Miami, FL – Suresh Gajwani, a 78-year-old investor from Miami-Dade County, pleaded guilty on June 13 to submitting a false and fraudulent document to the Internal Revenue Service (IRS). Gajwani's actions were an attempt to evade approximately $7 million in capital gains taxes by exploiting a tax incentive program under Puerto Rico Act 60.
In 2018, Gajwani, who owned a company with a portfolio worth roughly $30 million in built-in gains, sought to shield these gains from federal taxation. The Puerto Rico tax incentive program allows bona fide residents to apply for an exemption on certain capital gains. However, Gajwani did not become a bona fide resident of Puerto Rico until January 1, 2020, missing the eligibility for the gains accrued prior to this date.
Advised by an accountant and attorney, Gajwani attempted to convert his company into an S Corporation retroactively, claiming this conversion was intended as of January 1, 2019. This false statement was submitted to the IRS in January 2020. The IRS granted the conversion based on Gajwani's fraudulent claim, allowing him to avoid the massive tax liability.
If Gajwani had not manipulated the paperwork, his company would have owed significant taxes for the year 2019. He is set to be sentenced by Chief U.S. District Judge Cecilia M. Altonaga on August 30, and he faces a maximum sentence of three years in prison. In addition to potential imprisonment, Gajwani has agreed to repay approximately $15.3 million in restitution, covering taxes, interest, and penalties.
U.S. Attorney Hayden P. O’Byrne of the Southern District of Florida announced the guilty plea, along with acting Deputy Assistant Attorney General Karen E. Kelly of the Justice Department’s Tax Division, and Emmanuel Gomez, Special Agent in Charge of IRS Criminal Investigation. The case is being prosecuted by Senior Litigation Counsel Michael N. Berger and Trial Attorney Curtis Weidler of the Tax Division.
For more information, related court documents can be accessed through the Southern District of Florida's website under case number 25-cr-20117.
