A Massachusetts accountant was one of four men charged Tuesday in a federal court in New York with conspiracy and tax fraud in the first US indictment connected to the so-called Panama Papers.
Richard “Dick” Gaffey, 74, of Medfield, was arrested in Boston on Tuesday, according to federal authorities.
He was charged with one count each of conspiracy to commit tax evasion, wire fraud, and money laundering conspiracy and four counts of willful failure to file a Report of Foreign Bank and Financial Accounts, according to a statement from the US Department of Justice.
Gaffey was the only American among the four charged in a decades-long scheme to defraud the United States by stashing millions of dollars in offshore shell-companies and bank accounts.
Officials said the plot was perpetrated by a Panama-based global law firm and related entities, according to the department. The charges were revealed in an 11-count federal indictment unsealed Tuesday in New York.
The Panama Papers include a collection of 11 million secret financial documents that illustrated how some of the world’s richest people hide their money. The records were first leaked to the Suddeutsche Zeitung, a major German newspaper, and were shared with the International Consortium of Investigative Journalists, which began publishing collaborative reports with news organizations in 2016.
The repercussions of the leaks were far-ranging, prompting the resignation of the prime minister of Iceland and bringing scrutiny to the leaders of Argentina and Ukraine, Chinese politicians and Russian President Vladimir Putin, among others.
Others charged in the indictment were Ramses Owens, a 50-year-old from Panama, Dirk Brauer, a 54-year-old German citizen, and Harald Joachim Von Der Goltz, an 81-year-old German citizen, federal authorities said. All but Owens have been arrested.
Brauer was arrested in Paris on Nov. 15. Von Der Goltz was arrested in London on Dec. 3. Owens remains at large, according to the justice department.
Gaffey is a partner at Elder, Gaffey & Paine, P.C. in Marlborough, a spokeswoman for the US Department of Justice confirmed Tuesday night.
According to the firm’s website, Gaffey is a graduate of Northeastern University and spent 11 years at Arthur Andersen & Co., an international CPA firm. He’s lectured on taxes at Northeastern and Bentley University, according to the site, and is a member of the American Institute of Certified Public Accountants, the Massachusetts Society of Certified Public Accountants, and the Boston Estate Planning Council.
Messages left with Gaffey’s attorney were not immediately returned Tuesday night.
Jeffrey Newman, a lawyer for Von Der Goltz, called the indictment ‘‘a desperate attempt to salvage an American case out of the Panama Papers.’’
For about a 17-year period ending last year, Owens and Brauer allegedly “conspired with others” to help US taxpayer clients of Mossack Fonseca & Co., a global law firm based in Panama, circumvent US tax authorities by concealing assets and investments, according to the justice department.
Von Der Goltz was allegedly one of the firm’s US taxpayer clients, and the federal government asserts he skirted his tax reporting obligations by setting up a series of shell companies and bank accounts, and hiding his ownership of such entities from the Internal Revenue Service.
Von Der Goltz, according to the indictment, was helped in that scheme by Owens and Gaffey, a partner at a US-based accounting firm.
The trio are alleged to have falsely claimed that Von Der Goltz’s mother was the sole beneficial owner of the shell companies and bank accounts at issue “because, at all relevant times, she was a Guatemalan citizen and resident, and — unlike Von Der Goltz — was not a US taxpayer.”
In addition to allegedly helping Von Der Goltz dodge US income taxes and reporting requirements, Gaffey is alleged to have worked with Owens to help another client of Mossack Fonseca, the Panama law firm, defraud the IRS.
This client, who was not named in the indictment, allegedly maintained offshore bank accounts that Mossack Fonseca helped hide from the IRS for years, according to federal authorities.
According to the indictment, Gaffey and Owens gave that client advice on how to covertly repatriate about $3 million of the client’s offshore money to the US falsely saying on their tax return that the money represented proceeds from a sale. While the client moved the $3 million to the US that way, about $1 million remained in the offshore account, which was hidden from the IRS, according to the Justice Department.
Geoffrey S. Berman, the US Attorney for the Southern District of New York, said Tuesday that the defendants “went to extraordinary lengths to circumvent US tax laws in order to maintain their wealth and the wealth of their clients.”
“For decades, the defendants, employees, and a client of global law firm Mossack Fonseca allegedly shuffled millions of dollars through off-shore accounts and created shell companies to hide fortunes,” said Berman in a statement. “In fact, as alleged, they had a playbook to repatriate un-taxed money into the US banking system. Now, their international tax scheme is over, and these defendants face years in prison for their crimes.”
Material from the Associated Press was used in this report. Danny McDonald can be reached at email@example.com. Follow him on Twitter @Danny__McDonald.