Los Angeles- Zvi Sperling, of Beverly Hills, pleaded guilty to conspiring with others to defraud the IRS in the collection of income tax before U.S. District Court Judge John F. Walter on Friday.
Zvi Sperling, 62, formerly of Tel Aviv, Israel, admitted he opened and maintained foreign bank accounts, using nominee entities in Israel to conceal bank accounts and interest income. He also admitted he filed false tax returns by not claiming the foreign bank accounts and failing to report the interest income.
According to the plea agreement, Sperling and his brother own a business which sells wholesale goods imported from China. Around January 6, 2002, Sperling opened a bank account in Israel in the name of Orot Investments Limited, a nominee entity, an Island of Nevis corporation. He then transferred at least $100,000 from an account in China to the Orot account in Israel.
Sperling and his brother already had a foreign bank account in China, holding profits, not reported in the United States. A co-conspirator convinced Sperling to move the money from China into a bank account in Israel to avoid detection by the IRS. In furtherance of the conspiracy, bank statements were sent to an attorney in Israel who faxed the bank statements to Sperling in the U.S. Also, when Sperling visited Israel, he visited the attorney to look at his bank statements and visited other bank officials in the Israeli bank. Other bankers also gave Sperling advice on how to invest the money to avoid detection by the IRS.
Sperling and his brother also borrowed money from the Israeli bank to expand their business, using the Orot account in Israel as collateral. These loans were called “back to back loans.”
At one time there was about $4 million in the Orot bank account in Israel. Sperling never reported the undeclared Israeli account to the IRS by filing a Report of Foreign Bank and Financial Account (FBAR) and never reported the interest earned from the undeclared account on his federal tax returns.
Sperling also never told his accountant about his undeclared foreign bank accounts. For the tax years 2005 through 2008, Sperling failed to report interest income of approximately $381,563.
Sperling faces a maximum sentence of five years imprisonment, three years of supervised release and a fine of $250,000 at sentencing. Sentencing is scheduled for June 10, 2013 before U.S. District Court Judge John F. Walter.
