Coppell couple used Cayman account to avoid tax
By KEVIN KRAUSE, Dallas News.com
Coppell couple accused of avoiding taxes on tens of millions of dollars
Federal investigators say a 63-year-old woman living in Coppell and her husband, who works for a Chinese company in Africa, have avoided paying taxes on more than $80 million they hid from the U.S. government since 2006.
Federal prosecutors tried to seize several million dollars belonging to Huadong Guo and his wife, Yuanzheng Huang, that was held in bank accounts under the name of a Cayman Islands-based company, court records show. In January, the Internal Revenue Service used a warrant to have an account containing $6.6 million frozen “until further notice,” court records show.
Jeff Coopersmith, the couple’s Seattle-based attorney, said the government in late February agreed to return all the money.
“The government had originally seized or frozen the funds without hearing about how Mr. Guo and Mrs. Huang had legitimately earned the money,” Coopersmith said in a prepared statement. “When the government did hear, they released the funds immediately. We appreciate the integrity with which the U.S. attorney’s office in Dallas acted when they learned they had made a mistake.”
But the investigation continues and, although no one has been charged in connection with the case, court documents indicate that agents have tried to seize the couple’s money from various accounts several times, only to learn that it had been moved elsewhere.
The couple changes bank accounts “on an almost yearly basis,” an IRS agent wrote in the affidavit to seize the $6.6 million.
Court documents say millions of dollars have flowed through the couple’s accounts annually in past years, with no taxes paid on it.
“These amounts are grossly higher than what would be expected to be reported on Guo’s Chinese tax returns,” the IRS affidavit said.
The IRS and U.S. attorney’s office declined to comment.
The IRS said in an affidavit unsealed in February that Huang and Guo, a Chinese citizen, are using the offshore company as well as two Dallas-area shell companies to hide their riches from the U.S. government and avoid paying taxes. They are suspected of embezzling millions in foreign currency from a Chinese state-owned construction company operating in Africa, court records show.
“Guo and Huang devised a scheme in which they are billing a Chinese-owned construction company for construction equipment it never receives and wiring the proceeds of this scheme to accounts in the U.S. to conceal the source and nature of the funds,” an IRS agent wrote in the affidavit, which is part of the seizure warrant application for $6.6 million.
An FBI analyst with Chinese expertise concluded that the couple’s activities were consistent with bribery or embezzlement schemes, the IRS said, and Guo was probably receiving money that wasn’t reported to or taxed by the Chinese government.
Guo is vice chairman of the company, Jiangsu International Group, and he oversees its construction projects in Angola and surrounding African countries, the affidavit said. China is doing big business in Africa, investing in infrastructure projects such as roads and mining its natural resources.
A confidential source told the IRS agent that Guo’s salary as vice chairman is about $80,000.
The IRS agent wrote that the couple has used the Geotel Group Inc. and LBJ 8001 LP to receive about $85 million from African banks between 2006 and 2010.
In October 2010, Huang told the U.S. Customs and Border Patrol after returning from a trip to China that she runs Geotel from her home and was the only employee, the affidavit said. She said the company ships used construction equipment to Jiangsu in Africa, but customs officials learned that Geotel has never imported or exported anything, court records said.
In 2007, Guo opened Wachovia bank accounts for LBJ 8001, an investment firm focusing on commercial real estate. But the company had no employees or real estate holdings, the IRS affidavit said.
“On the account application, Guo stated his expected income was $60 million per year and indicated that the purpose of these accounts was to act as a tax shelter for incoming monies,” the affidavit said.
In 2009, the couple began to move money into different investment accounts with several financial institutions, the affidavit said. That same year, the couple tried to open accounts with a broker-dealer for hedge funds, money managers and professional traders. But the firm denied their application, “based on its concerns regarding possible security issues in dealing with a Chinese national,” the IRS affidavit said.
The IRS said the couple later succeeded in finding accounts for their money after having others create a hedge fund in the Cayman Islands. Only Huang and Guo invested in the fund, and no attempts were made to find additional investors, according to the IRS.
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