A wide-ranging investigation into possible tax violations by customers of Trident Trust Group has started.

On Dec. 23, 2024, a federal judge approved the IRS’s request to demand records about U.S. taxpayers from a Manhattan-based affiliate of the Trident Trust Group and international banks related to the firm’s global activities.

According to a press release from the U.S. Attorney’s Office for the Southern District of New York, similar IRS requests are pending in two other U.S. states.

• https://www.justice.gov/usao-sdny/pr/irs-obtains-court-order-authorizing-john-doe-summonses-records-relating-us-taxpayers
• https://www.justice.gov/d9/2024-12/john_doe_summonses_order.pdf

The tax agency said it had identified several Trident Trust clients who used its services to break U.S. tax laws and is now seeking information about the firm’s other clients.

IRS commissioner Danny Werfel said in the Justice Department announcement.

• “U.S. taxpayers and their facilitators who hide offshore income generating activities and assets from the U.S. government are on notice that the IRS continues to prioritise combatting offshore abusive activities,”
• “These records will assist the IRS and its partners in finding those taxpayers, ensuring their compliance with the U.S. tax laws and delivering on our mission of a fair tax system.”

The court order authorises the IRS to serve a so-called “John Doe” summons on Nevis Services Limited, the Trident Trust affiliate in New York City, to obtain records related to its clients’ offshore holdings from 2014 through 2023.

https://www.justice.gov/d9/2024-12/john_doe_summonses_order.pdf

The IRS uses these summonses when seeking information about possible tax abuse by individuals whose identities are unknown.

In response to questions from ICIJ, Trident Trust said

• It knows the IRS's actions and alerts the authorities whenever its compliance processes raise concerns.
• “Each of our trust and corporate services businesses is regulated in the jurisdiction in which it operates and is fully committed to compliance with all applicable regulations,”
• “All clients are assessed via a thorough onboarding process.”

The Pandora Papers investigation was based on over 11.9 million leaked records from 14 offshore service providers, including millions of documents from Trident Trust. ICIJ reported that Trident Trust’s customers included Ecuador’s former president Guillermo Lasso, Chinese e-commerce magnate Jack Ma, and Israeli mining billionaire Dan Gertler.

• https://www.documentcloud.org/documents/21581101-trident_fletcher_ventures/

ICIJ’s report also examined Trident Trust’s connection to a network of shell companies associated with Russian politician and billionaire Suleiman Kerimov, who used to shuffle hundreds of millions of dollars worldwide.

• https://www.icij.org/investigations/pandora-papers/kerimov-putin-banks-secret-transfers-offshore/

The story detailed the activities of a former Kerimov associate, Alexander Studhalter.

In an apparent effort to obscure ownership of a shell company that transferred more than $300 million to Kerimov-linked firms, Studhalter listed a tattoo artist in his Swiss town on Trident Trust paperwork as the company’s owner.

• https://www.documentcloud.org/documents/21581101-trident_fletcher_ventures/

Several months after that story was published, the United States sanctioned Studhalter, noting that he had “allegedly laundered significant amounts of money on Kerimov’s behalf.”

• https://www.icij.org/investigations/pandora-papers/us-sanctions-financial-network-and-luxury-planes-linked-to-russian-oligarch-suleiman-kerimov/

The U.S. had previously sanctioned Kerimov about Russia’s occupation of Crimea. In June 2024, the U.S. lifted its sanctions on Studhalter.

Pandora Papers reporting also dug into Trident Trust’s activities in South Dakota, which has been identified as a new destination for ultrawealthy people worldwide — including some with questionable sources of income-seeking financial secrecy.

• https://offshoreleaks.icij.org/nodes/240556001

The Justice Department’s recent announcement noted that, in addition to investigating Nevis Services’ clients, federal authorities are seeking approval to demand customer records from Trident Trust’s operations in the states of South Dakota and Georgia.

David Utzke, a former IRS agent who won approval in 2016 to issue a high-profile John Doe summons for the customers of cryptocurrency exchange Coinbase, said

• U.S. courts set a high bar for greenlighting these summonses.
• “You can’t use it for fishing,”
• “You have to lay out a preponderance of evidence that this will show a large portion of this customer population has done something in violation of the civil code.”

In its request for the summonses, the IRS said

• It “has encountered numerous examples” of Trident Trust entities “helping U.S. taxpayers create foreign corporations and trusts and open foreign bank accounts, all of which were concealed by their clients from the IRS.”

The filing said that, in one instance,

• Trident Trust helped a U.S. taxpayer create entities that conducted a series of financial transfers, resulting in assets being held in Swiss bank accounts that were not associated with his name and hidden for a time from U.S. authorities.

The filing alleged several other instances of “tax noncompliance among U.S. taxpayers that was facilitated” by Trident Trust, which has offices in at least 28 jurisdictions outside the U.S.

The IRS said it has evidence suggesting additional Trident Trust customers “violated the internal revenue laws” and believes Nevis Services holds valuable records regarding these clients.

The proposed summons on Nevis Services would seek extensive information, including customer names, communications with Trident Trust’s many global affiliates, and records detailing asset transfers to foreign entities.

According to the filing, the IRS also seeks information from third parties, including courier services and banks. The filing stated that Trident Trust offers “mail-retention and forwarding services commonly utilised by U.S. persons seeking to avoid IRS detection of beneficial ownership and taxable income and assets.”

The IRS received court approval to demand extensive shipment records relating to Trident Trust from FedEx, UPS, and DHL, which would reveal the names of the firm’s U.S. clients.

The court also granted the IRS’s request to demand banking transaction data related to Trident Trust’s operations from the U.S. offices of several central global banks, including HSBC, BNY Mellon, Citi and Deutsche Bank. The banks and courier services are not accused of wrongdoing. The banks may not have worked directly with Trident Trust but provided so-called correspondent banking services to foreign financial institutions that give them visibility into U.S. dollar transactions across the globe.

The IRS did not respond to a request to comment on the investigation.

Eulonda Lea, a former supervisory special agent in the IRS’s Criminal Investigation Division, said

• The deployment of such extensive John Doe summonses is not an everyday occurrence at the agency.
• “The sheer number of entities covered in the John Doe Summons says to me that this is a wide-ranging investigation,”
• “It looks like a significant action in terms of [the IRS] trying to prove what’s going on offshore.”

Source

https://www.icij.org/investigations/pandora-papers/us-court-grants-irs-request-to-probe-clients-of-offshore-finance-giant/