US federal prosecutors announced late last week that Maurizo Parlato has pleaded guilty to two charges involving a kickback scheme regarding limited-edition supercar allocations. He specifically pleaded guilty to one count of failing to report a foreign bank account or financial account and another count of filing a false tax return.
According to a statement from the Department of Justice, The former chief executive officer of a New Jersey-based importer of Italian luxury cars admitted today that he failed to report to the IRS as income kickback payments he received for misallocating limited edition sports cars, Attorney for the United States Rachael Honig announced.
A luxury watch dealer also admitted failing to report to the IRS commission he received for helping facilitate the unauthorized sale of one of those limited edition sports cars.
Parlato, 58, of Washington, D.C., pleaded guilty by videoconference before U.S. District Judge Stanley R. Chesler to an information charging him with one count of subscribing to a false tax return and one count of failing to file a Report of Foreign Bank and Financial Accounts (FBAR). Gigi Knowle, 69, of Miami, Florida, pleaded guilty by videoconference before Judge Chesler to a separate information charging him with subscribing to a false tax return.
“This defendant admitting rigging access to purchase high-end sports cars to line his own pockets, then failed to pay taxes on the money he made on his deals,” Attorney for the United States Honig said. “He tilted the playing field to his own advantage, cheating legitimate buyers and the government in the process. Our office remains firmly committed to prosecuting those who defraud the public and the government.”
“Today, the IRS told Mr. Parlato ‘not so fast’ when he failed to report almost $2.8 million on his tax returns for the kickbacks he received to misallocate the distribution of several supercars,” Jonathan D. Larsen, Special Agent in Charge, New York Field Office, said. “Mr. Parlato tried to hide the income by moving the funds around the world. Offshore tax evasion is a top priority for IRS – Criminal Investigation and, as was shown today, we are wholeheartedly committed to bringing these offenders to justice.”
“Today’s plea is another example of the great investigative work done daily by the IRS, U.S. Attorney’s Office and our agents,” FBI Newark Special Agent in Charge George M. Crouch Jr. said. “It is a clear message that we will relentlessly pursue those attempting to defraud the government.”
According to documents filed in the case and statements made in court:
Parlato was a resident of Florida and served as the CEO of a company (Company B) based in Englewood Cliffs, New Jersey, from 2002 to 2009. Company B was responsible for distributing automobiles that were produced by a luxury automobile manufacturer (Company A) based in Maranello, Italy. Company B distributed Company A’s luxury automobiles in the Western Hemisphere through dealers based in the Americas.
Company A produced several highly desired automobile models in small quantities. Parlato had some measure of authority over the allocations of those limited edition automobiles. In 2013, Company A announced it was creating its most exclusive model to date: a “supercar,” limited to only 500 units and carrying a manufacturer’s suggested retail price (MSRP) of approximately $1.4 million. Company A and Company B established a formula to determine which customers would be placed on the approved list to buy a supercar.
After resigning as CEO of Company B, Parlato assisted Company B dealers and supercar purchasers in misallocating supercars in exchange for kickback payments. Between 2015 and 2017, Parlato received approximately $2.8 million from Company B dealers and supercar purchasers in exchange for, among other things, assisting them in misallocating supercars to customers who were not on the list of approved purchasers. Parlato admitted that he failed to report the $2.8 million in kickback payments he received as income on his federal individual income tax returns. Parlato also admitted that he attempted to hide some of these funds from the IRS by depositing them in a bank account in Spain and failing to disclose the existence of that bank account. Parlato admitted that he avoided paying more than $1.1 million in taxes.
Knowle also received payments in connection with his role in misallocating a supercar. In 2015, Knowle lived in Florida and worked as a luxury watch dealer. That year, Knowle assisted Parlato in facilitating the sale of a supercar to another individual who was not on the approved list. Knowle received approximately $560,000 as commission for his role in the sale, some of which Knowle distributed to Parlato and others who were also involved in misallocating the supercar to the unapproved purchaser. Knowle failed to disclose the commission on his personal income tax returns. Knowle admitted that he avoided paying approximately $175,000 in taxes.
The count of subscribing to a false tax return carries a maximum potential penalty of three years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. The count of failing to file a FBAR carries a maximum potential penalty of five years in prison and a $250,000 fine.
Sentencings for Parlato and Knowle are scheduled for Jan. 12, 2021.
Attorney for the United States Honig credited special agents of IRS – Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen in New York, and special agents of the FBI, under the direction of Special Agent in Charge George M. Crouch Jr. in Newark, with the investigation leading to today’s charges.