Indian American indicted for concealing bank accounts in India

WASHINGTON - An Indian-American businessman has been indicted by a federal grand jury in New Jersey on charges that he tried to conceal undeclared bank accounts in the British Virgin Islands and India.

The indictment filed in Newark federal court charges India born Vaibhav Dahake, who became a naturalised US citizen in 2006, with one count of conspiring to defraud the IRS, according to nj.com, a New Jersey website.

From 2001 through 2010, Dahake maintained undeclared bank accounts in the British Virgin Islands and India that he failed to report on his federal income tax returns, prosecutors said.

The accounts located in India were maintained at a large international bank, which was headquartered in England and maintained offices throughout the world including in India, Singapore, Hong Kong and the US, they said.

The indictment didn’t identify the bank by name, saying only that the institution “was one of the largest international banks in the world and was headquartered in England”.

But the Wall Street Journal citing a person familiar with the case said the bank was HSBC Holdings PLC.

It also cited HSBC spokeswoman Juanita Gutierrez as saying: “HSBC does not condone tax evasion and fully supports the US efforts to promote appropriate payment of taxes by US taxpayers.”

The indictment said that in 2001, Dahake received from the bank an unsolicited letter advertising bank accounts in India that paid high interest rates.

Dahake subsequently met with a banker, employed by the banks New York office, who advised Dahake that one of the advantages of opening up a bank account in India was that he would not have to supply the bank with his social security number.

After Dahake decided to open an account in India, the banker advised him not to send one large check but to send five checks, each in the amount of $10,000, in order to stay below the radar.

During 2003 and 2004, Dahake wire transferred additional funds from the British Virgin Islands to his undeclared bank account in India.

In connection with these wire transfers, a second banker employed by the international bank in New York advised Dahake that he could conceal his undeclared accounts by converting funds from US dollars to either British pounds or euros before wire transferring them.

During a subsequent trip to India, Dahake had a telephone conversation with a third banker, employed by the international bank in California, regarding how to conceal the repatriation of funds from India to the US.

Following the publication of news reports that Swiss bank UBS AG had entered into a deferred prosecution agreement with the US Department of Justice, Dahake advised the banker in California that he was considering repatriating all his money from India to the US, prosecution said.

In response, the banker told Dahake he had nothing to worry about because the international bank would not be issuing Forms 1099 on the accounts in India and that the IRS would be looking for undeclared accounts maintained in the Caribbean rather than in the Far East.

The banker further advised Dahake that the international bank operated banks in both Singapore and Hong Kong and that the banker could introduce Dahake to bankers in those countries if Dahake wanted to move his funds there, prosecutors said.

The count with which Dahake is charged carries a maximum potential penalty of five years in prison and a $250,000 fine.

(Arun Kumar can be contacted at arun.kumar@ians.in)