Joshua LeVay set up more than 300 offshore companies for clients and sold them direct from the web, with the expectation of still making a large profit each time, according to Canadian court records. He even formed another company when he didn’t have enough to pay his taxes.
“The system is broken,” LeVay told The Washington Post in an interview. “It’s a manipulation of the system to make people rich and lazy.”
A federal tax receiver in Canada shut down the offshore corporations on Thursday. It had been following a Justice Department lawsuit accusing LeVay of helping wealthy people move money offshore to avoid paying taxes, and then lying to American tax authorities about the circumstances of it. The closed companies appeared to be a sophisticated system for hiding assets from paying taxes. It was created, and mass-produced.
To set up a new international corporation, LeVay sold his client a legal document with the name of the corporation and paperwork outlining the exact details, as well as collateral information for the company, Canadian court records show. LeVay also collected 100 percent of the money put into the corporation while it was running.
“There is absolutely no consideration that you would sell your client a complicated financing instrument and then be completely honest and openly disclose the precise circumstances of its creation,” former Justice Department tax litigator Adam Hochman said in a statement. “The response of the Receiver General is clear: The Crown can shut down any corporation that is engaged in this sort of blatant deception.”
LeVay said he didn’t take in a penny of commissions for his work, and he never sold the company to another person.
He invested the proceeds in property, and claimed they were already owned, LeVay said.
“The Crown has the distinction of having completely switched positions over the years,” he said, arguing that the accounts he set up were legitimate.
Canada has made significant progress on clamping down on offshore tax evasion, but the feds have yet to prosecute companies or individuals. Ottawa has promised to do so, but it’s unclear how it will go about it and who will take the lead.
Meanwhile, thousands of offshore companies are still operating in several dozen countries, based on the 2016 Global Initiative to Combat Money Laundering & Terrorist Financing, an industry group. Some will likely remain open if they don’t meet new regulations.
Tax receiver files more than 300 actions against offshore corporate operators to recover millions in missing federal taxes. https://t.co/R3jpy3etjo (Canadians) #toronto https://t.co/HK0qNGfjTR — Canada Tax Receiver (@canadataxreceiver) November 8, 2018
LeVay has had tax problems before. He and his wife owe over $23 million in federal taxes and, along with some of their children, were put in bankruptcy in 2015. The Taschen-brand, U.S.-based library chain bought the couple’s Washington home, amid a lawsuit brought by the U.S. government over unpaid taxes.
The tax-denial schemes spread to a large number of states, which many consumers found to be the only way to protect their assets and income from a criminal probe into the misuse of offshore trusts.
Read the full report from The Washington Post.