Peter Schiff files civil rights suit alleging conspiracy between IRS, OCIF
The lawsuit follows years of international scrutiny on Schiff and Euro Pacific Bank, which he founded in Puerto Rico.
Peter Schiff, a stockbroker, financial commentator and resident of Puerto Rico, filed a civil rights lawsuit against the U.S. Internal Revenue Service, Puerto Rico’s Financial Institutions Commissioner’s Office (OCIF, in Spanish), and several international tax enforcement officials, alleging a conspiracy to unlawfully seize his property and damage his reputation.
The suit, filed in the U.S. District Court for the District of Puerto Rico on Monday, also names individuals from tax agencies in Australia, Canada, the Netherlands and the United Kingdom as defendants.
At the heart of Schiff’s claims is a 2022 investigation led by the IRS’ Joint Chiefs of Global Tax Enforcement, or “J5,” a group of tax enforcement agencies from five countries.
Schiff alleges that IRS officials, including former Chief of Criminal Investigations Jim Lee, conspired with OCIF to close his bank, Euro Pacific International Bank, through a campaign of false accusations and regulatory maneuvers.
Schiff, who has lived in Puerto Rico since 2017, claims these actions violated his civil rights, deprived him of due process, and amounted to an illegal seizure of his assets.
The lawsuit follows years of international scrutiny on Schiff and Euro Pacific Bank. In 2020, several media outlets reported that Euro Pacific was under investigation by J5 for alleged money laundering and tax evasion.
According to Schiff’s suit, those reports were based on confidential information leaked by IRS officials, a move he describes as part of a “publicity stunt” to bolster the agency’s reputation.
The 55-page complaint seeks to hold the IRS and OCIF accountable for actions that the plaintiff claims were meant to destroy his bank and business reputation.
In the lawsuit, Schiff alleges that OCIF’s commissioner, Natalia Zequeira-Díaz, worked with IRS agents to block the sale of Euro Pacific to an outside buyer in early 2022. Schiff claims that OCIF initially supported the sale but later reversed course under pressure from the IRS. According to the suit, this decision came despite full disclosures regarding the transaction and the buyer’s financial qualifications.
Schiff offered to inject $7 million of his own capital into the bank if necessary to ensure its financial stability, according to the complaint.
“His offer to inject $7 million in capital was rejected by the OCIF Commissioner, who assured him that the bank’s current capital level, though below the statutory required minimum, was sufficient for the bank to operate prior to the completion of the sale to Qenta,” according to the lawsuit.
According to the lawsuit, OCIF blocked a sale of Euro Pacific’s assets to Qenta, a U.S.-based company that had offered $17.5 million for the bank. Instead, the bank’s assets were later sold at a loss to Qenta for $1.25 million — a transaction Schiff says produced “seven cents on the dollar, instead of trying to get the highest possible value for all parties involved, thus also failing to comply with [its] fiduciary duties.”
The suit accuses OCIF of knowingly allowing “Operation Atlantis,” an IRS-led investigation, to overshadow the closure of the bank, even as officials knew that Schiff was not directly involved in any alleged wrongdoing.
In a press conference on June 30, 2022, IRS and OCIF officials announced Euro Pacific’s closure, citing “capital deficiencies.”
“There is no doubt that OCIF’s work sends a strong message to others that the Puerto Rican financial industry will not be a haven for tax evaders or illegal conduct. We stand here together today to display the strong partnership we have with OCIF and to commend their leadership for taking decisive action,” said Lee, during the news conference at the time.
However, Schiff argues this was a “pretext” for defaming him and his bank.
Schiff contends that IRS officials had informed multiple journalists about the press conference hours before he or his legal representatives were notified.
“Selling the bank’s assets instead of the entire institution was the most harmful option for all involved,” Schiff’s attorney stated. “OCIF and the Trustee should have pursued the stock sale, which would have maximized the value and ensured stability for customers.”
Schiff also claims that he was misled into believing he could restructure the deal to prevent owning stock in the new entity, a concern reportedly raised by OCIF. However, Schiff says OCIF never gave him a fair opportunity to address the issue, which became a “pretext” to reject the sale.
Schiff contends the damage inflicted by the IRS and OCIF extends beyond finances, severely impacting his personal and professional reputation.
The suit notes that following the IRS’ June 2022 press conference, numerous media outlets published stories implying Euro Pacific’s involvement in criminal activity. Schiff claims that IRS officials intentionally fueled these stories, releasing unsubstantiated allegations to the press to gain international attention.
OCIF’s fines and penalties compounded the bank’s troubles, according to the lawsuit. Schiff claims that OCIF imposed a $700,000 fine after failing to renew Euro Pacific’s license in 2022, an action he says was inconsistent with OCIF’s usual practice.
The complaint also suggests the IRS may have provided Puerto Rico with incentives to participate in its efforts against Euro Pacific, alleging that the IRS’ removal of Puerto Rico from a list of high-risk money laundering jurisdictions was part of a “quid pro quo” arrangement.
In addition to damages exceeding $75,000, Schiff’s suit requests declaratory relief, seeking acknowledgment that the IRS and OCIF violated his constitutional rights. He also seeks compensation for the reputational harm he claims he suffered from what he describes as a campaign to “wrongfully shut down the bank and defame him.”
This is the second lawsuit Schiff has filed against the IRS in recent months. In July, the financier filed a suit at the U.S. District Court for the Columbia District over a Freedom of Information Act request, according to a report.
