U.S. and Canadian Citizens Charged with Using Offshore Accounts and Foreign Nominee Entities to Launder Money

A recent indictment in the Eastern District of Virginia highlighted efforts by the IRS and DOJ Tax Division to identify and prosecute those who engage in tax fraud and money laundering, including by targeting the foreign investment advisors, lawyers and other professionals who assist them.

In the indictment, the U.S. government alleged that Joshua Vandyk, an American, and Eric St-Cyr, his Canadian business partner, helped undercover agents posing as U.S. clients to conceal and disguise the nature, location, source, ownership and control of $200,000, which were represented to be the proceeds of bank fraud. In the same indictment, federal prosecutors also charged Patrick Poulin, a Canadian lawyer based in the Turks and the Caicos Islands, with participating in the scheme by setting up an offshore foundation for the undercover agents to conceal the U.S. origins of their funds. Poulin allegedly transferred funds from the offshore foundation to Vandyk and St-Cyr in the Cayman Islands, who, in turn, invested the funds outside the United States.

According to a DOJ press release discussing the indictment, Vandyk and St-Cyr's firm represented that investments and investment gains would not be disclosed to U.S. authorities, nor would any monthly statements be issued for the firm's accounts. Clients were allegedly able to check their investments through the internet by using anonymous numeric passwords. In addition, the men allegedly told the undercover agents that they would charge clients more to launder criminal proceeds than to assist in tax evasion.

See: USA v. Vandyk Indictment; DOJ Press Release.