Divorce & Hidden Money: A Farm Equipment Company & Tax Fraud
This 42nd post in my Divorce & Hidden Money series mentions a divorcing wife, (Person “A”), believed to have hidden her ownership of a farm equipment company (Company “A”). This post is also about Mr. Dusko Bruer of Palm Beach County, Florida who had supposedly gifted Company “A” to Person “A”. Meanwhile, in USA v. Bruer prosecutors filed their January 30, 2020 criminal information accusing Mr. Bruer of hiding money from the IRS in secret offshore bank accounts and otherwise.
I) PERSON “A” HID COMPANY “A” DURING HER DIVORCE
Mr. Bruer employed Person “A” as his personal assistant and as a bookkeeper for Company “A”. To possibly hide assets from the IRS, Mr. Bruer gifted his Company “A” to Person “A” in or about September 2009. At that time, Person “A” was embroiled in a contentious divorce case. During the divorce, Person “A” hid her supposed ownership of Company “A” from her husband. Person “A” did this by using her relative, (Person “B”), as the straw owner of Company “A”. At corporate records for Company “A,” Person “A” &/or Person “B” indicated Person “B” was the owner. However, Person “B” lacked the authority to run daily operations at Company “A”; and Person “A” and/or Mr. Bruer are believed to have been the true beneficial owner[s] of Company “A.”
II) MR. BRUER CONCEALED ASSETS/INCOME FROM THE IRS
Although Mr. Bruer purported to gift Company “A” to Person “A” in or about September 2009, Mr. Bruer apparently retained control over bank accounts belonging to Company “A”. After 2009, Mr. Bruer reportedly used these bank accounts:
- to pay hundreds of thousands of dollars for his personal expenses, make investments offshore, and transfer money to his relatives and an employee;
- in or about 2010 to purchase a 54-foot yacht called “Hawk’s Nest” for $235,000;
- between 2010 to 2014 to pay about $135,000 for the service; registration; and docking of Hawk’s Nest and another yacht;
- between 2012 and 2013 to pay a relative’s condo fees in NYC amounting to about $21,000;
- between 2011 and 2014 to transfer approximately $540,000 to another company Mr. Bruer owned.
One year after Mr. Bruer “gifted” Company “A” to Person “A”, Company “A” allegedly stopped filing US Corporation Income Tax Returns (Form 1120’s); and seemingly stopped paying income tax. Beginning in 1999 Mr. Bruer also allegedly stopped filing true Individual Income Tax Returns (Form 1040’s); &/or stopped paying federal income tax.
In U.S.A. v. Bruer, prosecutors additionally allege Mr. Bruer hid money in secret offshore bank accounts in Switzerland, Germany, Croatia and Serbia. Prosecutors say between 2007 and 2014, Mr. Bruer failed to report over $7.7 million in income and failed to pay more than $2.7 million in taxes. As set forth by his December 20, 2019 plea agreement, Mr. Bruer pleaded guilty to evading taxes in violation of 26 U.S.C. §7201 & failing to report foreign bank accounts in violation of 31 U.S.C. §§ 5314 & 5322. Mr. Bruer’s Factual Proffer Statement is available here and his sentencing is set down for June 12, 2020.
III. THE ASSET CONCEALMENT RED FLAGS
The following are red flags that Person “A” and Mr. Bruer had possibly concealed assets:
- Fraudulent Asset Transfers—during Person “A’s” divorce, Person “A'” seemed to transfer Company “A” to Person “B.” This was a suspected fraudulent transfer. Likewise, Mr. Bruer’s 2009 gift of Company “A” to Person “A”, could have been a fraudulent transfer. To analyze whether a fraudulent transfer has actually happened, courts usually look for the badges of fraud.
- Nominees—Person “A’s” use of Person “B” as the straw owner of Company “A” is an example of using a nominee to hide assets. Mr. Bruer also seems to have employed Person “A” as his nominee when he gifted Company “A” to Person “A” in 2009.
- Offshore Bank Accounts—as already mentioned above, prosecutor’s in U.S.A. v. Bruer allege Mr. Bruer hid assets &/or money from the IRS by maintaining secret bank accounts in Switzerland, Germany, Croatia and Serbia.
Copyright 2020 Fred L. Abrams
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