California Medical Manufacturer Sentenced to Prison for Foreign Bank Accounts in India

A San Jose medical device manufacturer was sentenced yesterday in Federal Court to 6 months in jail, according to a DOJ press release today.  The IRS has also assessed a penalty against him in the amount of $14,229,744.

The sentence is actually relatively light considering the facts of his case, though.  Unlike many who keep accounts offshore for asset protection, Desai's accounts generated significant interest income, more than $1.2 million over 2007-2009.  Furthermore, this is not case of a strict FBAR violation because that interest income was not reported on his returns, causing an under reporting of taxes of about $350,000.

Even in tax cases where a taxpayer accepts responsibility and pleads guilty, an omission of $350,000 would generally fall under offense level 16 (18 under Table 4.1, -2 for acceptance), for a guidelines sentence of 2 years, give or take 3 months.  In this case, Desai went to trial and was convicted by a jury, and the guidelines advise judges to sentence between 2 years and 3 months to 2 years and 9 months.

This case, then, continues the pattern of judges giving relatively light sentences to FBAR offenders.

Wilson Tax Law Group handles criminal tax cases.  The firm also handles voluntary disclosures of foreign bank accounts with the IRS, which, if done early enough, can avoid criminal charges.