In a stunning revelation that has left the financial world in a state of perplexity, investment banker Stephen Schechter has confessed to concealing a jaw-dropping $5.1 million in income from the Internal Revenue Service (IRS). The startling disclosure came as Schechter, who resides in Monaco, pleaded guilty to tax evasion, unraveling a web of deception that has baffled authorities.
Stephen Schechter Hiding $5.1M : The Swiss Connection
Schechter, a dual citizen of the U.K. and the U.S., admitted to a single count of tax evasion for the year 2011, with a tax debt amounting to a staggering $820,400. At the heart of this perplexing saga lies a convoluted financial scheme involving the assistance of a Swiss bank, as per the revelations made by the U.S. Department of Justice (DOJ).
The Elaborate Deception
Schechter, a specialist in private placement of debt securities, ingeniously concealed the 2011 sale of a company he established in the British Virgin Islands, which held his Monaco apartment. This astonishing act of subterfuge involved channeling the €14 million ($14.8 million) proceeds of the sale to a different country, then placing them in a Swiss account held under the guise of a separate British Virgin Islands corporation. What’s more, Schechter named his sons as shareholders while maintaining complete control of the company.
The Swiss Bank’s Role
A relationship manager at Swiss bank Piguet Galland & Cie SA played a crucial role in facilitating Schechter’s elaborate scheme. Astonishingly, the manager, aware of Schechter’s American citizenship, actively concealed this fact in bank documents, making it appear that Schechter was a solely a U.K. passport holder. This act of deception dates back to 2004, when Schechter first opened the account.
Stephen Schechter Hiding $5.1M : A Growing Web of Lies
The deception deepened as Schechter and the bank manager further entrenched the lie in 2009. A falsified note in Schechter’s bank file claimed that he and his wife had renounced their U.S. citizenship more than two decades earlier, adding another layer of complexity to the bewildering story. Schechter even went so far as to alter his U.K. passport to list his birthplace as “Kew Gardens,” a well-known location in London, rather than his actual birthplace in Kew Gardens, Queens, New York.
Threats and Hidden Wealth
As suspicions began to arise and the bank’s accounting firm pressed for proof of Schechter’s non-U.S. citizenship or voluntary disclosure of his account’s contents to the IRS, Schechter resorted to threats of legal action against the bank if his true citizenship status was disclosed.
A Maze of Hidden Income
Schechter deployed the income from the 2011 apartment sale to invest nearly $8.9 million in securities, earning substantial interest, dividends, and capital gains. Shockingly, he failed to report any of these earnings to both his New York tax preparer and the IRS, despite being legally obligated to pay taxes on foreign-earned income. He also omitted the $5.8 million in capital gains from the sale of the company that owned his Monaco apartment.
Stephen Schechter Hiding $5.1M : The Astonishing Total
The result of Schechter’s secretive apartment transaction and hidden securities investments was an astounding $5.1 million in unreported income, as revealed by the DOJ.
Stephen Schechter Hiding $5.1M : Escalating Deceit
Schechter eventually closed his Piguet account in 2012, transferring the substantial $10.2 million balance to a new Swiss account with UBS. He retained control of this account until 2017, all the while failing to report dividends and interest earned on it to the U.S. IRS, in violation of the law. Additionally, he failed to disclose the account as required by filing a report of Foreign Bank and Financial Accounts (FBAR).
A Silent Response
Amidst this whirlwind of intrigue, Schechter’s attorney declined to comment, leaving many questions unanswered.
Stephen Schechter Hiding $5.1M :The DOJ’s Stance
The U.S. Department of Justice’s Tax Division also opted to remain silent on the matter, further intensifying the enigma surrounding this complex case.
