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On the Panama Papers, Instagram, and Kroupa - by Daniel L. O’Neil

by News Editor
in Blog
on 05 April 2016
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It has been a whirlwind of exciting news lately that all centers around one thing: hiding assets in most cases is probably illegal and eventually there may be legal consequences.

Panama: not just a picturesque landscape in later seasons of the television series Prison Break.

The Panama Papers was a massive data leak detailing alleged worldwide corruption through an offshore alleged money laundering firm. Journalists around the world spent more than a year investigating leading up to the leak which began the other day with international elites and has promised to later release names of Americans. Already this has become a very important, very large story with protests against the Iceland Prime Minister already having led to his official resignation today on account of his relationship with the firm and his hidden offshore assets. What further implications there will be is unknown.                                

The firm in question is alleged to have created thousands of “shell companies” with company directors “for hire” that obscured the true ownership of multi-million dollar assets, and rubber stamped any transactions the beneficial owners of the shell companies wanted the directors for hire to sign off on. For as many practice areas as there exist in the practice of law, the asset hiding creates legal problems in nearly all of them: but most urgently probably in the tax and white collar criminal defense practices which have been seeing a large influx of new initial client consultations for advice in advance of the American list being leaked. If you are hiding assets and you have not talked to a lawyer, talk to a lawyer. If you are not hiding assets but find the whole thing interesting from a legal perspective then you can read more on the Panama Papers here and keep up to date with the newest live updates here as we await the leak of the Americans named.

Instagram: not just a way to tell the world what you had for lunch

Practicing law in the social media age is a lot different than it used to be before the world of iPhones and constant status updates about the minutiae of every life, both the good and the bad. Pretty much every lawyer tells their client to be extremely careful about what they put on social media. In every contested divorce case I have been involved in since the era of MySpace (this dates me I am afraid) social media has factored in prominently in one way or another, and usually the photos are of a very adult nature, and constitute what is best known as “oversharing” with the world wide web.

The most well-known “overshare” involved a rap artist back east going through bankruptcy proceedings who had to declare all assets and live underneath a microscope during the proceedings. This rap artist took that to mean it would be perfectly fine to post a selfy with large stacks of cash that he had not declared in any of his filings. Unsurprisingly the bankruptcy judge was not amused and hauled the rap artist in front of him to explain this situation.

From there, the newest “overshare” now is not even the individual adult that needs to keep a low profile while going through the court system: now it is the teenage children that are spilling their parents’ closely held secrets. On Instagram as some people like to flaunt a luxurious lifestyle to the world, sometimes this creates problems for the legal problems the adults of the family are facing. One notable recent occurrence in a debt recovery case had the father of the family declare in filings that the family owned no items of significant value; which seemed at odds with his son posting a selfy on the family’s $22,000,000 yacht in the Caribbean. Appreciably, this creates a few different new legal problems for the family. The same kind of thing happens routinely in divorce cases – many of them, where one spouse claims to be broke, can be solved by monitoring location tagging of your children’s social media posts. Read more on the Instagram effect here

Tax problems: even retired Tax Court Judges can have them

Retired U.S. Tax Court Judge Diane Kroupa, a notorious judge in Houston tax circles especially, is back in the national spotlight. Minnesota’s U.S. Attorney has alleged that she and her political lobbyist husband conspired to make phony tax returns and obstruct an IRS audit, understating about $1 million in taxable income during her term as a judge. "The tax laws of this country apply to everyone," U.S. Attorney Andrew Luger said in a statement Monday. Read more here

In summary, it has been an exciting cycle of news lately. These are just three of the biggest things happening right now, but they all share a common thread: legal advice is important if you are thinking about taking risky tax positions that the government can later challenge.

If the government is alleging that you have tax fraud, tax evasion, or other tax & white collar crime problems related to hidden assets and shell companies overseas you might consider an initial consultation with your friends here at Frye, Oaks, Benavidez & O’Neil, PLLC. We know that you are innocent until proven guilty in a court of law and while we explicitly cannot guarantee any outcomes (and past results do NOT guarantee future outcomes) we are willing to comb through the facts of your specific situation, analyze the evidence, argue the law, and stand beside you every inch of the way as we defend your family’s honor and explain your tax positions to the government.

713 227-1717