Fraud in the News

Things get messy for Messi

Lionel Messi, the Argentine and FC Barcelona footballer, and his father, Jorge, have each been sentenced to 21 months in jail for tax evasion, according to the July 6 BuzzFeed News article, Messi Probably Won't Go To Jail, Despite Being Sentenced to 21-Months In Prison, by Rose Troup Buchanan.

According to the article, Messi and his father were found guilty of three counts of tax fraud by a court in Barcelona. In June, a court heard that they'd defrauded Spanish tax authorities of about 4 million euros in three years.

The article states that tax havens in Uruguay and Belize were used to shield money made off the back of Lionel Messi's image, though Messi maintained throughout the trial he "knew nothing" about his father's actions and was only interested in playing football.

Under Spanish law, prison sentences under two years can be served on probation. However, according to the Forbes article, Soccer Star Lionel Messi Will Appeal Conviction, Prison Sentence on Tax Evasion Charges, by Kelly Phillips Erb on July 7, both Messi and his father will appeal the Spanish court decision.

According to the Forbes article, their lawyers have stated that the verdict is "incorrect" and the amounts of tax at issue had already been resolved: Messi made a "corrective payment" while still denying any wrongdoing a few months after charges were initially filed.

Bar rescued, but not the owner

Michael Flore, 43, a bar owner featured on Spike TV's reality series "Bar Rescue" was sentenced to two to five years in prison for failing to pay sales tax on his business' earnings, according to The Wrap article, 'Bar Rescue' Alum Sentenced to Prison on Tax Charges, by Tim Kenneally on July 14. He was also ordered to pay more than $1.5 million in restitution.

According to the article, Michigan Attorney General Bill Schuette said Flore pocketed more than $700,000 in sales tax from his bar The Arena in Ann Arbor, Michigan. He's been charged with 120 counts of failure to file taxes in 10 years.

'The most powerful person in Hollywood you've never heard of'

Omar Amanat — an investor who was once described as "the most powerful person in Hollywood you've never heard of" — was arrested on charges of participating in a conspiracy to defraud investors in a tech startup, Kit Digital Inc., according to the Bloomberg Technology article, Omar Amanat Arrested and Charged as Kit Digital Case Widens, by Bob Van Voris and Christian Berthelsen on July 13.

According to the article, prosecutors claim that Amanat, 43, worked with the company's former CFO, Robin Smyth; former CEO, Kaleil Isaza Tuzman; and an unnamed individual to purchase Kit Digital shares using an investment vehicle controlled by Tuzman. Smyth pleaded guilty to fraud in March, and Tuzman is in custody in Colombia fighting extradition to the U.S.

The article states that Maiden allegedly used Tuzman's fund to inflate the share price and trading volume of Kit Digital. Using money from Tuzman and Kit Digital, they invested $2 million from December 2008 to September 2011, and Maiden was rewarded with loans and investments from Kit Digital.

Syrian aid marred by fraud and bribery

According to the Reuters article, U.S. investigations expose fraud, bribery in Syrian aid response, by Dasha Afanasieva on July 15, the U.S. Agency for International Development (USAID) has raised concerns about profiteering in the humanitarian sector after U.S. investigations exposed bribery and fraud in Syrian aid programs.

According to the article, the most common fraud involved collusion between companies selling humanitarian supplies and staff of USAID's local partners who accepted kickbacks in exchange for help in winning the contract.

There were also cases of aid items being substituted for cheaper alternatives, resulting in inflated billing, according to the article. In one case, the article states, a Turkish vendor delivered food ration kits with salt instead of lentils.