Ex-Hedge Fund Manager Who Renounced U.S. Citizenship Sentenced to 37 Months for Tax Evasion
(Colorado = Alex Walczak) Justin Ryan Schmidt, a former hedge fund manager who renounced his U.S. citizenship, was sentenced to 37 months in prison for hiding millions in income and assets from the IRS, the Justice Department announced on July 27.
Justin Ryan Schmidt, once a U.S. citizen and hedge fund manager specializing in cryptocurrency investments, concealed at least $7 million in income from 2020 to 2022, according to court documents. Despite earning millions, Schmidt falsely reported earning $5,000 or less annually on his tax returns and failed to disclose millions held in foreign bank accounts.
Schmidt, originally from Austin, Texas, renounced his U.S. citizenship in March 2022. At that time, he was required to report his net worth to the IRS but falsely declared it as $25,000, despite having assets exceeding $2 million. He also lied about complying with tax obligations over the previous five years.
In 2023, Schmidt purchased a $5.8 million home in Snowmass Village, Colorado, and sold it three months later for approximately $9 million. He did not report the gains from this sale and submitted false documents to avoid tax withholding.
U.S. District Judge Robert Pitman sentenced Schmidt to 37 months in prison, three years of supervised release, and ordered him to pay roughly $3.4 million in restitution.
Assistant Attorney General Colin M. McDonald of the National Fraud Enforcement Division emphasized that renouncing citizenship does not exempt individuals from U.S. law. “Mr. Schmidt deliberately hid millions in income and assets from the IRS, filed false statements, and cheated America’s tax system,” McDonald said.
Christopher J. Altemus Jr., Special Agent in Charge of IRS Criminal Investigation in Texas, added, “He benefited from being a U.S. citizen but tried to avoid paying taxes. Even after renouncing citizenship, he lied to hide his wealth. Our investigators pursue justice beyond borders.”
The case was jointly investigated by the Department of Justice’s National Fraud Enforcement Division and IRS Criminal Investigation. Prosecutors included Senior Litigation Counsel Michael C. Boteler and Trial Attorney Michael Jones.
This prosecution aligns with the Justice Department’s intensified efforts to combat fraud, including the recent establishment of the National Fraud Enforcement Division and the government-wide Task Force to Eliminate Fraud. The ruling sends a clear message that expatriation cannot be used to shield illegal tax evasion, signaling increased scrutiny and enforcement against high-net-worth individuals moving assets offshore.
