In a significant development, an indictment was unsealed today revealing charges against Douglas Edelman, a former defence contractor, and his wife, Delphine Le Dain. The couple is accused of orchestrating a complex, a decades-long scheme to defraud the United States and evade taxes on more than $350 million in income that Edelman amassed during his tenure as a defence contractor amid the U.S. military efforts in Afghanistan and the Middle East post-9/11. Edelman, arrested on July 3 in Spain, now faces extradition to the United States for trial.
The Alleged Scheme of Edelman and Le Dain
According to the indictment, from 2003 to 2020, Edelman was a 50% owner of Mina Corp. and Red Star Enterprises, collectively known as Mina/Red Star. This defense contracting business secured over $7 billion in contracts from the Department of Defense to supply jet fuel to U.S. soldiers stationed in the Middle East and Afghanistan. Edelman, with the alleged help of Le Dain and several co-conspirators, is accused of executing an elaborate scheme to conceal his earnings from these contracts.
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The indictment details how Edelman allegedly hid his income in undisclosed foreign bank accounts, fabricated documents, and made false statements, presenting Le Dain as the founder and owner of Mina/Red Star. Le Dain, a French citizen living abroad, did not have U.S. tax obligations. She is accused of signing false documents that purportedly “gifted” Edelman money for various personal expenses, furthering the deceit.
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Deceptive Practices Unveiled
To sustain their scheme, Edelman allegedly conveyed this fabricated narrative of Le Dain’s ownership to several U.S. government entities. He allegedly deceived a Subcommittee of the House of Representatives during a 2010 Congressional investigation, the Department of Defense during contract negotiations, the Justice Department in a 2018 presentation, and the Internal Revenue Service (IRS) in a 2015 application to the Offshore Voluntary Disclosure Program.
Until around 2015, Edelman did not file any U.S. individual tax returns, neglecting to pay taxes on the substantial income he was allegedly earning annually from Mina/Red Star. In 2015, he is accused of filing false tax returns for the years 2007 to 2014, falsely claiming that his business interests, income, and assets were owned by Le Dain. From 2015 to 2020, Edelman continued the deceit by filing false tax returns, asserting that his only income came from consulting work and denying any foreign business interests.
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Concealment of Wealth
The indictment further alleges that Edelman directed his profits from Mina/Red Star into banks known for shielding account holder identities from U.S. authorities, including institutions in Switzerland, the Bahamas, Singapore, and the United Arab Emirates. These accounts were allegedly held under the names of non-U.S. entities established in Panama, Belize, and the British Virgin Islands. Despite these layers of concealment, Edelman allegedly maintained control over the funds, using them to finance various global business ventures and personal luxuries.
His ventures reportedly included a business providing internet services to U.S. troops and contractors at Kandahar Air Base in Afghanistan, a fuel infrastructure project in Mexico, and a music television franchise in Eastern Europe. Additionally, Edelman allegedly used the concealed funds to purchase a ski chalet in Austria, a house in Spain, a townhouse in London, and multiple yachts, all acquired in the names of nominees.
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Charges and Potential Penalties
Edelman and Le Dain face serious charges, including conspiring to defraud the United States and 15 counts of tax evasion. Edelman also faces two charges of making false statements to the U.S. government and 12 counts of willfully violating foreign bank account reporting obligations as part of a pattern of unlawful activity.
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If convicted, both Edelman and Le Dain could face up to five years in prison for the conspiracy count, and up to five years for each tax evasion count. Additionally, Edelman could receive up to five years for each false statement count and ten years for each count of willfully violating foreign bank account reporting obligations. They also face the prospect of supervised release, restitution, and substantial monetary penalties. A federal district court judge will determine their sentences, taking into account the U.S. Sentencing Guidelines and other statutory factors.
Investigation and Prosecution
The indictment was announced by Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Tax Division of the Justice Department and U.S. Attorney Matthew M. Graves for the District of Columbia. The case is being investigated by IRS Criminal Investigation and the Special Inspector General for Afghanistan Reconstruction, with assistance from His Majesty’s Revenue & Customs of the United Kingdom. The Joint Chiefs of Global Tax Enforcement (J5), which includes tax authorities from Australia, Canada, the Netherlands, the United Kingdom, and the United States, also provided assistance. Edelman’s arrest was facilitated by the U.S. Drug Enforcement Agency and Spain’s Guardia Civil.
Read the complete order on the website of DOJ
Trial Attorney Ezra Spiro from the Tax Division, Senior Litigation Counsel Nanette Davis, Assistant Chief Sarah Ranney, and Assistant U.S. Attorney Joshua Gold for the District of Columbia are all prosecuting the case. It’s crucial to note that an indictment represents an allegation, and all defendants are presumed innocent unless proven guilty beyond a reasonable doubt in a court of law.
