

Israeli firms would be allowed to report to their local tax authority, that would then send this information to the IRS. Other foreign firms that do not comply with the act face a 30 percent withholding tax on their U.S. investment income. The article also stated that the United States Treasury Department had reached agreements with 57 other countries to comply with the act.

 

Baravarian was a founding member of an organization called the Magbit Foundation, which helped needy and qualified university students secure interest-free loans for their education. If convicted, he could face a maximum prison term of five years and a fine of $250,000.