Tuesday, November 29, 2022

Diamond Dealer Did Not Make the Cut and Agrees To Pay $1.3M In FBAR Penalties

According to Law360A diamond dealer agreed Thursday to pay $1.3 million as part of a consent judgment in New Jersey federal court settling allegations that he failed to report his overseas bank accounts.

Favi Cahan of Toms River, New Jersey, agreed that he willfully failed to file Reports of Foreign Bank and Financial Accounts from 2005 to 2008, according to the decision entered by the U.S. District Court for the District of New Jersey. The U.S. had accused him of owing $1.5 million in penalties and interest.

Cahan became a permanent U.S. resident around 1990, according to court documents. The U.S. claims Cahan traveled to Switzerland in 1997 and opened a bank account at UBS, declaring himself the beneficial owner of assets deposited.

Simultaneously, Cahan granted a brother, Jehuda Cahan, power of attorney over the account, and gave a Swiss asset manager named Felix Kramer full discretion to invest the funds, the U.S. said. By the end of 1997, the U.S. said, the account's balance was about $2.1 million.

From 2005 to 2008, Favi Cahan directed 19 transfers from his UBS account, drawing down the balance from about $1.9 million at the beginning of 2005 to about $1 million in 2008, the U.S. said.

IRS assessed civil penalties against him in 2020 for $425,000 for each year from 2005 through 2007 and $100,000 for 2008, for a total of $1.375 million. By March 2022, he had accrued interest on his unpaid liabilities and incurred other additions such that his outstanding debt had grown to more than $1.5 million, the government said.

Favi Cahan describes himself as "a scion of the Cahan family — Belgian diamond dealers of renown,'' who distinguished himself "as an aficionado in the influential Antwerp Diamond Bourse'' on FaviCahan.com, which redirects to the website for FCD Corp., a jeweler in Manhattan's Diamond District.

A section on FCD's website said Favi Cahan was a senior executive at Israeli diamond wholesaler LID before he moved to New York City in 1990 and "transferred his passion and talents to 47th Street," joining "the prestigious Diamond Dealers Club."

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