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14 July – LAWFUEL – The Law News Network – The United States Attorney’…

14 July – LAWFUEL – The Law News Network – The United States Attorney’s Office for the Northern District of California announced that Randolph S. Bronte, formerly of Tiburon, was sentenced late yesterday by Judge Charles Breyer to 41 months in prison and ordered to pay a fine of $150,000, and costs of prosecution of $21,453.22 for evading approximately $1.5 million in taxes.

On March 2, 2005, Randolph S. Bronte, 53, was convicted of five counts of tax fraud by a federal jury. After a six day trial and a short deliberation, the jury convicted Mr. Bronte on two charges of tax evasion and found that the defendant filed false federal income tax returns for the years 1998, 1999, and 2000. The defendant had been remanded into custody by Judge Breyer after the jury verdict because the Court found that he was a flight risk. The IRS made a jeopardy assessment against the defendant immediately after the conviction and has collected a total of $1,027,279.06 since the defendant’s conviction from the sale of Mr. Bronte’s residence in Tiburon and from a levy on an account at Wells Fargo Bank.

In a second superseding indictment, Bronte was charged with two counts of tax evasion and three counts of filing false tax returns involving the years 1998-2000. The evidence at trial showed that during those years the defendant failed to report $4,888,515 of income from his offshore hedge fund activities. As a result, Bronte evaded approximately $1.5 million in taxes.

The federal income tax returns the defendant prepared and filed for the years 1995-2003 showed claimed operating losses in each year for a total of almost $1.6 million. Since 1994, the defendant has paid no income tax and has reported no taxable income. During this period, the defendant bought a house for approximately $7 million and a vacation home in Squaw Valley, California.

Bronte claimed his income was gifted from his wealthy in-laws in Japan. The defendant claimed that his in-laws had accounts in the Cayman Islands and Bermuda and used those accounts to wire funds to the defendant and his wife. The entities purportedly used by his in-laws to hold their assets were called Quantitive Investment LTD and Dartmoor Holding LTD. The evidence at trial showed that during the years 1995-2000 approximately $6,500,000 was wired from these entities for the benefit of the defendant and his wife. The evidence showed that the defendant was laundering his business income through bank accounts and entities in the Cayman Islands to conceal their true source.

The evidence at trial also showed that his in-laws were not wealthy, and that his wife and her parents are deceased. The only remaining family member was the defendant’s sister-in-law. In her deposition, taken in Tokyo, Japan on December 13, 2004, she testified that her parents were not wealthy. The evidence also showed that the defendant had lied about the source of his income to bankers, accountants, IRS agents, and his own attorney. The evidence also showed that the money was from the defendant’s offshore business activities, which he had hidden in accounts in the Cayman Islands, Bermuda, and the British Virgin Islands.

The defendant is native of Los Angeles, California, and currently resides in Tiburon, California. Upon graduation from college, Bronte moved to Tokyo, Japan where he was employed by a medium-sized Japanese securities firm.

By 1983, Bronte joined Morgan Stanley & Co., Inc. as a vice president where he built a large business in Japanese equity warrants and convertible bonds. In 1989, at the peak of a seven year bull market in Japanese shares, Mr. Bronte became a director of the Swiss Bank Corporation with a mandate to design hedging strategies for the bank’s considerable holdings of Japanese equity warrants and convertible bonds. In August 1994, Mr. Bronte moved his base of operations from London, England to Tiburon, California to have better access to a growing American interest in investment in the region.

In 1999, he incorporated Stephen Bronte Advisors LLC to accommodate a substantial growth in assets under his management. He formed a private hedge fund based in Bermuda called Sakura Fund, LTD, which bought and sold Japanese securities. He also formed a domestic entity called Sakura Fund, LP.

Following the return of the verdict last March, Judge Breyer immediately remanded the defendant to the custody of the U.S. Marshals finding that he was a substantial flight risk. In making this ruling, the judge said that, from his review of the evidence, it was clear that the defendant had repeatedly lied, that because the defendant was facing a lengthy prison sentence and had money offshore, he was a substantial flight risk.

In sentencing the defendant yesterday Judge Breyer said that the defendant was a liar, thought he was smarter than the government agents, and a flight risk because he had the resources, means, and ability to flee. Accordingly the Judge recommended that he be incarcerated in a facility, such as a medium security facility, that would inhibit his ability to flee.

The conviction is the result of a lengthy investigation by agents of the Internal Revenue Service – Criminal Investigation. Jay R. Weill, Chief of the Tax Division, is the Assistant U.S. Attorney who prosecuted the case.

British MP George Galloway and his opponent the Daily Telegraph will leave no stone unturned to sort out what could be a spectacular libel case.