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Russian Bank Founder Agrees To Pay IRS $500 Million In Tax Fraud Case

WASHINGTON -- The founder of one of Russia’s largest privately-owned banks has agreed to pay the U.S. Internal Revenue Service (IRS) more than $500 million after pleading guilty to tax fraud.

Oleg Tinkov, who was arrested in the United Kingdom in February 2020 at the behest of the United States, will be sentenced to time served at his hearing on October 29, the Justice Department said on October 1.

The Russian-born businessman renounced his U.S. citizenship in 2013, days after his TCS online bank held an initial public offering on the London Stock Exchange.

Tinkov sold a part of his majority shareholder stake for more than $192 million, and his assets following the initial public offering were estimated at more than $1.1 billion, the Justice Department said.

U.S. citizens are required to pay taxes on income earned abroad as in the case of Tinkov, who returned to Russia after receiving his American passport in 1996.

Individuals with more than $2 million in assets who renounce their U.S. citizenship must pay an exit tax based on any income and capital gains they would receive if they sold their assets.

Tinkov claimed in his 2013 statement to the IRS that he did not have more than $2 million in assets.

“No one who enjoys the immense benefits of United States citizenship, as Tinkov did, may avoid the corresponding obligation to support the country he chose. Tax evaders should take notice of the long reach of U.S. law enforcement,” Acting U.S. Attorney Stephanie M. Hinds for the Northern District of California said in the statement.

The Justice Department said the $500 million payment — which includes fines and penalties — is more than double his original tax bill.

Tinkov is one of Russia’s most successful entrepreneurs, having built and sold two businesses before launching his bank in the middle of the 2000s.

TCS is one of Russia’s fastest growing banks. Its stock price has more than tripled over the past year, giving Tinkov a net worth of nearly $8 billion, according to Forbes.

The 53-year-old was not extradited to the United States because he demonstrated to the court and the Department of Justice that he is receiving medical treatment to fight leukemia.

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    Todd Prince

    Todd Prince is a senior correspondent for RFE/RL based in Washington, D.C. He lived in Russia from 1999 to 2016, working as a reporter for Bloomberg News and an investment adviser for Merrill Lynch. He has traveled extensively around Russia, Ukraine, and Central Asia.