(Bloomberg) Three Caribbean-based men who helped Americans hide assets from U.S. tax authorities were charged in a sting operation with laundering what they were told was dirty money.
The U.S. indicted Eric St-Cyr, a Canadian who ran a Cayman Islands investment firm; Joshua Vandyk, a U.S. citizen who worked at the firm; and Patrick Poulin, a Canadian lawyer who worked in Turks and Caicos, the Justice Department said Monday in announcing their March 12 arrests in Miami.
The men met with undercover agents who posed as a wealthy U.S. citizen, a financial planner, and an American “looking for ways to launder criminal proceeds and avoid taxes,” according to the indictment brought in federal court in Alexandria, Virginia.
St-Cyr, Vandyk and Poulin created “layers of transactions in foreign commerce through which their U.S. clients could launder criminal proceeds,” according to the indictment. They would “falsely disclaim knowledge of the fact that their clients were U.S. citizens who were using their services to launder criminal proceeds.”
The arrests came amid a U.S. crackdown on offshore tax evasion that has led to charges against more than 70 clients and about three dozen bankers, lawyers and advisers. More than 43,000 Americans avoided prosecution by disclosing accounts to the Internal Revenue Service and paying back taxes, fines and penalties.
“The IRS’s voluntary disclosure policy excludes disclosures after the government has received information about taxpayers’ identities,” Kathryn Keneally, the head of the Justice Department’s tax division, said in a statement. “If the investigation team now has the names of account holders who have not yet come forward, time has run out for them.”
Agents held their first meeting with the men on March 7, 2013, in Miami, where St-Cyr and Vandyk said their firm helped U.S. clients create corporations, trusts and foundations in offshore locations like the Cayman Islands and used foreign attorneys as intermediaries, according to the indictment.
St-Cyr and Vandyk said U.S. clients liked that nothing the company “does touches the United States,” prosecutors said. The agent posing as a money launderer said he was looking to move proceeds of a bank fraud offshore.
Four months later in San Francisco, Vandyk told agents they would take the proceeds “so long as the money was not linked to drugs or terrorism,” the government alleged.
They met in Quebec on Sept. 11, 2013, when Poulin said he would set up an offshore foundation that wouldn’t tie the agents to the money, according to the indictment. One agent allegedly said he had $2 million to launder, and he would start by moving $200,000.
Three months later, they met with one of Poulin’s partners in Turks and Caicos, with Poulin on the phone, according to the indictment. The lawyers set up an offshore foundation called “Zero Exposure Inc.” The agents allegedly later wired $200,000 to Poulin’s firm, and Poulin wired it to a Cayman account.
Agents met in the Caymans on Jan. 16, 2014, with Vandyk and St-Cyr, who discussed some of the finer points of their business, according to the indictment.
“Vandyk and St-Cyr indicated that use of a foundation as intermediary was the preferable process for money laundering, while use of a trust intermediary was sufficient for tax evasion,” prosecutors said. The men said they would charge more for laundering than tax evasion.
Court records show that Vandyk appeared March 18 in federal court in Miami and was released on a $250,000 bond, with an option to post 10 percent. Poulin is in custody and scheduled for a bail hearing on March 26. St-Cyr was ordered to remain detained through March 27 so IRS agents could transfer him to Virginia.
The case is U.S. v. Vandyk, 14-cr-00082, U.S. District Court, Eastern District of Virginia (Alexandria).