Adrian Baron, the former Chief Business Officer and former Chief Executive Officer of Loyal Bank Limited, has become the first person ever convicted for failing to comply with the Foreign Account Tax Complinace Act ("F.A.T.C.A"). Mr. Baron faces a maximum sentence of five years in prison.
Loyal Bank is an offhsore bank with offices in Budapest, Saint Vincent, and the Grenadines. In June 2017, an undercover agent met with Mr. Baron and explained that he was a U.S. citizen interested in opening several corporate bank accounts. Although the agent would be the true beneficial owner of the accounts, he expressed concern that he did not wish to appear as the account holder on the bank records because the accounts would be used in multiple stock manipulation schemes. Mr. Baron responded that the bank could open such accounts.
One month later, the agent again met with Mr. Baron and described how the stock manipulation scheme operated, including the need to circumvent reporting under F.A.T.C.A. Mr. Baron responded that the bank would not submit a F.A.T.C.A. declaration to regulators unless the paperwork indicated "obvious" U.S. involvement. The bank opened multiple bank accounts and did not request information required under F.A.T.C.A. from the agent.
Mr. Baron was extradited to the U.S. from Hungary in July. He plead guilty to conspiring to defraud the U.S. by failing to comply with F.A.T.C.A. provisions.
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