Ever since the United States hosted the World Cup Finals in 1994, soccer has struggled to find a place in the overwhelmingly crowded American sports landscape. So, if you subscribe to the theory that there’s no such thing as bad publicity, the recently-unsealed indictments in New York may be the best thing to happen since internationally-renowned striker and noted metrosexual David Beckham joined the Los Angeles Galaxy in 2007.

The indictments certainly weren’t good news for the 14 people named in the court documents; six of which have already entered guilty pleas. The list is a veritable who’s who at Fédération Internationale de Football Association (FIFA) and Confederation of North, Central American and Caribbean Association Football (CONCACAF). Of particular note to fans are the allegations that these FIFA luminaries accepted blood money in awarding the 2022 Cup finals to Qatar, a party that U.S. Soccer sorely wanted to host. It’s rather safe to assume that, one the Land of the Free lost this event to the Land of the Desert Mirage, government auditors suddenly became football fans.

But perhaps the most troubling points are that these men are smart guys who employed sophisticated means to cover their tracks, and once the government started snooping around, it took investigators very little time to unravel the whole thing. More on that later.

Busted

As they say in the sports world, you can’t tell the players without a scorecard. Here are a few of the more relevant highlights.

The dominoes began to fall when Charles Blazer, the former CONACAF general secretary, waved indictment and pled guilty to a 10-count indictment, which included allegations of money laundering, income tax evasion, and failure to file a Report of Foreign Bank and Financial Accounts (FBAR). As a rule of thumb and an aside, any time a criminal defendant “waives” anything, the prosecutor’s case is typically stronger than normal.

According to the New York Daily News, Mr. Blazer was riding his scooter on Fifth Avenue one autumn day in 2011. He was accosted by G-Men in cheap suits who allegedly told him, “We can take you away in handcuffs now or you can cooperate.” Mr. Blazer chose what was behind Door Number Two and agreed to wear a keychain embedded with a microphone to the 2012 London Olympics. He surreptitiously recorded conversations with international football officials, many of whom were later indicted.

Mr. Blazer forfeited $1.9 million upon entering his plea, and agreed to pay a “second amount” at the sentencing hearing. In other words, federal investigators were still tallying the bill. He also faces up to 10 years in prison for failure to file a FBAR and five years for tax evasion.

Eugenio Figueredo, a FIFA official and former president of the South American Football Confederation (CONMEBOL), pled guilty to similar charges under similar circumstances. In addition to the probable revocation of his United States citizenship, Mr. Figueredo faces a maximum five years in prison for each tax charge.

Daryll and Daryan Warner, the sons of former FIFA vice-president Jack Warner, were also caught in the dragnet. In another surreal event, Daryan allegedly sashayed into a Chase branch in Queens to deposit €7,500, or $10,636.50. Since it was a cash transaction of over $10,000, the teller asked Daryan for his drivers’ license. Probably because he was feeling the heat, Daryan asked for €500 back to push the transaction below the $10,000 threshold. Alas, it was not enough to escape the steely gaze of the IRS, and both he and his brother are looking at up to 10 years apiece for structuring financial transactions to evade currency reporting requirements.

All told, the people named in the indictment are charged with:

• Creating and using shell companies, nominees and numbered bank accounts in tax havens and other secretive banking jurisdictions,

• Actively concealing foreign bank accounts,

• Structuring financial transactions to avoid currency reporting requirements, and

• Using safe deposit boxes in furtherance of income tax evasion.

Tax Crimes and Criminal Prosecutions

We spend a lot of time discussing standalone tax prosecutions, and rightly so. But these financial misdeeds also have folks in the FBI salivating, because even though the laws are much more complicated than they used to be, these allegations are comparatively easy to prove.

These matters are very objective and straightforward. Accurate returns were on file before the deadline, or they were not. There are some defenses to these charges and the government may have a hard time proving willful failure to file, but most lawyers play these cards to reduce the sentence.

The key takeaway from the FIFA imbroglio is that if you have unfiled or inaccurate returns, the government will hunt you down. You can take action to untangle the knot and reduce or eliminate your own liability, or you can wait for this moment.

Original Post By:  Michael DeBlis