Former Defense Contractor and His Wife Indicted for Evading U.S. Taxes on Profits from Selling Jet Fuel to U.S. Military (2024)

An indictment was unsealed today charging Douglas Edelman, a former defense contractor, and Delphine Le Dain, his wife, with a decades-long scheme to defraud the United States and evade taxes on more than $350 million in income Edelman made as a defense contractor during the United States’ post-9/11 military efforts in Afghanistan and the Middle East. Edelman was arrested on July 3 in Spain based on the U.S. criminal charges. The United States will seek Edelman’s extradition to stand trial in the United States.

According to the indictment, between 2003 and 2020, Edelman allegedly was the 50% owner of Mina Corp. and Red Star Enterprises (Mina/Red Star), a defense contracting business that received more than $7 billion from contracts with the Department of Defense to provide jet fuel to U.S. troops in Afghanistan and the Middle East. Working with Le Dain and several other co-conspirators, Edelman allegedly engaged in a lengthy scheme to hide his profits from Mina/Red Star, including by concealing his income in undisclosed foreign bank accounts, creating false documents and making false statements that Le Dain — who, as a French citizen residing abroad, did not have U.S. tax obligations — founded and owned Mina/Red Star. Le Dain allegedly signed some of the false documents, including those that purported to “gift” Edelman money for certain personal expenses.

The indictment further alleges that to carry out his scheme, Edelman conveyed this false story of Le Dain’s ownership to arms of the U.S. government, including to a Subcommittee of the House of Representatives during a 2010 Congressional investigation, to the Department of Defense during contract negotiations, to the Internal Revenue Service in a 2015 application to the Offshore Voluntary Disclosure Program, and to the Justice Department in a 2018 presentation.

Until approximately 2015, Edelman allegedly did not file any U.S. individual tax returns and did not pay any tax on the tens of millions of dollars he was allegedly making each year from Mina/Red Star. In 2015, Edelman allegedly filed false returns for tax years 2007 to 2014, claiming that his business interests, income, and assets belonged to Le Dain. From 2015 to 2020, Edelman allegedly filed false tax returns reporting that his only income was as a consultant, and that he had no interests in any foreign businesses.

The indictment further alleges that Edelman directed his profits from Mina/Red Star into banks known at the time to shield account holder identities from U.S. authorities, in countries such as Switzerland, the Bahamas, Singapore and United Arab Emirates. He allegedly held the accounts in the name of non-U.S. entities created in countries such as Panama, Belize and the British Virgin Islands. Edelman allegedly always controlled the money in these accounts and used it to fund his other business ventures around the world, including a business selling internet services to U.S. troops and contractors at Kandahar Air Base in Afghanistan, a Mexican fuel infrastructure project and a music television franchise in Eastern Europe. Edelman allegedly also used the money to buy a ski chalet in Austria, a house in Spain, a townhouse in London and multiple yachts — all of which were purchased in the name of nominees.

Edelman and Le Dain are charged with conspiring to defraud the United States and 15 counts of tax evasion. Edelman is also charged with two counts of making false statements to the United States, and 12 counts of willfully violating his foreign bank account reporting obligations, as part of a pattern of unlawful activity.

If convicted, Edelman and Le Dain face up to five years in prison for the conspiracy count, as well as up to five years in prison for each tax evasion count. Edelman also faces up to five years in prison for each false statement count and ten years in prison for each count of willfully violating foreign bank account reporting while engaged in a pattern of unlawful activity involving more than $100,000 per year. They each face a period of supervised release, restitution and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Matthew M. Graves for the District of Columbia made the announcement.

IRS Criminal Investigation and the Special Inspector General for Afghanistan Reconstruction are investigating the case, with assistance from His Majesty’s Revenue & Customs of the United Kingdom. Assistance was also provided by the Joint Chiefs of Global Tax Enforcement (J5), which brings together the taxing authorities of Australia, Canada, the Netherlands, United Kingdom and United States. Assistance with the arrest was provided by the U.S. Drug Enforcement Administration and Guardia Civil of Spain.

Senior Litigation Counsel Nanette Davis, Assistant Chief Sarah Ranney and Trial Attorney Ezra Spiro of the Tax Division and Assistant U.S. Attorney Joshua Gold for the District of Columbia are prosecuting the case.

An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Former Defense Contractor and His Wife Indicted for Evading U.S. Taxes on Profits from Selling Jet Fuel to U.S. Military (2024)


Former Defense Contractor and His Wife Indicted for Evading U.S. Taxes on Profits from Selling Jet Fuel to U.S. Military? ›

WASHINGTON – A 30-count indictment was unsealed today in U.S. District Court charging Douglas Edelman, 72, a former defense contractor, and Delphine Le Dain, 58, his wife, with a decades-long scheme to defraud the United States and evade taxes on more than $350 million in income Edelman made as a defense contractor ...

What is the defense of tax evasion? ›

Tax evasion defenses can be used when there is insufficient evidence of intentional or purposeful conduct. The IRS must prove that the defendant knew their wrongdoing and intentionally misreported their taxes or tried to evade taxes. Mere mistakes and carelessness cannot convict someone with tax evasion.

Can you plead insanity to tax evasion? ›

Insanity, as with other charges, is an option for defense. Similar to additional charges, pleading insanity during the time of tax evasion, or that due to mental deficiencies, you weren't aware of the tax evasion, could be considered pleading insanity.

What is the most common form of tax evasion? ›

Here are some of the most common criminal activities in violation of the tax law: Deliberately under-reporting or omitting income. This is self-explanatory: concealing income is fraudulent.

What is the biggest tax evasion? ›

An American entrepreneur, Walter Anderson made his millions after the breakup of AT&T in 1984. He was convicted of the largest tax evasion case in U.S. history for evading more than $200 million in taxes. It was reported that in 1998, he paid $495 in taxes on $67,939 of income.

What is the fight against tax evasion? ›

Efforts to Combat Tax Avoidance and Evasion

Over the years, this has been done through application of cutting-edge technology like introduction of systems such as iTax and the Integrated Customs Management System (iCMS), to facilitate return filing and custom clearance as well as employing cargo scanners and trackers.

Which of the following is a common legal defense to tax evasion? ›

Lack of Willfulness: Demonstrating that the defendant did not have the requisite willfulness to commit tax evasion can be a strong defense. This may involve showing that the taxpayer made an honest mistake or misunderstood their tax obligations.

How does the IRS deal with tax evasion? ›

Typically, IRS examiners who find strong evidence of fraud will refer the case to the Internal Revenue Service Criminal Investigation Division for possible criminal prosecution. Keep in mind that both civil sanctions and criminal prosecution may be imposed.

How many years can you go without filing taxes? ›

Additionally, you have to consider the state you live in. For example, if you live in California, they have a legal right to collect state taxes up to 20 years after the date of the assessment!


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