Market Data 
- Tiesto saved $28 million over six years through illegal offshore tax shelters, court documents show.
- Prosecutors now want the tax attorney who masterminded the scheme to personally pay most of it back.
- The tax attorney counters that Tiesto should be responsible for his own back taxes.
On Thursday, DJ Tiesto, who earns millions a year spinning electronic dance music at venues worldwide, will be midway into a three-show swing through Vegas.
That same day, his former tax attorney will be in a federal courtroom in White Plains, New York — trying to not get stuck with the bill for the Dutch DJ’s back taxes.
Federal prosecutors say Frank Butselaar — known in the Dutch media as Holland’s “tax attorney to the stars” — set up an illegal web of offshore shelters that saved Tiesto $28 million in US taxes over six years.
Prosecutors have not accused Tiesto of wrongdoing and have said he was unaware that the offshore structures were illegal. Court documents show the IRS capped Tiesto’s own obligation at $9,467,085, an amount that federal prosecutors say the DJ has paid “voluntarily.”
Now, though, prosecutors are taking Butselaar back to court to ask a judge to order restitution for the balance — some $19 million in Tiesto’s unpaid taxes.
In a filing from Monday, March 3, prosecutors said that if Butselaar plays nice and agrees to pay without a fight, they’ll cut him a break and limit their request for restitution to $15.5 million.
Butselaar’s lawyer plans to counter that his client is broke, that any restitution amount should be determined via an exhaustive hearing, and that back taxes should be the burden of the taxpayer — meaning Tiesto.
“Mr. Butselaar was paid an hourly rate to help his clients,” the lawyer, Kerry Lawrence, told Business Insider. “If anyone is held liable to pay taxes on the millions of dollars in income it should be the artists who earned it, not Mr. Butselaar.”
Reps for Tiesto — given name Tijs Verwest — declined requests for an on-the-record comment.
$19 million is ‘a lot’
White-collar defense lawyers and tax law experts told Business Insider they had never heard of a tax attorney or accountant being ordered to pay such a high amount of their client’s back taxes.
In last week’s filing, Butselaar’s prosecutors offered US District Judge Cathy Seibel three examples. The highest restitution cited was $2 million, the amount a federal judge in Mississippi ordered a tax preparer to pay the IRS in late January.
Still, federal law holds tax preparers liable if it’s proven that they knowingly hid their clients’ income, said John Moscow, a longtime financial crimes prosecutor for the Manhattan District Attorney’s Office.
“Nineteen million — that’s a lot,” said Moscow, now senior counsel at Lewis Baach Kaufmann Middlemiss in New York. “But it seems appropriate for the federal government to tell a tax preparer, ‘You knew it was a crime; pay it back to us.'”
The offshore structures Butselaar created for Tiesto hid tens of millions in income earned from overseas performances between 2012 to 2017, and caused a total IRS tax loss of $28,020,413 — money prosecutors say the DJ should have paid after qualifying as a US tax resident in each of those years.
Butselaar has also admitted saving fellow Dutch DJ Afrojack $700,000 on his 2013 taxes through an identical offshore shelter scheme. As with Tiesto, Afrojack — given name Nick van de Wall — has not been implicated in wrongdoing.
When Afrojack’s $700,000 tax savings are added in, and Tiesto’s $9 million payment is subtracted, “the total outstanding tax loss to the IRS from Butselaar’s actions is $19,250,845,” prosecutors wrote last month.
“Butselaar’s efforts to escape his restitution obligations are unpersuasive, unsupported by law, and contrary to the plea agreement that both he and his lawyers signed,” prosecutors wrote in their filing to the judge last week.
Prosecutors also wrote that they hope Seibel will order Butselaar to pay up immediately before they leave the courtroom.
The IRS lost at least $25 million
Butselaar, 65, is in a Westchester County, New York, jail, serving the final six months of a 30-month federal sentence.
In a November tax-fraud plea, he admitted that the offshore shelters he devised for the Dutch DJs and fashion models on his client list had cost the IRS at least $25 million.
Prosecutors described the scheme this way:
Butselar set up a web of companies to segregate his clients’ US-generated income from their overseas income.
The overseas companies, typically set up in Cyprus and Guernsey, were controlled by trusts with straw beneficiaries, and the non-US income that flowed into them would not be reported to the IRS.
Butselaar’s clients would report only their US-generated income on their tax returns, even though, as US resident taxpayers, they needed to report all of their income worldwide. Overseas citizens qualify for US tax-residency status — and must, therefore, pay US taxes on the entirety of their income — if they live in the states for 183 or more days in a single year.
In total, Butselaar hid between $70 million and $100 million in reportable overseas income from the IRS, prosecutors alleged. The scheme was discovered in March 2018 by Dutch authorities.
Learning of the criminal investigation, Tiesto hired a prominent international law firm, Kramer Levin Naftalis & Frankel, to review his offshore setup.
“In the wake of the Dutch criminal investigation and Kramer Levin’s analysis, Verwest eventually fired Butselaar,” prosecutors wrote in February, using Tiesto’s given name.
A modest home in Italy
On Thursday, Butselaar’s lawyer plans to argue that his client has limited financial means and that the judge has the discretion to order no restitution at all.
“Mr. Butselaar’s sole asset is a modest home in Italy that he and his wife are selling to repay a loan extended by a friend in connection with the defense of this case,” Lawrence wrote the judge, referring to his client’s holiday villa in the medieval town of Valfabbrica, near Perugia.
Under a November plea deal, Butselaar pleaded guilty to a single tax fraud count, telling the judge he filed a false 2013 return for Afrojack. Lawrence now argues that any restitution should be limited to back taxes relating to that one count.
Prosecutors say Butselaar approached at least six other professionals, including American CPAs and tax lawyers, but they refused to participate.
These professionals instead told the tax lawyer that the offshore income being accumulated outside the US by the two DJs needed to be reported to the IRS, prosecutors said.
Prosecutors have not sought charges or restitution against Butselaar’s unindicted co-conspirators: an entertainment management firm and two employees who did agree to sign years of fraudulent tax returns. Their names remain redacted in the court record.
