Decades-long scheme involved hidden income, false documents, and undisclosed foreign accounts.

A former defense contractor and his wife have been indicted for a massive tax evasion scheme involving over $350 million in unreported income. The contractor, whose business supplied jet fuel to U.S. troops in Afghanistan and the Middle East, allegedly manipulated ownership records and concealed profits to avoid U.S. taxes.

How It Unfolded: A Multibillion-Dollar Business

From 2003 to 2020, the contractor co-owned two companies, Mina Corp. and Red Star Enterprises, which earned over $7 billion through Department of Defense contracts. These contracts provided essential jet fuel for U.S. military operations in the region. Despite generating massive profits, the contractor reportedly took extreme measures to avoid paying taxes on his share of the income.

His wife, a French citizen living abroad, was allegedly used as a front to claim ownership of the businesses. This arrangement aimed to exploit her non-U.S. tax obligations and obscure the contractor’s financial gains.

The Allegations

The indictment accuses the contractor and his wife of several fraudulent actions:

1. False Ownership Claims
   The contractor allegedly claimed that his wife founded and owned the companies. Documents signed by her supported this narrative. These included false claims that she “gifted” him money for personal expenses.
2. Misleading U.S. Authorities
   The couple presented this false narrative to various government bodies, including:
   1. A Congressional Subcommittee during a 2010 investigation.
   2. The Department of Defense during contract negotiations.
   3. The IRS during a 2015 voluntary disclosure application.
   4. The Justice Department in a 2018 presentation.
3. Unreported Income
   The contractor reportedly failed to file U.S. tax returns until 2015. Even then, he filed false returns, misrepresenting his business interests as his wife’s and understating his income.
4. Offshore Accounts and Shell Entities
   The contractor allegedly funneled millions into foreign bank accounts in jurisdictions like Switzerland, the Bahamas, and the UAE. These accounts were held under shell companies in Panama, Belize, and the British Virgin Islands to further obscure ownership.

Lavish Lifestyle

The contractor used these hidden funds to finance an extravagant lifestyle. He invested in ventures such as internet services for U.S. troops and a music television franchise in Eastern Europe. Additionally, he purchased luxury assets, including:

• A ski chalet in Austria.
• A home in Spain.
• A London townhouse.
• Multiple yachts.

All these properties were allegedly bought under nominees’ names to avoid detection.

Charges and Penalties

The indictment includes charges of conspiracy to defraud the United States, tax evasion, false statements, and violations of foreign bank account reporting obligations. If convicted, the contractor faces significant penalties, including:

• Up to five years in prison for conspiracy and each tax evasion count.
• Up to ten years for each violation of foreign bank account reporting rules.
• Restitution, monetary penalties, and supervised release.

A federal court will determine the exact sentences after considering statutory guidelines.

International Collaboration in the Investigation

The investigation involved multiple agencies, including the IRS Criminal Investigation, the Special Inspector General for Afghanistan Reconstruction, and tax enforcement authorities from the U.K., Australia, Canada, and the Netherlands. Spanish authorities assisted with the contractor’s arrest.

This case highlights the global reach of tax enforcement and the consequences of evading U.S. tax laws.

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