For six years, Los Angeles apparel executive Masud Sarshar hid more than $21 million from the Internal Revenue Service (IRS) with the help of Bank Leumi and another unnamed Israeli bank, according to a plea agreement announced Aug. 1.
Sarshar, an Iranian immigrant who founded Apparel Limited, Inc., agreed to pay about $8.4 million in restitution to the IRS, as well as a civil penalty that could add millions to the total, and serve 24 months in prison.
The Department of Justice Tax Division alleged that from 2006 to 2012, Sarshar failed to report income held in Israeli bank accounts while collecting interest from those accounts and, with the help of bank personnel, using those funds in the United States. It also alleged that he obtained Israeli and Iranian passports “for the sole purpose of evading U.S. reporting requirements.”
To avoid detection, neither bank sent Sarshar account statements by mail, according to the allegations. Instead, relationship managers traveled to Los Angeles to meet with him in person. In one case, a Bank Leumi employee hid a USB drive in her necklace to smuggle information to the executive.
In total, Sarshar was able to bring $19 million in Israeli-held funds back to the United States “without creating a paper trail,” according to a Department of Justice press release.
Government officials intended the case to send a message: “There’s no safe place for taxpayers to divert and hide income anywhere in the world,” IRS criminal investigation chief Richard Weber said in the press release.
Sarshar immigrated to the United States in 1978 and made his riches in rags. In a video interview posted on his website, he describes how he went from selling clothing at the Santee Alley flea market in downtown L.A. to selling in Walmart stores. His big break came after he decided to buy Dickies brand clothes and resell them after dyeing them unique colors.
According to Sarshar’s website, Apparel Limited now employs more than 100 people and occupies a 78,000-square-foot downtown warehouse.
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