By WASHINGTON — Billionaire 5-hour Energy entrepreneur Manoj Bhargava maintained allegedly undeclared bank accounts worth hundreds of millions of dollars at the Swiss bank Pictet, according to documents cited by Senate Finance Committee Chairman Ron Wyden, D-Ore., in a letter sent Wednesday to the bank’s managing partner in Geneva.
The letter, which seeks information as part of an ongoing committee investigation, did not name Bhargava, instead referring to him as “Person 1.” But according to a source familiar with the investigation and documents reviewed by CNBC, Bhargava was the account holder at issue.
Wyden says he has received documents about an alleged scheme to avoid U.S. taxes on a personal fortune largely built on the sale of the tiny bottles of highly caffeinated liquid at retail points of sale across the country.
“According to records reviewed by the Committee, Person 1 has been a Pictet client for at least fifteen years,” Wyden wrote.
The letter said Person 1’s account — that CNBC’s reporting linked to Bhargava — received a deposit of $255 million in 2013, but the account was later zeroed out at the end of that year.
Wyden laid out allegations that “the documents explicitly suggest” Person 1 transferred the funds to a Bahamas entity nominally owned by another person, identified as “Person 2.” Yet despite the transfer, the funds allegedly remained under Bhargava’s control.
An attorney for Bhargava, Bryan C. Skarlatos, told CNBC he had no comment on the letter.
A spokesperson for Pictet referred CNBC to a statement it made in December, when it came to a resolution with the Department of Justice over its American clients. That statement said in part, “This resolution follows Pictet’s extensive cooperation with the US authorities, in full compliance with Swiss law. The DOJ recognizes this substantial assistance in the resolution agreement.”
The bank turned over to the Department of Justice information on 1,109 accounts and 1,236 names, with aggregated assets of almost $9 billion.
The Wyden letter cited several indicators that Bhargava, Person 1, allegedly controlled the funds that were in the nominal possession of Person 2.
As a result, Wyden wrote, the foreign bank account reports that Bhargava, Person 1, filed to the Internal Revenue Service did not accurately reflect his control over the Swiss accounts.
Americans are permitted to maintain foreign bank accounts, but they must file so-called FBAR forms with the IRS disclosing the assets, and must pay appropriate related taxes. Bhargava was born in India, but he is a U.S. citizen who conducts business in the suburbs of Detroit.
Bhargava created 5-hour Energy in 2003, and in less than a decade he had pushed the product to $1 billion in sales.
He is also a member of The Giving Pledge charitable campaign, which was founded by billionaires Warren Buffett and Bill Gates. Members make a nonbinding promise to donate the majority of their wealth to philanthropy.
In an essay on The Giving Pledge website, Bhargava indicated that he planned to give 90% of his wealth to charity.
“Service to others seems the only intelligent choice for the use of wealth,” he writes. “The other choices especially personal consumption seem either useless or harmful.”
Wyden wrote that the allegations against Bhargava, Person 1, and Person 2, if true, “could involve potentially the largest individual FBAR penalty in US history.” The highest penalty paid to the IRS to date is $100 million.
Wyden’s letter said the fact pattern inside the Swiss bank called into question whether Bhargava’s — Person 1’s — transactions with Person 2 were truly at arm’s length.
“Even though Person 1 was no longer formally listed as the account holder or had signatory authority over the funds he sent to Person 2’s accounts, Pictet continued to direct inquiries and paperwork concerning the funds to Person 1 and his advisors,” wrote Wyden.
The Senate Finance Committee also “received allegations” that in 2014, several of the bank’s in-house counsel and outside attorneys advised Person 1 to make a voluntary disclosure to the IRS related to an account, but that Person 1 declined to do so.
Federal agents from the Department of Justice and IRS Criminal Investigation unit opened a criminal probe into the matter, wrote Wyden.
It was not clear Thursday whether any such investigation remained open.
