In Episode 19 of Final Notice, Jason Carr breaks down the case of Justin Ryan Schmidt, a crypto hedge fund manager who renounced his U.S. citizenship, hid millions in foreign accounts, lied on his expatriation form, and flipped a luxury Colorado home while evading every tax along the way.
Show Notes:
Justin Ryan Schmidt founded Translunar Crypto LP, an Austin-based hedge fund focused on cryptocurrency investments. Between 2019 and 2022, he earned at least seven million dollars from his fund but reported income of five thousand dollars or less on each of his federal tax returns. He held millions in undisclosed foreign bank accounts, never filed an FBAR, and failed to pay the income taxes he owed.
In March 2022, Schmidt renounced his U.S. citizenship at the American Embassy in Kingston, Jamaica. When he filed Form 8854, the expatriation statement required by the IRS, he reported his net worth as twenty-five thousand dollars. Court records established that his net worth exceeded two million dollars. He also falsely certified that he had complied with his tax obligations for the preceding five years.
After expatriating, Schmidt purchased a home in Snowmass Village, Colorado, for 5.8 million dollars and sold it three months later for approximately nine million dollars. He submitted false documentation to prevent FIRPTA withholding on the sale and did not report the gain.
On July 27, 2026, U.S. District Judge Robert Pitman sentenced Schmidt to 37 months in federal prison and ordered him to pay approximately 3.4 million dollars in restitution.
Jason explains how the IRS exit tax works under IRC Section 877A, why renouncing citizenship triggers a final tax accounting rather than ending one, and what Schmidt should have done instead: voluntary disclosure, accurate expatriation filings, FBAR compliance, and proper FIRPTA procedures.
Key Takeaways
- Renouncing U.S. citizenship does not end your tax obligations. It triggers a final accounting under IRC Section 877A, including a potential exit tax on unrealized gains.
- Form 8854, the expatriation statement, is filed under penalty of perjury. False statements on this form carry criminal consequences.
- Foreign bank accounts exceeding $10,000 must be disclosed annually on an FBAR. Willful failure to file is a separate federal crime.
- FIRPTA requires withholding on real property sales by foreign persons. Submitting false documents to avoid withholding is a prosecutable offense.
- Voluntary disclosure and amended returns, filed through a tax attorney, can eliminate criminal prosecution risk when the facts are addressed early.
- Expatriation tax planning is a legitimate practice area with legal structures available at every step. The crime is choosing the illegal version of a legal process.
Resources Mentioned
DOJ sentencing announcement: https://www.justice.gov/opa/pr/expatriated-hedge-fund-manager-sentenced-prison-tax-evasion
DOJ indictment announcement: https://www.justice.gov/opa/pr/hedge-fund-manager-indicted-tax-fraud-charges
IRS-CI guilty plea announcement: https://www.irs.gov/compliance/criminal-investigation/hedge-fund-manager-pleads-guilty-to-tax-evasion-in-austin
IRS Expatriation Tax guidance: https://www.irs.gov/individuals/international-taxpayers/expatriation-tax
IRC § 877A (Tax responsibilities of expatriation): https://www.law.cornell.edu/uscode/text/26/877A
IRC § 7201 (Tax evasion): https://www.law.cornell.edu/uscode/text/26/7201
31 U.S.C. § 5314 (FBAR filing requirements)
Oleg Tinkov case (DOJ, October 2021): https://www.justice.gov/archives/opa/pr/founder-russian-bank-pleads-guilty-tax-fraud
The Law Office of Jason Carr, PLLC: https://carrtaxlaw.com