Solicitor convicted of US tax fraud is struck off

New York: Solicitor used status to ‘sell’ his version of events

A solicitor jailed in New York for 20 months after being convicted of conspiring to defraud the US Internal Revenue Service (IRS) has been struck off.

The Solicitors Disciplinary Tribunal (SDT) heard that Michael John Little charged fees of over $500,000 for facilitating the flow of over $3m from a Swiss trust to a widow in New York in way that avoided detection by the IRS.

He was convicted as well of aiding and assisting the preparation of false IRS forms and corruptly obstructing an IRS investigation.

Mr Little is also a barrister regulated by the Bar Standards Board – which is also taking disciplinary action against him – and a New York attorney. He was admitted as a solicitor in 2008 and ran his own firm, Little & Co, from 2009 to 2011.

He was an executor of the estate of a wealthy client, Mr Seggerman, who died in 2001, “leaving behind a multimillion-dollar inheritance to his wife, Mrs Seggerman, and children – much of it in overseas accounts”.

The SDT said Mrs Seggerman, who was also an executor, “did not report the undeclared offshore assets to the IRS as required by US law”.

Mr Little and a Swiss lawyer met members of the family at a New York hotel to discuss the offshore assets in 2001.

“It was set out that significant funds to be inherited by Mrs Seggerman would be moved into a trust of which Mr Little and the Swiss lawyer would be trustees.”

Funds “subsequently flowed” from the Swiss trust into a dormant company in the US controlled by Mrs Seggerman in the form of loans.

Evidence was given at the trial that Mr Little asked one of her children to become a 1% owner of the dormant company, so that she could file company tax returns as the person “least likely to draw IRS scrutiny”.

Between 2001 and 2010 over $3m went to Mrs Seggerman in this manner, and Mr Little “charged fees of over half a million dollars for his services”.

The IRS began investigating Mrs Seggerman’s foreign bank and financial accounts in 2010 and was convicted by the US District Court (Southern District of New York) of 19 counts in April 2018.

The SDT said Mr Little did not submit an answer to the SRA’s allegations, but “denied all the allegations, asserted that he had been wrongly convicted and maintained his innocence”.

But it found he made misleading statements to third parties in correspondence in 2011, “using his status and letterhead as a solicitor of England and Wales” in relation to 11 of his convictions. He was also found to have acted dishonestly.

The SDT said Mr Little’s misconduct started before his admission as a solicitor and continued afterwards.

It had been established to the New York court’s satisfaction that Mr Little was “present at the hotel meeting” where setting up the Swiss trust was discussed and he became a trustee.

The judge at his trial said Mr Little had played “a key part” in the criminal enterprise that used a “level of sophistication that successfully avoided detection by the IRS [for many years], and probably would have continued to do so” had not the Swiss bank UBS made “certain disclosures”.

The judge described one letter Mr Little wrote after the IRS investigation began, in which he said the payments were pure gifts from the Swiss lawyer to Mrs Seggerman, as “a whopper of a lie” and that Mr Little had used his status as a lawyer “to sell it”.

Mr Little lodged a judicial review application with the High Court in January this year to stop the SDT proceedings, which was rejected by Mr Justice Ritchie. He applied for a stay on the grounds that the tribunal had no jurisdiction, which the SDT rejected.

The SDT said he was “motivated by the intention to conceal the true sum of taxation due to the IRS” and his actions were “clearly carefully planned”.

His criminal convictions related to “one family and was not part of wider criminality” but his knowledge of tax matters was extensive, “even if his experience as a solicitor was less so”.

His actions represented “a complete departure from integrity, probity and trustworthiness, resulting in his incarceration for serious criminal offences, which caused great harm to reputation of the profession”.

He was struck off and ordered to pay almost £11,400 in costs.

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