One Lawyer, Four Siblings and $12 Million Worth of Tax Evasion

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GUEST BLOGGER

Hallie Ayres
Contributing Writer

After nearly a decade of legal proceedings, Manhattan District Judge Kevin Castel has condemned four siblings to jail sentences, each of less than a year, for an extensive tax fraud scheme. The siblings — Suzanne, John, Henry and Yvonne — were all children of Harry Seggerman, a vice chairman of Fidelity Investments who made millions by investing in Japanese and Korean companies. When Harry died in 2001, he left his children a vast estate worth $24 million. This included $12 million in a secret account in Switzerland, stashed there to evade taxes. Faced with the decision to report the inherited money or to maintain their father’s legacy of tax fraud, the siblings chose to keep up the farce, a decision that is finally bearing consequences.

How exactly did they manage to gain access to the $12 million while keeping it covertly stowed in Switzerland? Shortly after Harry’s death, the siblings met with Michael Little, a lawyer based in the U.K. who had worked with Harry as a stock trader. Suggesting that each of the siblings open their own secret accounts, Little advised them to withdraw small amounts of money from their father’s account and deposit it into their own accounts by using traveler’s checks, by describing transfers as “loans,” and by making phoney mortgage payments, among other tactics. Suzanne later confessed to frequently traveling to Switzerland and returning with just under $10,000 in cash to avoid having to report the money while going through U.S. Customs. Had the siblings complied with laws and reported their inherited income on their tax returns, they would have been forced to pay about $13 million in inheritance taxes, leaving only about $11 million of the original estate.

The scheme contained much dramatic flair, including a system of code words used among Little and the Seggermans to describe the inherited millions. Referring to the IRS as the FDA, correspondences between the fraudsters involved talk of “the beef,” meant to signify the money. “So I met with 2 lawyers yesterday to talk about the beef,” reads a note Suzanne wrote to Henry in 2001. Henry later responds that the prospect of declaring their inheritance in accordance with legal standards “would entail each of us paying 750 lbs. to the FDA, plus more each year if the beef grows mold,” code for the $750,000 per year the siblings would face in yearly taxes on the “beef.” “Switzerland” was described as “New Jersey,” and any mention of Little had been translated into “small.”

When UBS, Switzerland’s largest bank, entered into a $780 million tax fraud deal with the U.S., the bank released the names of nearly 4,500 American account holders to the federal government, leading to the start of a grand jury investigation into the Seggermans’ decade-long scheme. By 2010, the four Seggermans had pleaded guilty to conspiracy and tax fraud and were awaiting sentencing. In 2012, their lawyer Michael Little was arrested on a conspiracy charge as he arrived at JFK airport in New York. The Seggermans agreed to cooperate as witnesses in Little’s trial, a move that shortened the total jail time each was given when their trial wrapped up in late June. While federal prosecution standards dictate that the Seggermans should have faced four to five years for the crime, New York District Judge Kevin Castel severely shortened their sentences due to their cooperation with prosecutors in their own trial as well as in Little’s.

Little is currently serving a 20-month jail sentence after a jury found him guilty of all nineteen fraud, conspiracy and obstruction charges against him. “I foolishly ran into a house on fire,” he lamented to the courtroom in his closing statement.