Foreign Corporations, a Doctor, and Alleged Sham Losses: Boy, This Sounds Familiar

You know how some recipes always say to add a pinch of salt or a teaspoon of sugar? It’s the same way when you read stories about foreign trusts and taxes. One quick glance at the headline and I already know the end result: Trouble.

As usual, when you have a recipe you lay out the ingredients:

  • One Successful Doctor in the U.S.
  • Several Foreign Corporations Allegedly Used to Create Phony Tax Losses
  • A Nevada Corporation or two (to add taste to the mixture)
  • A ‘Trusted’ Adviser who actually is an alleged accomplice

You then need to allow the mixture to simmer. In this case, the issues date from 1998 – 2003. That’s enough simmering.

What actually happened? At this point we only have allegations. The Department of Justice and the IRS allege that Dr. Edward Picardi of Rapid City, South Dakota, with the alleged aid of attorney Ira Kritt of Maryland, set up corporations in a variety of European countries (including some tax havens such as the Isle of Man).  Dr. Picardi, a successful surgeon, was allegedly an employee of these businesses.  The government alleges that Dr. Picardi baked up $2.7 million of losses in order to avoid $811,000 of taxes.

Although not noted in the news story I always wonder in cases like this about FBARs. Assuming that the money was really transferred, Form TD F 90-22.1 might have needed to be filed. The penalties are severe for not filing FBARs. But I digress….

Meanwhile, Mr. Kritt is already facing seven counts in a case of an Osteopath in West Virginia. As for Dr. Picardi, he faces five counts of tax evasion and is looking at a stay at ClubFed if found guilty.

Comments are closed.