Seeking to line his pockets with the fabric of Puerto Rico's tax incentive program, 78-year-old Miami-Dade County resident Suresh Gajwani pleaded guilty to filing a false statement with the IRS; a move that shielded some $30 million in capital gains. Gajwani, who owned a company with a high-value portfolio of stocks and options, admitted at his plea hearing to the fraudulent act committed with the aim of exploiting Puerto Rico Act 60, created to exempt bona fide Puerto Rican residents from federal taxes on certain capital gains accrued after establishing residence, as officially announced last week by the U.S. Attorney's Office for the Southern District of Florida.
Despite the counsel of both an accountant and attorney, Gajwani boldly distorted the timeline of his company's conversion to an S Corporation, a status that would enable him to skirt the significant tax bill looming over its elevated capital gains; it's a move that would've slighted the IRS out of approximately $7 million in capital gains taxes for 2019, had it not been for his false statement that led to an improperly retroactive conversion.
The scheme unraveled, Gajwani now faces a potential three-year prison sentence as per the maximum penalty, with his sentencing set by Chief U.S. District Judge Cecilia M. Altonaga for August 30, taking into consideration the U.S. Sentencing Guidelines and other pertinent statutory factors, during his plea change hearing, it was verified that Gajwani knew he had not initially intended to treat the company as an S Corporation effective January 1, 2019, as his January 2020 submission to the IRS falsely proclaimed.
Following his guilty plea, Gajwani has committed to repay a hefty sum of approximately $15.3 million in restitution—covering taxes, interest, and penalties—to reimburse the IRS, as detailed in the press release from the U.S. Attorney's Office. As IRS Criminal Investigation continues to probe the case, Senior Litigation Counsel Michael N. Berger and Trial Attorney Curtis Weidler stand as the Tax Division's prosecuting force.
Interested parties can access related court documents and information on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or may inquire further at http://pacer.flsd.uscourts.gov, under case number 25-cr-20117.
