Left: Hunter Biden (AP Photo/Manuel Balce Ceneta). Center: Alexander Smirnov in a courtroom sketch (William T. Robles via AP). Right: Special counsel David Weiss (AP Photo/Matt Slocum).
Special counsel David Weiss just indicted a man who worked for a decade as an FBI informant on multiple tax crimes. The defendant was previously accused of lodging false bribery allegations against President Joe Biden and his adult son Hunter Biden.
Alexander Smirnov is a resident of Los Angeles who was born in the USSR, according to the 27-page indictment filed in the U.S. District Court for the Central District of California on Tuesday.
Despite making over $2.3 million between 2020 and 2022, Smirnov claimed his “consulting” business had between $40,000 and $50,000 in gross receipts each year and that he only owed a combined $5,269 in taxes for the time period, according to the 10-count indictment.
The defendant made his money via “income from multiple sources” paid to a Delaware-based entity of which he served as the sole officer, president and CEO, prosecutors say. That company, Avalon Group, Inc., allegedly “never filed a U.S. Corporation Income Tax Return.”
Prosecutors say Avalon actually took in some $1.35 million in 2020; $684,000 in 2021; and $300,000 in 2022.
And with the company’s money, Smirnov allegedly spent lavishly.
“He used these funds to pay personal expenses for himself and his Domestic Partner, a woman that he has referred to as his girlfriend and at other times his wife, although they are not married,” the indictment alleges. “These expenditures included a $1.4 million Las Vegas condominium, a Bentley, and hundreds of thousands of dollars of clothes, jewelry and accessories for himself and Domestic Partner purchased at high-end retailers in Los Angeles and Las Vegas.”
Authorities say the funds were not only spent on the couple but were frequently “co-mingled” with the woman’s personal bank account “and used to pay” both her and Smirnov’s personal expenses.”
In broad terms, the idea of co-mingled funds simply means mixed sources of income. Often in law, and here, the concept refers to the improper mixing of funds overseen by a fiduciary – like an executive who owes a duty to a company – with their own personal funds.
Corporations, however, are regulated entities; as are banks who service them. Certain safeguards exist to make it at least somewhat difficult for such co-mingling to occur.
Prosecutors say Smirnov did an end-run around a Bank of America employee by hiring and then firing an Avalon employee.
From the indictment, at length:
On February 10, 2020, the Defendant caused the opening of the Avalon Bank Account, in the name of Avalon Group Inc., which he identified on the account opening document as an “S Corporation.” An individual (hereafter “Bookkeeper”) was identified as “president” of Avalon and the Defendant was identified as a “signer” on the account opening document. Bookkeeper agreed to be listed on the account because the Defendant had told her he wanted to use her services as a bookkeeper for Avalon’s business and having signatory authority on the account meant she could access its statements for bookkeeping purposes. Bookkeeper never accessed any of the funds in the Avalon Account. Later the Defendant told Bookkeeper that he didn’t need her services because Avalon wasn’t operating. On July 21, 2021, the Defendant submitted a revised signature card to Bank of America that removed Bookkeeper, making him the sole signatory on the account.
While purporting to document such corporate shenanigans, prosecutors eschewed filing any corporate fraud charges in the case.
And when it came time to file income tax returns on his relatively modest income for the three years at issue, Smirnov allegedly played fast and loose with a tax preparer and then left them stonewalled.
“The Defendant did not provide any documents that substantiated any of these figures,” the indictment reads. “As a result, the professional tax return preparer refused to sign the returns. The Defendant told the professional tax return preparer that he would not disclose how he earned any income and that the professional tax return preparer should not inquire about how he earned his income. The Defendant also instructed the tax return preparer to delete any emails or messages with the Defendant, which the professional tax return preparer did.”
On top of that, the false tax returns were themselves not particularly credible, according to the indictment.
During each of the three years in question, respectively, after accounting for “fictitious expenses,” Smirov allegedly filed tax returns claiming $8,020, $122, and $23,232 in “total income.”
The indictment alleges the defendant was responsible for three counts of filing his own false 1040 forms, three counts of filing his partner’s false 1040 forms, one count of filing a false 1040 form for an associated business, and three counts of tax evasion.
This is not the defendant’s only federal case.
In February, the longtime FBI asset was accused of fabricating claims the Bidens were bribed by executives of the Ukrainian gas company Burisma – while Joe Biden was vice president and Hunter Biden was a member of Burisma’s board – to orchestrate the firing of Ukraine’s then-prosecutor general Viktor Shokin and stave off a criminal probe.
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