- Teisto's ex-lawyer — Holland's "Taxman to the Stars" — has been sentenced to 30 months on tax fraud.
- Prosecutors say Frank Butselaar hid $100M in income for his clientele of rich Dutch DJs and models.
- He may have to pay back the $19M in taxes that the IRS says he saved Tiesto and fellow DJ Afrojack.
The longtime tax attorney for world-famous DJs Tiesto and Afrojack was sentenced in New York on Thursday to 30 months in prison for tax fraud.
The sentencing was bad news for Frank Butselaar, a 65-year-old tax consultant known in the Dutch press as the "taxman to the stars."
But it may be good news for Tiesto and Afrojack, his former clients.
Butselaar, a Dutch citizen and until 2013 a partner at the Amsterdam office of Greenberg Traurig, is now being asked to pay $19.25 million in restitution. That's the total amount that federal prosecutors say Butselaar saved the two DJs in taxes through a fraudulent web of offshore shelters.
In other words, the feds want Butselaar, the tax lawyer, to square up with the IRS, rather than the clients themselves.
"We're claiming he shouldn't have to pay anything," Butselaar's attorney, Kerry Lawrence, told Business Insider on Friday. "He's not the taxpayer."
Meanwhile, Tiesto and Afrojack, who have not been accused of wrongdoing, have quietly resolved their differences with the IRS at a huge discount, Lawrence said.
"They've paid up, I think, a very small portion of it, and the IRS is not looking to them for anything more," he said of Tiesto, given name Tijs Verwest, and Afrojack, given name Nick van de Wall.
Tiesto and Afrojack, both Dutch citizens, have faced no charges in the tax-shelter scheme. In fact, prosecutors have repeatedly said that the two were unaware of Butselaar's frauds on their behalf.
Representatives for the two DJs did not immediately return requests for comment on Friday.
In detailing the allegations against Butselaar in court papers, prosecutors have alleged that the two DJs were able to save a combined $19 million in US taxes through an offshore tax-shelter scheme Butselaar ran on their behalf from 2012 to 2018.
Prosecutors say that during those seven years, Tiesto and Afrojack were deemed US tax residents because they were temporarily living here. As tax residents, the two were therefore obligated to pay income taxes to the IRS on their worldwide income, prosecutors said.
At the time, both were spinning electronic dance music at clubs and stadiums around the world.
Tiesto, in particular, was earning tens of millions of dollars a year.
Widely considered the "Godfather of EDM," Tiesto was one of the originators of the trance style of electronic dance music in the mid-90s.
During the seven years of the scheme, Tiesto's music had its own station on Sirius XM. Three of his tracks were included in the soundtrack at the Bellagio Fountains in Vegas, and in 2014 he headlined the Global Citizen Festival in New York City with Jay-Z and No Doubt.
Forbes estimated that in 2017 — the last full year that prosecutors say Butselaar ran his scheme — Tiesto earned $39 million.
According to the charges against him, Butselaar hid a total of $100 million of his wealthy clients' foreign-earned income by diverting it into shell corporations and trusts in Cypress and Guernsey. At least two Dutch fashion models were among what prosecutors called his "high-net-worth clients."
Butselaar would file tax paperwork indicating that his clients' friends and family members were the beneficiaries of those shell corporations and trusts. The true beneficiaries were the DJs and fashion models themselves, prosecutors said.
"His clients retained control — and expected to benefit from — the income they generated and collected in their trusts, and Butselaar used the fig leaf of a nominee beneficiary to conceal this income from the IRS," prosecutors wrote in July.
Prosecutors alleged that as part of the scheme, Butselaar filed a false tax return for Afrojack for the tax year 2013, and for Tiesto for the tax years 2014 through 2017.
While the scheme was operating, Butselaar was repeatedly warned that the income being collected offshore for his clients was reportable, prosecutors wrote in November. Six different professionals — including American CPAs and tax lawyers — told Butselaar that the offshore income being accumulated outside the US for the two DJs needed to be reported to the IRS, prosecutors wrote.
The former tax accountant initially fought his indictment, which alleged conspiracy against the United States and multiple counts of filing false tax returns.
Defense lawyers argued in court papers last year that there was nothing nefarious about the structure of foreign trusts and holding companies Butselaar set up for his clients.
It was "the ordinary practice of artists and entertainers throughout the world" to set up so-called loan-out corporations that would act as their "contracting entities," Butselaar's attorneys wrote in May.
Butselaar went to trial in White Plains, New York in October. The trial was halted after seven days of testimony, and on November 4, Butselaar accepted a plea deal, admitting to a single charge of aiding in the filing of a false tax return.
He admitted he worked with partners at an unnamed US management firm to conceal Afrojack's offshore income in his 2013 US resident tax return.
"He was facing decades in jail," had he lost at trial, Lawrence told BI when asked why his client, a married father of four, took the plea.
Butselaar has, to date, spent 21 months in pretrial detention. The time includes detention in Italy, where he and his family have a vacation home, and time at a jail some 25 miles north of New York City, where he remains held.
Given that time already served, he will likely complete his 30-month sentence and be freed from jail in about six months, Lawrence, the defense lawyer, told BI.
In court papers filed ahead of Thursday's sentencing, Lawrence complained that multiple unnamed people in the two DJs "advisory orbit" have avoided criminal charges, as have his client's unnamed alleged coconspirators.
The two DJs have likewise carried on with their careers, with only Butselaar paying any real penalty.
"Tiesto is scheduled to take the stage in India tonight," Lawrence told the judge at sentencing on Thursday.
"And Afrojack is scheduled to appear in Italy next week," he said, adding, "Mr. Butselaar never blamed anyone else for doing anything improper and asked us not to do so."
US District Judge Cathy Seibel has 90 days after imposing the sentence to make a finding on restitution. She said Thursday that she will weigh arguments for and against the prosecution's $19 million demand before ruling.
