Wealthy Aventura man is released from jail, then indicted on fraud and tax-evasion charges
A South Florida businessman who made a fortune from selling imported watches has been indicted on charges of hiding millions of dollars in assets in Switzerland and failing to pay taxes on his earnings from those secret investments over the past two decades.
Dan Rotta, 77, of Aventura, was indicted Thursday on charges of conspiracy, tax evasion and lying to the IRS after his release from a federal lock-up this week on a $15 million bond. His bail was granted last week by a magistrate judge after Justice Department attorneys pushed for his pre-trial detention following his arrest at Miami International Airport this month.
Rotta, a Romanian native with citizenship in the United States and Brazil, was indicted along with a close Brazilian friend, Sergio Cernea, who has not been arrested. Cernea is accused with Rotta of conspiring to defraud the United States by helping the wealthy businessman hide $20 million in Swiss banks to avoid paying income taxes on those assets.
Rotta plans to enter a plea of not guilty through his defense attorney at an arraignment scheduled for Monday in Miami federal court, but he waived his appearance through a court filing this week. His defense attorneys said Rotta plans to fight the charges, noting he had made a good-faith effort to work with the IRS over the massive income-tax dispute.
“These are complex issues and this is someone that participated in the voluntary disclosure program — only to get tossed out by the IRS,” Rotta’s Greenberg Traurig lawyers — Jed Dwyer, Ben Katz and Emiley Pagrabs — said in a statement. “Thousands of folks got a clean slate from the IRS for doing the same that the government alleges against Mr. Rotta. Mr. Rotta looks forward to his day in court.”
HOW THE MONEY WAS MADE
Rotta, who formerly lived on Fisher Island off Miami Beach, made his money as president of a New York City company that imported Seiko watches through the “gray market” and sold them at a discount in the United
States. According to the indictment, he is accused of hiding more than $20 million in assets in 24 secret accounts at five Swiss banks, including UBS, Credit Suisse and Bank Julius Baer, and failing to report substantial income from these holdings on his tax returns.
Justice Department prosecutors said at his detention hearing last week that Rotta owes $26 million in taxes, interest and penalties dating back to 2001 and has $38.5 million in assets, which are now mostly held in U.S. bank accounts and real estate properties.
Rotta, who was arrested March 9 at Miami International Airport before a planned flight to Spain, was granted a $15 million bond by a federal magistrate judge. But his bail came with heavy financial conditions, including a $3 million cash deposit and an agreement to transfer several Florida and New York properties valued at $9 million to the U.S. government if he fails to appear for trial.
Rotta, the father of two grown sons and a daughter, also must 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 after they argued he was a flight risk. Rotta, who speaks six languages, also owns two luxury apartments in Barcelona.
“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.”
Despite coming up short, the Justice Department chose not to appeal the judge’s order allowing Rotta to be released from the Federal Detention Center.
INDICTMENT DETAILS
In the indictment, the department’s tax attorneys portrayed Rotta as a perennial tax dodger.
Prosecutors said that from 2001 to 2017, Rotta falsely told banks that he was a Brazilian citizen residing in Brazil, when he had been a naturalized U.S. citizen living in this country since the 1970s. Rotta and one of his companies received millions of dollars in transfers from his secret Swiss accounts, according to the indictment.
In 2008, after UBS and its bankers came under criminal investigation for helping U.S. taxpayers evade paying their taxes, Rotta tried 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, the indictment says.
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 is accused of claiming the transfers were non-taxable loans from third parties, and that a representative of the businessman provided the IRS with “sham loan documents to corroborate his claims,” prosecutors said. To back up his claim, Rotta enlisted his friend, Cernea, the Brazilian, to inform the IRS that he either made or facilitated the loans.
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 a
Justice Department news release summarizing a previous criminal complaint for his arrest.
In addition, Rotta’s friend, Cernea, 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’ 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 disputes and limit their potential criminal liabilities, prosecutors said.
In his submission, which was signed under penalties of perjury, Rotta made several false statements, according to the new indictment.
Rotta, if convicted, faces a maximum penalty of five years for each of the following charges: conspiracy, tax evasion, failing to file a report of bank and financial accounts, and making false statements. He also faces up to three years on charges of filing false tax returns.