> This defendant schemed to export to China semiconductors with military and civilian uses, then he lied about it to federal authorities and failed to report income generated by the scheme on his tax returns
Funny how it always comes back to taxes, I wonder if that is how they were caught. I'm also curious how he was contacted by that Chinese company. Did he just get an email one day asking for chips in exchange for money?
I was having drinks with an accountant friend of mine who had/has clients in the budding borderline legal pot biz a little while ago and he said something interesting - we were talking about President's Trump's refusal to share his tax returns. Forgot the exact gotcha was but the jist of it was that you should ALWAYS report all your income even if it's not technically legally obtained.
On a side note, this friend of mine thinks the reason why the President isn't showing his returns isn't because of Russia but because his accountants may have done false filing of some shady business deals and the release of this data will place the President under serious legal troubles.
> On a side note, this friend of mine thinks the reason why the President isn't showing his returns isn't because of Russia but because his accountants may have done false filing of some shady business deals and the release of this data will place the President under serious legal troubles
This is the rationale a lot of laypeople give - but we need to remember the IRS isn't a bunch of laypeople. The entire purpose of the IRS is taxes - more-or-less.
I'm very confident that, by now - particularly with all the "Never Trump'ers" that surely populate some of the offices in the IRS - we'd have heard something tangible. I'm confident people at the IRS have looked into Trump and The Trump Organization's taxes quite a bit by now, and the lack of any "leaks" or public releases from the IRS or its employees really speaks to there not being anything there - other than complicated multi-national corporation taxes.
The act of not letting every Tom, Dick and Harry look at his personal tax filings and selectively choose pieces to misrepresent for political purposes isn't indicative of wrong-doing. I'm surprised it ever became a thing for any politician to do.
IRS is run under the Treasury, which yes may be part of the Executive Branch - but that doesn't mean there's 100% support for the current President in every desk. Just like any department, there's a lot of career employees and hold-overs from previous administrations. Just look at the EPA... or FBI.
Not to mention Trump just became president in 2016... they've had his entire life to review his taxes. Wouldn't there be a whiff of something foul, somewhere, if there was something nefarious going on there?
A lack of investigation does not mean a lack of criminal activity. IRS is perpetually understaffed and doesn't have the resources to go after HNW offenders, which is why auditing of lower income individuals has skyrocketed
We're talking about an organization that's existing for 96 years... and a person that's been an adult filer for 55 years. I'm confident the IRS has looked into it by now.
Other than disliking the guy - is there any evidence there's any "criminal activity" here?
The IRS audits the president continually, I believe they've done so for many years though I don't recall exactly when they started.
This particular president has been audited for something like 12 years consecutively as I recall. If there were something there to find, it likely would have been found by now.
Sure - there may be nothing wrong with his IRS tax filings; he may have gains or losses listed under "other" - but what does that mean? He reported them, and that's all that matters, right?
Except for the fact that there was a particular bank lending to him, the only bank in the world that would lend to him, because American banks would not.
And that bank is currently under investigation for money laundering activities for people in a certain other country; and many of those people have cozy relationships with the government of that country. And Trump is particularly cozy as POTUS with the leader of the government of that country.
So - what if the "other" amounts on his tax returns happen to match up in some way with certain amounts on the books with that bank?
I don't know - I'm not an expert in these matters - but something tells me it wouldn't bode well for Trump, and that might be the reason he's so cagey about his tax returns.
After all - if there were nothing there, he shouldn't really care, right? The fact that he isn't "calling their bluff" speaks volumes...
> After all - if there were nothing there, he shouldn't really care, right? The fact that he isn't "calling their bluff" speaks volumes...
Or the simple fact that almost nobody are tax experts and almost everybody would like to selectively pick pieces and misrepresent them for political purposes.
What would he gain by releasing them? What would anybody gain by releasing theirs?
I'd guess tax stuff's a hell of a lot easier to prove in court than a lot of other crimes. Heavy on figures and a defendant with no decent explanation of where the money came from or why they didn't report it, light on witnesses talking about anything other than the figures.
Taxes are the federal catch-all. It's like "disorderly conduct" or "resisting arrest" but for higher net worth individuals. If they can't prove the thing they actually want to get you for and can't trick you into lying to a federal agent then they go through your taxes and generally speaking most people involved in the kind of stuff the feds put you in prison for aren't paying taxes on said stuff in a manner that is fully consistent with law (paying what you owe is not necessarily enough to comply with the law for these purposes).
That is a very naive thing to assert. Federal tax law is expansive enough and provides enough discretion to the IRS that if they want you they can almost certainly get you, especially if there's anything you aren't totally above the board with. Remember, a lot of the law hinges on intent and if you made $100 selling drugs and claim you made $100 selling used TVs (and pay taxes accordingly) they'll likely be able to find some felony statute violation if they want to dig into it.
When they audit normal people they don't go all in like that. They want their money and it's gonna be hard for you to pay if they destroy your life by putting you in jail.
> if you made $100 selling drugs and claim you made $100 selling used TVs (and pay taxes accordingly) they'll likely be able to find some felony statute violation if they want to dig into it.
And in fact, the article mentions the crime that you could be charged with for lying about the source of your income: "making false statements to a government agency".
For many many years as a resident in China, I just reported some numbers on my 1040 with no documentation or explanation about where those numbers came from.
Even Al Capone went in for tax evasion. If you are going to do crime, just report and pay taxes on the income you get from it as “other”, the IRS doesn’t talk to the police for anything other than tax evasion.
I don’t know whether the IRS proactively shares information with law enforcement, though I wouldn’t be surprised, but I do know with absolute certainty that the IRS regularly works with law enforcement on many issues that don’t necessarily relate to tax evasion. Money laundering being chief among them.
There’s a bi-weekly process called “314(a) Information Sharing” that’s run by the Treasury Department under the USA PATRIOT Act. It requires financial institutions to pass all kinds of information on to the agencies in the Department - IRS, Secret Service, Customs, ATF, Homeland Security, etc. - who are looking into various matters. All of those agencies are under the same umbrella and they absolutely work together.
A good friend of mine is also a forensic accountant/investigator for the US Attorney’s Office so I know the IRS works closely with the DOJ though I’m not familiar with how that process works in practice.
In our recent ACAMS chapter event, the IRS person seemed very eager to be pro-active ( and in AML world the general push is towards greater surveillance anyway ). I don't know how common this attitude is, but I never hear anyone really challenging it either.
> IRC 6103(i)(1) provides that, pursuant to court order, return information may be shared with law enforcement agencies for investigation and prosecution of non-tax criminal laws.
They need a warrant, the IRS can’t proactively share tax info with law enforcement agencies for non-tax law reasons.
That is insane. Scratch that, it's surreal. There seems no logic for the government to offer this, and no logic for users to pay this tax. That is so strange.
> i presume it's offered because more tax revenue is more tax revenue.
Most states with these kinds of tax stamp laws passed them explicitly to create a new crime to charge people with, not to actually collect any tax revenue. In some cases it provides an excuse to seize property when state law would otherwise prohibit it (they aren't using civil/criminal forfeiture, just seizing property to payoff a tax debt). If you showed up to buy the stamps they wouldn't sell them - some states didn't even bother printing any.
Eventually this was tested in courts and squashed; the courts ruled you can't create an impossible-to-follow law just to catch people. If the law says you have to buy weed stamps then the state must actually sell them. The state also can't use it to entrap you (eg: by requiring you bring the weed to the tax office, then arresting you for possession).
There's a small cottage industry of folks who collect these tax stamps because they're so rarely issued. Most people don't bother buying them so the law still serves its purpose of giving prosecutors more crimes to charge you with.
I think it's that the state would rather receive the tax money than enforce federal law. As for the users, it protects them from state prosecution for tax evasion.
Which is why there's a certain individual here in the US who doesn't want us to see his tax returns, amid a chorus of his supporters who cry "But the IRS didn't find anything wrong with them, so what's the point?"
The point is, there was only one bank in the world (no US bank would lend this guy money, because he was such a bad risk due to all his financial schemings and bankruptcies, among other reasons) who would do business with this individual, and that bank is currently under investigation for money laundering for certain individuals of a certain country.
A country that is known for harboring fugitives wanted by the United States; a country this individual is very, very friendly with - so friendly, this individual has nary said any bad words for the leader of it. Indeed, he is very deferential with that person, almost like a lap dog. And why is that?
The answer might be the intersection between the information in the records of that bank, who they were working with from that other country in money laundering, and what amounts this individual has reported as "other" income or losses. For someone who has repeatedly in the past claimed that he would be open with his tax records, he's awfully cagey about them now.
One would think that if nothing was really there, he wouldn't care one way or the other...?
Did this certain person further crack down on this country and associated oligarchs, even after Congress passed sanctions, which this certain person signed? Did this certain person do far more to punish this country than this person's predecessor, even though the predecessor knew this country had been interfering with federal elections for well over a year and did nearly nothing to stop it?
You are revision history, badly. To take the dumb mask off, Obama was informed by the FBI of their suspicions of tampering. He knew it would look politically motivated, so he approached high members of congress about it ... and Mitch McConnnel refused to participate.
> I'm also curious how he was contacted by that Chinese company. Did he just get an email one day asking for chips in exchange for money?
The article states that he was actually the president of the Chinese company that he transferred the chips to: "The scheme was uncovered and investigators realized that Shih was the president of CGTC."
That's kind of how it works. He may have friends of friends or met someone from a professional's organization that learn either what kind of business he's in or what kind of resources he has access to. Contact is made and a relationship is formed to the point where the guy feels comfortable doing all of this for a big stack of money. He might be lied to and told everything is on the up and up (or at least told it's a legal grey area) or he might be in on everything and know that he's breaking the law.
> This defendant schemed to export to China semiconductors with military and civilian uses, then he lied about it to federal authorities and failed to report income generated by the scheme on his tax returns
Funny how it always comes back to taxes
These people were rank amateurs. You don't do something in this category of activity, unless you're planning to move back to China and you know the government authorities there will have your back. You don't commit a US federal crime that involves defense secrets, continue to live in the USA, and have that income noticed by the IRS. Also, the payoff needs to be commensurate with the risk. If you're not set for life, you're not doing it right. In fact, if given the opportunity, assume you won't do it right, and just don't do it.
I'm also curious how he was contacted by that Chinese company. Did he just get an email one day asking for chips in exchange for money?
I wonder if there are foreign agents conning US citizens into ex-filtrating sensitive materials and information? The average person would have no way of knowing if someone was using an assumed identity. Such agents could arrange to be out of the country when the deal went down, and certainly by the time the IRS gets involved.
Chinese business practices can sometimes be a bit scofflaw. I know that some Chinese exporters (at least used to) ignore certain procedures and documents, because the US personnel didn't have the manpower to enforce certain regulations, despite the fact that jail sentences could technically result. I'd bet a lot of IoT startup projects have run afoul of those regulations.
There's also a startup culture idea that people should be a "bit naughty" or engage in civil disobedience in the name of disruptive capitalism. That stops when it comes to the interests of the US Defense Department.
Tax evasion is actually a really clever way to catch for-profit criminals. They don't commit crime just to bury the proceeds in a hole, so they'll inevitably perform easier-to-observe criminal actions when they seek to enjoy their ill-gotten gains.
It has become very easy to hide money today. Shell companies are cheap and readily available. They can be had with functional bank accounts, phony board members, and subsidiaries in countries that don't make it easy to obtain ownership information.
You can enjoy your ill-gotten gains by proxy. Instead of taking a million and buying a house, you happen to find a great deal on a rental. Or find a company willing to loan you the money to buy a Ferrari at 0.9% interest with no repayment date stipulated.
Obviously this raises suspicions, but it provides enough cover to make tackling your case onerous enough that probably only a really determined and well-funded Federal prosecution team will come after you.
How widespread is industrial espionage between countries? Are people past a certain age considered more at-risk for a quick payout? If a 64 year old can do this, anyone can do this.
"An unnamed US firm which manufactured semiconductor chips and Monolithic Microwave Integrated Circuits (MMICs)". Does anyone have a concrete idea of what of tech we are talking about here? That you some how can get a sample of and also 219 years in prison for if you resell it to a Chinese company?
I do not know, but my first guess would be some sort of communications chip with embedded (possibly custom) military grade encryption/decryption used for voice communications in the field. The sort of thing where if you have the code of the day, you can listen to all the foreign military's voice communications in real time.
54 comments
[ 2.9 ms ] story [ 109 ms ] threadFunny how it always comes back to taxes, I wonder if that is how they were caught. I'm also curious how he was contacted by that Chinese company. Did he just get an email one day asking for chips in exchange for money?
https://en.wikipedia.org/wiki/Al_Capone#Tax_evasion
On a side note, this friend of mine thinks the reason why the President isn't showing his returns isn't because of Russia but because his accountants may have done false filing of some shady business deals and the release of this data will place the President under serious legal troubles.
This is the rationale a lot of laypeople give - but we need to remember the IRS isn't a bunch of laypeople. The entire purpose of the IRS is taxes - more-or-less.
I'm very confident that, by now - particularly with all the "Never Trump'ers" that surely populate some of the offices in the IRS - we'd have heard something tangible. I'm confident people at the IRS have looked into Trump and The Trump Organization's taxes quite a bit by now, and the lack of any "leaks" or public releases from the IRS or its employees really speaks to there not being anything there - other than complicated multi-national corporation taxes.
The act of not letting every Tom, Dick and Harry look at his personal tax filings and selectively choose pieces to misrepresent for political purposes isn't indicative of wrong-doing. I'm surprised it ever became a thing for any politician to do.
Not to mention Trump just became president in 2016... they've had his entire life to review his taxes. Wouldn't there be a whiff of something foul, somewhere, if there was something nefarious going on there?
https://www.irs.gov/pub/irs-soi/18databk.pdf
Other than disliking the guy - is there any evidence there's any "criminal activity" here?
This particular president has been audited for something like 12 years consecutively as I recall. If there were something there to find, it likely would have been found by now.
Except for the fact that there was a particular bank lending to him, the only bank in the world that would lend to him, because American banks would not.
And that bank is currently under investigation for money laundering activities for people in a certain other country; and many of those people have cozy relationships with the government of that country. And Trump is particularly cozy as POTUS with the leader of the government of that country.
So - what if the "other" amounts on his tax returns happen to match up in some way with certain amounts on the books with that bank?
I don't know - I'm not an expert in these matters - but something tells me it wouldn't bode well for Trump, and that might be the reason he's so cagey about his tax returns.
After all - if there were nothing there, he shouldn't really care, right? The fact that he isn't "calling their bluff" speaks volumes...
Or the simple fact that almost nobody are tax experts and almost everybody would like to selectively pick pieces and misrepresent them for political purposes.
What would he gain by releasing them? What would anybody gain by releasing theirs?
Not really, those are qualitatively judged crimes while tax evasion is very empirical. It doesn’t get fairer than that.
When they audit normal people they don't go all in like that. They want their money and it's gonna be hard for you to pay if they destroy your life by putting you in jail.
And in fact, the article mentions the crime that you could be charged with for lying about the source of your income: "making false statements to a government agency".
For many many years as a resident in China, I just reported some numbers on my 1040 with no documentation or explanation about where those numbers came from.
Source?
There’s a bi-weekly process called “314(a) Information Sharing” that’s run by the Treasury Department under the USA PATRIOT Act. It requires financial institutions to pass all kinds of information on to the agencies in the Department - IRS, Secret Service, Customs, ATF, Homeland Security, etc. - who are looking into various matters. All of those agencies are under the same umbrella and they absolutely work together.
A good friend of mine is also a forensic accountant/investigator for the US Attorney’s Office so I know the IRS works closely with the DOJ though I’m not familiar with how that process works in practice.
> IRC 6103(i)(1) provides that, pursuant to court order, return information may be shared with law enforcement agencies for investigation and prosecution of non-tax criminal laws.
They need a warrant, the IRS can’t proactively share tax info with law enforcement agencies for non-tax law reasons.
Unless the US Congress asks for them.
You can still get in trouble for possession of course.
Most states with these kinds of tax stamp laws passed them explicitly to create a new crime to charge people with, not to actually collect any tax revenue. In some cases it provides an excuse to seize property when state law would otherwise prohibit it (they aren't using civil/criminal forfeiture, just seizing property to payoff a tax debt). If you showed up to buy the stamps they wouldn't sell them - some states didn't even bother printing any.
Eventually this was tested in courts and squashed; the courts ruled you can't create an impossible-to-follow law just to catch people. If the law says you have to buy weed stamps then the state must actually sell them. The state also can't use it to entrap you (eg: by requiring you bring the weed to the tax office, then arresting you for possession).
There's a small cottage industry of folks who collect these tax stamps because they're so rarely issued. Most people don't bother buying them so the law still serves its purpose of giving prosecutors more crimes to charge you with.
Which is surely going to happen because people will pay taxes even anonymously, because it's such an enjoyable activity.
USAians in particular looove to pay tax!
(signed: a brit. Who knows nothing of history)
Edit: flippant, but now I can start to see the rationale. Thanks all.
The point is, there was only one bank in the world (no US bank would lend this guy money, because he was such a bad risk due to all his financial schemings and bankruptcies, among other reasons) who would do business with this individual, and that bank is currently under investigation for money laundering for certain individuals of a certain country.
A country that is known for harboring fugitives wanted by the United States; a country this individual is very, very friendly with - so friendly, this individual has nary said any bad words for the leader of it. Indeed, he is very deferential with that person, almost like a lap dog. And why is that?
The answer might be the intersection between the information in the records of that bank, who they were working with from that other country in money laundering, and what amounts this individual has reported as "other" income or losses. For someone who has repeatedly in the past claimed that he would be open with his tax records, he's awfully cagey about them now.
One would think that if nothing was really there, he wouldn't care one way or the other...?
https://www.npr.org/2018/02/21/587614043/fact-check-why-didn...
Congress unilaterally passed sanctions which the current WH administration objected to and failed to enforce.
https://www.politico.com/story/2017/08/02/trump-signs-bipart...
https://news.ycombinator.com/newsguidelines.html
The article states that he was actually the president of the Chinese company that he transferred the chips to: "The scheme was uncovered and investigators realized that Shih was the president of CGTC."
Funny how it always comes back to taxes
These people were rank amateurs. You don't do something in this category of activity, unless you're planning to move back to China and you know the government authorities there will have your back. You don't commit a US federal crime that involves defense secrets, continue to live in the USA, and have that income noticed by the IRS. Also, the payoff needs to be commensurate with the risk. If you're not set for life, you're not doing it right. In fact, if given the opportunity, assume you won't do it right, and just don't do it.
I'm also curious how he was contacted by that Chinese company. Did he just get an email one day asking for chips in exchange for money?
I wonder if there are foreign agents conning US citizens into ex-filtrating sensitive materials and information? The average person would have no way of knowing if someone was using an assumed identity. Such agents could arrange to be out of the country when the deal went down, and certainly by the time the IRS gets involved.
Chinese business practices can sometimes be a bit scofflaw. I know that some Chinese exporters (at least used to) ignore certain procedures and documents, because the US personnel didn't have the manpower to enforce certain regulations, despite the fact that jail sentences could technically result. I'd bet a lot of IoT startup projects have run afoul of those regulations.
There's also a startup culture idea that people should be a "bit naughty" or engage in civil disobedience in the name of disruptive capitalism. That stops when it comes to the interests of the US Defense Department.
Spying ain't what it used to be.
Tax evasion is actually a really clever way to catch for-profit criminals. They don't commit crime just to bury the proceeds in a hole, so they'll inevitably perform easier-to-observe criminal actions when they seek to enjoy their ill-gotten gains.
You can enjoy your ill-gotten gains by proxy. Instead of taking a million and buying a house, you happen to find a great deal on a rental. Or find a company willing to loan you the money to buy a Ferrari at 0.9% interest with no repayment date stipulated.
Obviously this raises suspicions, but it provides enough cover to make tackling your case onerous enough that probably only a really determined and well-funded Federal prosecution team will come after you.
https://www.popehat.com/2013/02/05/crime-whale-sushi-sentenc...