The Tax Times: Expat Ordered Arrested for Skipping $20M FBAR Enforcement Hearing

A recent order out of the Southern District of Florida underscores just how aggressively the government is willing to pursue FBAR enforcement—even when the taxpayer is abroad and already facing a massive civil judgment.

In United States v. Schwarzbaum, a federal judge has now taken the unusual step of ordering the arrest of a U.S.-German expatriate who failed to appear at a court-ordered hearing tied to a nearly $20 million FBAR judgment.

Background: From FBAR Penalties to Contempt

The case has been closely watched for years. The government originally assessed substantial FBAR penalties against Isac Schwarzbaum for willfully failing to report foreign accounts in Switzerland and Costa Rica for tax years 2007 through 2009.

Key developments include:

· A 2020 finding of willful FBAR violations

· A 2022 judgment of approximately $12.5 million

· An Eleventh Circuit adjustment in 2024

· A revised 2025 judgment totaling approximately $19.6 million with interest and penalties

Despite the judgment, the government has alleged that Schwarzbaum moved assets abroad—reportedly maintaining tens of millions of dollars in Swiss accounts—while refusing to satisfy the liability.

The Court’s Escalation: Civil Contempt and Arrest

The latest development stems from Schwarzbaum’s failure to appear at an August hearing addressing the government’s motion for civil sanctions, including an order to repatriate foreign assets.

Judge Beth Bloom rejected several defenses for nonappearance, including:

· Lack of proper notice

· Health-related travel limitations

· Residence abroad

The court emphasized that Schwarzbaum made no effort to request a continuance or appear remotely.

As a result, the court:

· Found him in ongoing civil contempt

· Ordered his arrest

· Authorized incarceration until he complies (i.e., repatriates assets to satisfy the judgment)

· Referred the matter to the U.S. Attorney’s Office for potential criminal prosecution

This is a notable escalation—transforming what began as a civil FBAR enforcement action into something approaching quasi-criminal enforcement pressure.

Extradition Realities

One complicating factor is that Schwarzbaum resides in Switzerland.

Civil contempt alone is generally not extraditable under the U.S.–Switzerland treaty. However, the court’s referral for potential criminal prosecution introduces a new variable. If criminal contempt or related charges are pursued, Swiss authorities would evaluate extradition under the treaty’s dual-criminality standard.

In practice, that creates uncertainty:

· Civil remedies may have limited cross-border enforceability

· Criminal escalation may be necessary to compel compliance

· Even then, extradition is far from guaranteed

Constitutional Undercurrents

Schwarzbaum has also challenged the underlying FBAR penalty on constitutional grounds, arguing a violation of his Seventh Amendment right to a jury trial.

This argument has gained some traction in other jurisdictions, particularly following a 2024 Texas federal court decision questioning the IRS’s ability to assess FBAR penalties without a jury proceeding.

While that issue remains unresolved at a broader level, it did not persuade the court here to delay or avoid enforcement.

Practical Takeaways

For practitioners advising clients with offshore exposure, this case highlights several important points:

· FBAR enforcement is not slowing down; the government continues to pursue high-dollar cases aggressively.

· Moving assets offshore does not eliminate enforcement risk; it often escalates it.

· Courts are increasingly willing to use civil contempt—and even incarceration—to compel compliance.

· Failure to engage with the court process (even from abroad) can significantly worsen outcomes.

· Constitutional challenges to FBAR penalties remain unsettled but are not currently a reliable defense strategy.

Perhaps most importantly, this case illustrates that FBAR enforcement is no longer confined to financial penalties—it can evolve into personal liberty risk when taxpayers refuse to comply with court orders.