Tuesday, June 13, 2017

The Whistleblower Behind Caterpillar Tax Commotion

OUR RULING CLASS IN A NUTSHELL: Obama Warns Against Income Inequality While Delivering $7,700-a-Minute Speech

Japanese individuals, firms named in Panama Papers owe ¥1 billion in taxes on hidden income | The Japan Times

Japanese individuals and companies listed in the leaked Panama Papers owe more than ¥1 billion ($9.06 million) in taxes on undeclared income, sou

Jay A. Soled (Rutgers) & James Alm (Tulane), W(H)Ither the Tax Gap?:

For decades, policy makers and politicians have railed against the “tax gap,” or the difference between what taxpayers are legally obligated to pay in taxes and what they actually pay in taxes. To close the gap, Congress has instituted numerous reforms, with varying degrees of success. Notwithstanding these efforts, the tax gap has largely remained intact, and, if anything, its size has gradually grown over the last several decades.

Daniel Hemel (Chicago), The President's Power to Tax

The gilded glut: falling demand hits luxury property marketFinancial Times. In New York, there’s a threatened crackdown on using real estate to launder money. That put a big dent in the super high end market.

Sending his lawyer to talk to the press is just latest bizarre twist in the Russia investigation.

Rich People’s Demonstrations Of Status Are Changing – It’s No Longer Just About Conspicuous Consumption

“The democratisation of consumer goods has made them far less useful as a means of displaying status. In the face of rising social inequality, both the rich and the middle classes own fancy TVs and nice handbags. They both lease SUVs, take airplanes, and go on cruises. On the surface, the ostensible consumer objects favoured by these two groups no longer reside in two completely different universes. Given that everyone can now buy designer handbags and new cars, the rich have taken to using much more tacit signifiers of their social position.”


A quote from Comey's testimony.
Norton Rose Fulbright is in late-stage merger talks with Australian firm Henry Davis York. [Law.com]

Google on Plutus Tax fraud

Ministers and high-level officials from 76 countries and jurisdictions have signed today or formally expressed their intention to sign an innovative multilateral convention that will swiftly implement a series of tax treaty measures to update the existing network of bilateral tax treaties and reduce opportunities for tax avoidance by multinational enterprises. The new convention will also strengthen provisions to resolve treaty disputes, including through mandatory binding arbitration, thereby reducing double taxation and increasing tax certainty.

I wrote before on the execution of a search warrant on Catepillar' Headquarters.  Search Warrant Executed Against Caterpillar HQ, Apparently Related to Tax (Federal Tax Crimes Blog 3/6/17; 3/8/17), here.  I concluded that discussion with the following speculation:
I will raise one possibility, though, and I caution that this is entirely speculation.  I wonder whether her report could have been submitted along with a whistleblower claim?  I have no idea, but given the numbers involved, a whistleblower claim is likely to be very lucrative indeed.  But, I certainly have no idea whether that is the case.
Bloomberg reports that a whistleblower claim is behind the Caterpillar commotion.  Bryan Gurley, David Voraceos and Joe Deaux, The Whistleblower Behind Caterpillar's Massive Tax Headache Could Make $600 Million (BloombergBusinessweek 6/1/17), here.

The article identifies the whistleblower as Daniel Schlicksup, a Caterpillar accountant, and summarizes his saga from company curmudgeon trying to get the attention of superiors on the matter to finally whistleblower.  A very good read. 

The Whistleblower Behind Caterpillar Tax Commotion 

DOJ Tax announced Friday here the guilty plea of Joyce Meads of College Station, TX.  Meads was charged in SD FL.  Meads pled to one count of the Klein / defraud conspiracy, a five-year felony.  I link the following document:  docket entries as of today here; the guilty plea here. and the Stipulated Facts here. Notice from the docket sheet that she was charged by information and that she waived indictment, which use indicate a plea agreement in the making.

Yet Another Offshore Account Conviction But With DOJ Agreement of No Sophisticated Means 

The U.S. attorney’s office in southern New York State said the suspects operated internationally and across the United States, trafficking in drugs and stolen goods, including cigarettes and shiploads of chocolate, while engaging in extortion, murder for hire, and credit card fraud.
Most of the 33 defendants were led by Razhden Shulaya and Zurab Dzhanashvili, were born in the former Soviet Union, and had strong ties to Ukraine, Georgia, and Russia, the federal prosecutors said.

Jack Townsend is in the process of revising my Federal Tax Procedure Book in  anticipation of the next edition in August 2017. " I have spent inordinate amounts of time on Chevron and the APA.  In the process, I added one section dealing with lenity and Chevron.  I thought I would post that section here because the text (absent the footnotes) is relatively short and on topic for the Federal Tax Crimes Blog.  For those who can't live without footnotes (or question whether I can support the statements in the text), I offer the text with footnotes here."

On Chevron and Lenity