Two executives charged with visa fraud failed to list full income, IRS agent testifies

Hundreds of thousands of dollars said involved

April 10, 2001|By Walter F. Roche Jr. | Walter F. Roche Jr.,SUN STAFF

ALEXANDRIA, Va. - An IRS agent testified yesterday that the principals of a company that specialized in marketing an investor visa program failed to report hundreds of thousands of dollars in income on their tax returns.

Robert A. Warren, the IRS agent, told U.S. District Judge T. S. Ellis III that by his calculations, James F. O'Connor, president of the Interbank Group of Herndon, failed to report income of more than $450,000 over a four-year period ending in 1996. He said co-defendant James A. Geisler failed to report slightly lesser amounts over the same period.

Geisler and O'Connor are on trial here on charges of visa fraud, conspiracy and income tax violations. Geisler also is charged with bankruptcy fraud.

The two marketed a program under which foreign investors could gain permanent U.S. citizenship by investing at least $500,000 in an American business.

Prosecutors charge that the applications filed in behalf of about 235 Interbank clients were fraudulent.

INS revoking visas

Also yesterday, a special agent for the U.S. Immigration and Naturalization Service testified that the 43 visas granted to Interbank clients never should have been issued and that her agency either has revoked or is in the process of revoking all of them.

"Any that were approved were approved in error," Elizabeth Goyer, the INS official, testified. She added that the INS was in the process of similar revocation action against other investor visa companies and their clients.

Under questioning from O'Connor, who is acting as his own attorney, Goyer acknowledged that four Interbank visa applications had been approved under a decision issued by an INS appeals' unit. But, she added, the appeals decision was also made in error.

Amount of investments

Goyer said that in all but a handful of the Interbank applications, the company failed to disclose that the foreign investors had put up only $110,000 to $150,000 in cash and the balance of the investment was made up with a loan wired from a Bahamian bank account. In one case she cited, the investor put up only $50,000 plus a $20,000 fee charged by Interbank

In his testimony, Warren, the IRS agent, said the income Geisler and O'Connor failed to report came from an affiliated company run by the two men. He said it was only after they learned that they were under investigation that the two defendants contended the payments were loans.

Loans or income?

Citing bank loan applications and other documents signed by the defendants, Warren said the two had sworn that they did not have any loans. Geisler also had failed to list the loans in documents he filed in a 1996 bankruptcy case.

The agent said some of the payments were made directly to Geisler and O'Connor, while others went to their wives or other family members. Some checks, he said, were sent to pay the rent on a house O'Connor was renting. Still others covered a $175,000 down payment on a $565,000 home purchased by O'Connor in 1995.

"Those loans were not, in fact, loans," said Warren, citing the regularity of the payments.

During cross-examination, Geisler, who is also representing himself, asked Warren why his analysis of tax returns did not take into account the fact that he was eligible for losses carried forward from previous tax years that would offset additional taxes.

Warren said the offsets didn't matter because Geisler should have disclosed the income regardless of its effect on his tax liability.

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