On September 13, 2024, the Department of Justice announced that Nigel Sinclair, a film producer, and Anthony Stewart, an Australian accountant, were indicted by a federal grand jury. They are accused of engaging in a decades-long conspiracy to hide Sinclair’s income and assets from the IRS, resulting in significant tax losses.
According to court documents, Sinclair, who founded multiple movie production companies, allegedly co-owned a production company called Intermedia in 2000. Sinclair is accused of holding half of his shares in Intermedia through a nominee company based in Malta, which he controlled. When Intermedia was listed on a foreign stock exchange, Sinclair allegedly sold his shares for around $25 million. Prosecutors claim that Sinclair and Stewart worked together to hide the proceeds by moving them into accounts in Switzerland under different names.
The indictment further alleges that Sinclair used these funds to finance a luxurious lifestyle, including private jet travel, purchasing a high-value guitar owned by a famous rock musician, funding his new production ventures, and building a large vacation home in Jackson Hole, Wyoming. Stewart and others are accused of using corporate structures and falsified documents to disguise the ownership and origin of these funds.
The indictment details that in 2004, one of Sinclair’s co-conspirators was arrested in Australia, and his seized laptop contained files related to Sinclair’s offshore dealings. This event reportedly led to a larger tax investigation in Australia called Project Wickenby. The government believes that in an effort to avoid further scrutiny, Sinclair, Stewart, and their co-conspirators took steps to conceal their actions, including moving assets under new names, destroying documents, and communicating through burner phones.
In 2015, Sinclair attempted to use the IRS’s Streamlined Domestic Offshore Procedures, a program designed to help taxpayers resolve foreign asset non-compliance with reduced penalties. However, prosecutors allege that Sinclair made false statements during this process, misrepresented his foreign assets, and did not report certain foreign accounts in later years.
Sinclair allegedly caused a tax loss to the IRS of more than $5 million. He and Stewart are charged with conspiracy to defraud the United States. Sinclair also faces charges for filing false tax returns, failing to report foreign bank accounts, and obstruction of justice. If convicted, they face significant penalties, including potential prison time. They both face a maximum penalty of five years in prison for conspiracy. Sinclair also face maximums of three years in prison for each filing a false tax return charge, five years in prison for each false FBAR charge, and 20 years in prison for the obstruction charge.
This case highlights that failing to disclose foreign assets and income can lead to severe legal consequences. If you have concerns about your tax compliance or need guidance on handling offshore financial matters, seeking professional legal advice is essential.
The attorneys at Chilivis Grubman represent clients of all types and sizes in connection with tax fraud. If you need assistance with such a matter, please contact us today.