Hayden O’Byrne United States Attorney for the Southern District of Florida | The Florida Bar
On June 13, Suresh Gajwani, aged 78, admitted to making a false and fraudulent statement to the Internal Revenue Service (IRS). This admission came during a change of plea hearing.
In 2018, Gajwani resided in Miami-Dade County. By October 2019, he owned a company with stocks and options that had significantly appreciated in value by tens of millions of dollars. Anticipating taxes on these gains, Gajwani aimed to benefit from a tax incentive program under Puerto Rico Act 60. This program allows bona fide residents of Puerto Rico to apply for an exemption from federal taxes on certain capital gains realized after becoming residents. However, Gajwani did not become a bona fide resident until January 1, 2020, after the stock portfolio had already accrued built-in gains.
Gajwani received advice from an accountant and attorney to convert his company into a small business corporation (S Corporation) under the Internal Revenue Code to leverage the Puerto Rico capital gains tax exemption. He was also advised that built-in gains for U.S. residents accrued before becoming Puerto Rican residents could be exempt from federal taxes.
In January 2020, Gajwani submitted a false document to the IRS claiming that his company intended to convert as of January 1, 2019. He knew this was not true and that the submission aimed to avoid paying capital gains taxes. The IRS granted his request based on this false statement.
In 2019, Gajwani’s company held approximately $30 million in built-in gains. Without the retroactive conversion approval by the IRS, his company would have owed about $7 million in capital gains taxes for that year.
Gajwani is scheduled for sentencing on August 30 by Chief U.S. District Judge Cecilia M. Altonaga after considering U.S. Sentencing Guidelines and other statutory factors. He faces up to three years in prison and has agreed to repay around $15.3 million in restitution covering taxes, interest, and penalties to the IRS.
The announcement was made by U.S. Attorney Hayden P. O’Byrne for the Southern District of Florida; acting Deputy Assistant Attorney General Karen E. Kelly of the Justice Department’s Tax Division; and Emmanuel Gomez, Special Agent in Charge at IRS Criminal Investigation.
The case is being investigated by IRS Criminal Investigation with prosecution led by Senior Litigation Counsel Michael N. Berger and Trial Attorney Curtis Weidler of the Tax Division.
For more details or related court documents under case number 25-cr-20117, visit www.flsd.uscourts.gov or http://pacer.flsd.uscourts.gov.
