Two investment and trust management companies affiliated with Cayman National Corporation pleaded guilty Wednesday in U.S. federal court to conspiring with American taxpayers to hide about US$137 million in accounts managed by those companies from the U.S. federal tax authority, the Internal Revenue Service.
As part of the plea agreement, Cayman National Trust Co. Ltd. and Cayman National Securities Ltd. agreed to forfeit US$6 million based on revenues earned in the scheme, as well as lost tax revenues to the U.S. and a fine. In addition, the companies agreed to turn over account information on the alleged tax evaders whose accounts they managed.
The pleas made Wednesday represented the U.S. Department of Justice’s first criminal conviction of non-Swiss financial entities for tax evasion conspiracy.
“The veil of secrecy has been lifted from what was once a common place for criminals to hide their money offshore,” said IRS criminal investigations chief Richard Weber.
No individual criminal convictions were recorded as part of Wednesday’s plea announcement.
Cayman National Corporation’s shareholders were informed of the pending court action last year in the company’s 2014/2015 fourth quarter financial statements ending Sept. 30, which identified the US$6 million settlement figure. Those statements were released in December 2015.
Cayman National Corporation is the parent company of Cayman National Bank, as well as the trust and securities businesses.
Stuart Dack, the chief executive officer of Cayman National Corporation said in a press statement, “We are pleased finally to reach a conclusion to this matter. Many financial institutions around the world, including others in the Caribbean, have been under investigation for their roles in U.S. tax compliance matters.”
He added, “Upon learning of the investigation relating to [Cayman National Securities] and [Cayman National Trust], we fully cooperated with the U.S. authorities to the extent possible, including approaching the authorities before they approached us.”
The admitted conduct of Cayman National Securities and Cayman National Trust “is generally a historic issue,” Mr. Dack said.
“We deeply regret that the conduct occurred, and the conduct does not continue today. We have policies, procedures, and staff now to ensure that this conduct, which assisted U.S. taxpayers in evading their own tax obligations, does not occur again.”
Please see Friday’s edition of the Cayman Compass for the full story.