On May 9, 2016, the Justice Department announced it first FATCA related conviction. The case itself was the first time that the U.S. government had brought criminal charges based upon alleged violations of FATCA. Gregg R. Mulholland is a dual U.S. and Canadian citizen who ran an offshore broker-dealer and investment management company based in Panama and Belize. Mulholland, along with other defendants, were indicted in 2014 by a grand jury in the Eastern District of New York. It was alleged that he led the ‘Mulholland Group’ which participated in three interrelated schemes.
First, the Mulholland Group convinced U.S. investors to purchase stock in thinly-traded public U.S. companies through fraudulent promotion of the stock; the group hid their ownership interest in the stock and artificially manipulated price movements and trading volume. Second, they circumvented the IRS’s FATCA reporting requirements. Third, the group laundered money from the fraudulent stock practices to and from the United States through five offshore law firms. Their scheme also helped assist U.S. clients evade U.S. tax reporting requirements by concealing the proceeds made from the manipulated stock transactions through shell companies and their nominees in Belize, Nevis and the West Indies. Mulholland’s strategy for abusing financial markets attracted the attention of the U.S. government.
Mulholland plead guilty to the charges which included manipulation of more than 40 publically traded U.S. companies through which more than $250 million in profits were laundered through the United States.
With the first FATCA conviction now on the books, it is likely that the DOJ will continue to crackdown and criminally prosecute FATCA related charges.