Aventura man sentenced to five years for not paying more than $10 million in taxes
An Aventura businessman who made a fortune off importing Seiko watches and selling them at a discount was sentenced on Wednesday to five years in prison for failing to pay taxes of more than $10 million over two decades.
Dan Rotta, who has citizenship in his native Romania, Brazil and the United States, was given the maximum sentence in a plea deal and ordered to pay the back taxes the Internal Revenue Service by U.S. District Judge Rodney Smith in Fort Lauderdale federal court.
Justice Department prosecutors obtained the maximum sentence for Rotta, 78, after he pleaded guilty in March to a conspiracy to defraud the IRS for hiding income of more than $34 million in overseas bank accounts. Prosecutors painted a portrait of him as an artful tax dodger who devised one scheme after another to avoid paying his income taxes.
“There was no low to which Dan Rotta would not descend to in order to cheat the government of the taxes owed,” prosecutors said in a sentencing memo.
Rotta’s defense lawyer, Jared Dwyer, argued that Rotta deserved less than the maximum sentence because he had accepted responsibility for his crime, calling the prosecutors “vindictive.”
“He suffers from multiple health problems,” said Dwyer, who worked on the defense with attorneys Benjamin Katz and Emily Pagrab. “The Government has been investigating him for years. The Government knows where all Mr. Rotta’s money and assets are located.”
Given the magnitude of his crime, Rotta caught a break with his plea agreement, which required prosecutors to dismiss 21 related charges, including tax evasion. Under sentencing guidelines, he could have faced between eight and 10 years in prison, but his plea to the fraud conspiracy capped his punishment at five years.
Arrested at MIA
In March of last year, as he was about to depart on a trip to Spain where he owns a luxury apartment, Rotta was arrested at Miami International Airport on charges that he defrauded the U.S. government by hiding millions of dollars in Swiss bank accounts and lying to the IRS about his foreign assets for decades.
Initially, Rotta was accused of hiding more than $20 million in assets in 24 secret accounts at five Swiss banks, including UBS and Credit Suisse, and failing to report substantial income from these holdings on his tax returns, according to Justice Department prosecutors.
At a bond hearing last year, prosecutors said Rotta owed $26 million in taxes, interest and penalties dating back to 2001 and had $38.5 million in assets, which are now mostly held in U.S. bank accounts and real estate properties.
Rotta was granted a $15 million bond by a federal magistrate judge who required a $3 million cash deposit and the transfer of several Florida and New York properties valued at $9 million to the U.S. government if he failed to appear for trial. He was ordered to be confined to his home, surrender his passports and wear an electronic ankle bracelet.
Magistrate Judge Jared Strauss stopped short of granting a request by prosecutors to detain Rotta, who has lived in the United States for more than 50 years but has global connections and speaks six languages.
“He’s a man of the world,” Justice Department attorney Sean Beaty said at Rotta’s detention hearing. “There is nothing truly tying him to Miami anymore.”
Rotta’s attorney, Dwyer, with the Greenberg Traurig law firm, said his client has two sons and a daughter living in the United States, stressing that he has returned to Miami from numerous trips overseas knowing he was under federal investigation.
Rotta gained his release from a federal lock-up, but only for a few months. After transferring assets to secure his bond, Rotta violated it by failing to turn over one of his passports and was detained again in August of last year. He’s going to receive credit for the time he served in detention toward his five-year sentence.
Set up Swiss accounts
Rotta, who formerly lived on exclusive Fisher Island, has spent much of his adult life battling the IRS.
In 2008, after UBS and its bankers came under criminal investigation for helping U.S. taxpayers evade paying their taxes, Rotta took steps to hide his holdings by shutting down his account with that bank and moving his funds to Credit Suisse and other Swiss banks, including putting the accounts in the names of other people, according to an indictment, IRS affidavit and other court records.
Three years later, the IRS began auditing Rotta after obtaining evidence of unreported foreign financial accounts. At the time, Rotta falsely denied holding such accounts, but IRS investigators uncovered evidence showing Rotta received transfers of hundreds of thousands of dollars from these foreign accounts that he did not report on his tax returns, prosecutors said.
Rotta claimed the transfers were non-taxable loans from third parties. A representative of the businessman provided the IRS with “sham loan documents to corroborate his claims,” prosecutors said.
To back up his claims, Rotta enlisted his friend and cousin, Brazilian native Sergio Cernea, to inform the IRS that he either made or facilitated the loans, prosecutors said.
Cernea, who was charged as a co-conspirator in the tax evasion case, is still at large.
IRS investigators did not believe Rotta and assessed additional taxes as well as penalties and interest against him, prosecutors said. But then in U.S. Tax Court, Rotta filed a petition that falsely denied having any foreign accounts and attached the fictitious loan documents, according to prosecutors.
In addition, Rotta’s cousin traveled to the United States and retold the false loan story to IRS attorneys, prosecutors said. In 2017, after Rotta offered evidence showing that the purported loans had been repaid, the IRS reversed its earlier decision and agreed that Rotta owed no additional tax. Unbeknownst to the IRS, however, the funds that Rotta purportedly repaid to the third parties went into accounts under his control, prosecutors said.
Aware that the IRS would receive copies of his Swiss bank records, Rotta tried to participate in the IRS’s voluntary disclosure practice two years later. Taxpayers who willfully do not comply with their tax and reporting obligations can make complete disclosures of their conduct as a possible way to resolve their dispute and limit their potential criminal liability, prosecutors said.
In his submission, which was signed under penalty of perjury, Rotta made several false statements, according to a factual proffer filed with his plea agreement.
