On Sept. 9, 2014, in U.S v. Robert Bandfield et al., federal prosecutors in the Eastern District of New York announced the indictment of a U.S. citizen and others, including offshore corporate service providers (CSPs) and investment managers, for conspiring with numerous U.S. citizens to violate securities and tax laws, including evading reporting obligations under the recently implemented Foreign Account Tax Compliance Act (FATCA).

According to U.S. prosecutors, the defendants engaged in a $500 million offshore securities fraud, tax avoidance and money laundering scheme. The indictment describes a sophisticated multi-agency undercover operation and clearly demonstrates the United States’ commitment to use a wide variety of law enforcement tools to combat offshore tax evasion and financial fraud. Notably, last week’s indictment is the first time a FATCA violation has been charged as an “overt act” in furtherance of a tax conspiracy and securities fraud and strikes a cautionary note for financial institutions and financial service providers that may be used as instrumentalities of crime.

Originally published in Law360 – September 16, 2014.