IRS cracks down on LA's Dickies Girl manufacturer for tax evasion
Longtime LA garment manufacturer Masud Sarshar, of Dickies Girl fame, has been charged with tax evasion by hiding over $21 million of income in Israeli banks.
Dickies Girl rose to fame as a colorful, girly, alternative to boring work wear. Sarshar operated a 75,000 square foot warehouse in east LA which he turned into a tribute to the brand's color by having LA graffiti artist Man One create a piece for the outside.
He subsequently lost the Dickies Girl license in 2014 to Jerry Leigh of California after unsuccessful litigation with the license owner Williamson-Dickie.
Sarshar submitted a guilty plea last month where he agreed to pay $8.3 million to the IRS and serve 24 months in prison. The court has yet to accept his plea, which also included the promise to pay half of the highest balance of his previously undeclared Israeli bank accounts.
“As the filing of the criminal charges demonstrates, the days of bank secrecy are rapidly changing,” said Chief Richard Weber for the IRS–Criminal Investigation.
“IRS-CI works vigorously to stop offshore tax schemes such as this one and is proud that our forensic accounting skills helped uncover over $21 million in untaxed gross business income in this investigation.”
Sarshar began funneling money to Israel's largest bank, Bank Leumi, as well as to a second bank. From 2006-09 he sent $21 million and earned over $2.5 million in interest on those accounts through 2012, none of which was reported on his US tax filings at the time.
The court documents reveal he went out of his way working with Bank Leumi to hide evidence of the money. One example given was that he did not receive paper statements. Instead, they were put on a jump drive concealed in the bank manager's necklace that was later handed over to Sarshar.
This is not Bank Leumi's first appearance in US federal court. In 2010 it entered into a non-prosecution agreement with the US government when it was found to have helped 1,500 US citizens avoid taxes. It agreed to repay the IRS $270 million and reveal the names of those account holders.
Sarshar is scheduled to appear in court next month. Sentencing is not yet set.
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