A Los Angeles businessman was sentenced to two years in prison recently for hiding more than $23.5 million in Israeli bank accounts, announced acting deputy assistant attorney general Stuart M. Goldberg, of the U.S. Justice Department’s Tax Division.

According to court documents, Masud Sarshar, a U.S. citizen, maintained several undeclared bank accounts at Bank Leumi and two other Israeli banks, both in his name and in the names of entities he created. Sarshar owned and operated Apparel Limited Inc., a business that designed, manufactured and sold clothing and other apparel.

With the assistance of at least two relationship managers from Bank Leumi and a second Israeli bank, Sarshar hid tens of millions of dollars in assets to conceal income and obstruct the Internal Revenue Service. From 2006 to 2009, Sarshar diverted more than $21 million in untaxed gross business income to the undeclared accounts and earned more than $2.5 million in interest from the funds. Sarshar did not report the income on his 2006 through 2012 individual or corporate tax returns. He also filed false Reports of Foreign Bank and Financial Accounts, commonly known as FBARs, with the U.S. Department of Treasury on which he omitted his ownership and control of the offshore accounts.

“Masud Sarshar used every trick to avoid paying his taxes. He moved his money from foreign bank to foreign bank, switched passports and had his statements smuggled to the United States on a thumb drive secreted in the necklace of a bank manager,” Goldberg said. “He even tapped the funds in his offshore accounts through financial maneuvers that he thought would not leave a paper trail. However, Sarshar found out with the imposition of a two-year prison sentence that secret foreign bank accounts can no longer be safely hidden from the Department of Justice and the IRS.”

Sarshar’s bank relationship managers visited him frequently in Los Angeles. At the defendant’s request, neither bank sent him his account statements by mail. Instead, the banks provided Sarshar with his account information in person.

Sarshar used loans to bring approximately $19 million in assets to the United States without creating a paper trail or otherwise disclosing the existence of the offshore accounts to U.S. authorities. He also obtained Israeli and Iranian passports to avoid being flagged as a U.S. citizen by the banks’ compliance departments.

In addition to the prison term, Sarshar was ordered to serve three years of supervised release and to pay more than $8.3 million in restitution to the IRS, plus interest and penalties. Sarshar also agreed to pay a more than $18.2 million penalty for failing to report his Israeli bank accounts.