Sanjay Sethi to pay hefty fine, faces jail time.
Bureau Report
NEW YORK: Yet another Indian American has paid a heavy price for concealing hidden assets from the Internal Revenue Service (IRS): Sanjay Sethi, 52, an entrepreneur who lives in Watchung, NJ, has pleaded guilty before U.S. District Judge Jose L. Linares in Newark federal court to conspiracy to conceal nearly $7 million dollars in undeclared bank accounts.
Sethi, who owns San Vision Technologies Inc., pleaded guilty to charges that he held the undisclosed amount in banks located in India and Switzerland. In addition to agreeing to pay $2.4 million penalty for not disclosing the assets, the cost for the trial, agreeing to file true and accurate tax returns and to pay to the IRS all taxes and penalties owed, he also faces a maximum of five years of jail time, according to U.S. Attorney Paul J. Fishman and Assistant Attorney General Kathryn Keneally of the Justice Department’s Tax Division, reported Echoes-Sentinel today.
Sethi admitted to using corporations in the Cayman Islands and the British Virgin Islands to conceal the bank accounts he had in those two countries.
Sethi also failed to file a Report of Foreign Bank or Financial Accounts (FBAR) with respect to his foreign accounts, Fishman said. U.S. citizens who have an interest in, or signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 are required to disclose the existence of such account on Schedule B, Part III, of their individual income tax returns They must file an FBAR with the U.S. Treasury disclosing any financial account in a foreign country with assets in excess of $10,000 in which they have a financial interest, or over which they have signature or other authority, Fishman said.
“Our criminal laws do not tolerate those who use foreign accounts to conceal their assets,” Fishman said. “Cheating the government out of tax dollars hurts all honest taxpayers.”
“This guilty plea serves as another warning to those who still think they can hide their assets offshore through the use of shell companies, nominees, and foreign bank accounts,” said Assistant Attorney General Keneally. “On behalf of all honest taxpayers, we will continue to seek out and prosecute those who engage in these criminal activities.”
Sethi schemed with bankers from the United States, United Kingdom, and Switzerland to conceal his assets and income derived from those assets, said reports. He used nominee and shell companies formed in tax-haven jurisdictions to conceal his ownership and control of assets from the IRS. Sethi and his co-conspirators used bank accounts in the name of shell companies and nominees, and filed false and fraudulent tax returns with the IRS in order to conceal his ownership of the foreign accounts.
From 2001 to 2009, Sethi met with his co-conspirators and opened numerous undeclared bank accounts in India and Switzerland, and used shell companies to transfer millions of dollars to undeclared offshore accounts. The total tax loss to the U.S. Government was between $80,000 and $200,000, said Echoes-Sentinel.
The criminal information says that Sethi opened secret accounts with “one of the largest international banks” headquartered in England with offices in Hong Kong, Singapore, India and the US.
While the information has not named the bank, media reports said the bank is HSBC. The bank operated a division in the US called NRI Services through which it encouraged US citizens to open undeclared bank accounts in India, the 12-page criminal information said.
Sethi initially founded SanVision Technology Inc. in 1992 as a consulting company, which commenced operation in the current form in 1997. He is a software engineer by training and started his career at IBM. He later worked as a database architect in several Wall Street firms including Salomon Brothers, Smith Barney Shearson, Lehman Brothers and JP Morgan.
Sethi has an M.S., Physics, from Harvard Business School, a Master’s degree in Electrical Engineering and Computer Science, from the University of Illinois, and earned an M.B.A. , Finance and International Business, from the New York University Stern Business School.