Friday, May 10, 2024

Doctor Facing Jail After Failing to Repatriate $1M FBAR Judgment

According to Law360, a Michigan doctor faces jail time after a federal judge ruled him in contempt of court for not complying with an order to deposit $1.1 million into a bank to cover a judgment for failing to report his foreign bank accounts.

James J. Kelly Jr. has had multiple opportunities to comply, and the threat of prison is necessary, U.S. District Court Judge Gershwin A. Drain said in an order Wednesday, January 4, 2024.

"Incarceration in addition to the daily fine is warranted in this case because defendant will likely be unmoved to comply with this court's repatriation orders by the imposition of a daily fine based on his contumacious conduct before the court," Judge Drain wrote.

Kelly Had Argued That He Should Not Be Held In Contempt Because He Had Complied With Other Orders, Such As Surrendering His Passport. That Does Not Excuse Him From Ignoring An Order To Repatriate Funds, The Judge Said.

Kelly also argued that liquidating his overseas funds is expensive, but he has enough money, Judge Drain said. Kelly's claims that he needs time to obtain a bond for the judgment fall flat because he has had plenty of time to do so, Judge Drain said.

The court granted the U.S. government's request for summary judgment against Kelly in May, ruling he had deliberately concealed assets he maintained at Finter Bank in Switzerland without filing the required foreign bank and financial account reports from 2013 to 2015. The court issued an order in October that instructed Kelly to deposit assets in a Michigan bank sufficient to satisfy the outstanding debt of $1.1 million.

The court denied Kelly a stay in November and ordered him to deposit the funds by Dec. 1, which he failed to do, according to the order.

The court ordered Kelly to surrender to U.S. authorities by Friday, saying it would issue an arrest warrant for him otherwise. It also fined him $100 for each day that he did not comply.

The federal government has said Kelly opened the Finter account in 2008 when he left the U.S. to avoid a criminal inquiry, according to court documents. 

The bank advised him to consider joining the Internal Revenue Service's Offshore Voluntary Disclosure Program, according to the U.S. government. Kelly joined the program but eventually stopped cooperating with the agency and in 2015 he transferred the funds to Bank Alpinum AG in Liechtenstein, the U.S. said.

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