On April 30, 2014, a federal grand jury in Los Angeles, California, indicted Shokrollah Baravarian for Klein conspiracy: conspiracy to defraud the United States by impairing and impeding the IRS.
According to the indictment, Baravarian, a former senior vice president at the Los Angeles branch of a bank headquartered in Tel Aviv, Israel, widely believed to be Bank Mizrahi, conspired to conceal the existence of undeclared accounts owned and controlled by U.S. customers in Israel. Baravarian and his U.S. customer-conspirators opened the accounts under pseudonyms, code names and the names of nominee entities set up in the British Virgin Islands and the island of Nevis.
The indictment further alleges that Baravarian assisted U.S. customers in secretly accessing the funds in their undeclared accounts by obtaining back-to-back loans from the Los Angeles branch of the bank. According to the indictment, a back-to-back loan was a loan that was secured by funds in an undeclared account in Israel and issued by the Los Angeles branch to a U.S. customer. Baravarian is alleged to have helped conceal the fact that U.S. customers were using their own funds as collateral by purposely not keeping copies of loan-related documents in the files at the Los Angeles branch. These documents included Israeli account information and pledge agreements used to secure the loans. As detailed in the indictment, some U.S. customers obtained back-to-back loans from the Los Angeles branch by transferring funds to Israel from other foreign countries, including Switzerland and China.