Minnesota Tech Entrepreneur Indicted in Multi-Million Dollar Offshore Tax Evasion Scheme

David V. Erickson, a former resident of Excelsior, Minnesota, and a licensed CPA, has been charged with multiple counts of tax evasion, assisting in the preparation of false tax returns and making false statements to federal agents. The indictment, which was unsealed today in St. Paul, Minnesota, has sent ripples through the tech and business communities, highlighting the severe consequences of tax evasion schemes.

From 2014 to 2018, Erickson, who operated Halstead Bay Holdings (HBH), a consulting firm based in Minnesota, is alleged to have engaged in a sophisticated scheme to hide income earned abroad from the IRS. The indictment accuses him of misrepresenting nearly $5 million as loans, which were actually payments from several foreign companies partially owned by him. These companies were involved in marketing and payment processing for an adult content website.

According to the indictment, Erickson orchestrated the transfer of millions of dollars from offshore accounts to his U.S.-based bank accounts. These funds were falsely recorded as nontaxable loans in HBH’s accounting records, leading to a purported debt close to $5 million by the end of 2018. The indictment details that Erickson used these funds for personal expenses, including buying a $1.3 million home and a luxury vehicle.

Further complicating the case, Erickson is accused of providing false information to his accountants and bookkeepers, leading to the filing of false federal income tax returns with the IRS. In interactions with IRS Criminal Investigation special agents, Erickson allegedly lied, claiming he had no authority to direct the foreign companies to send money.

If convicted, Erickson faces a severe legal penalty. Each count of tax evasion and making a false statement to IRS-CI agents carries a maximum sentence of five years in prison. Additionally, each count of assisting in the preparation of false tax returns could lead to three years in prison. The final sentence will be determined by a federal district court judge, taking into account the U.S. Sentencing Guidelines and other statutory factors.

The case’s announcement was made by Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Andrew M. Luger for the District of Minnesota. The IRS Criminal Investigation is conducting the investigation, with Trial Attorneys Amanda R. Scott and Boris Bourget of the Justice Department’s Tax Division leading the prosecution.

This case serves as a stark reminder to small business owners and entrepreneurs about the critical importance of compliance with tax laws and the severe ramifications of engaging in tax evasion schemes. It underscores the government’s commitment to uncovering and prosecuting complex tax fraud cases, ensuring that all individuals, regardless of their business or position, adhere to lawful tax practices.

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This article, "Minnesota Tech Entrepreneur Indicted in Multi-Million Dollar Offshore Tax Evasion Scheme" was first published on Small Business Trends