Senate Says Lawyers Helped Wealthy Americans Dodge Taxes Through Puerto Rico Residency Claims

Sen. Ron Wyden, the committee's ranking Democrat, said that ultra-wealthy investors may have improperly shifted billions of dollars in income to Puerto Rico through questionable legal opinions provided by major law firms. The concern is not that Americans legally moved to Puerto Rico to reduce future taxes, but that some allegedly tried to erase taxes they already owed before becoming bona fide residents.

"The IRS is appropriately seeking to determine whether individuals who have relocated to Puerto Rico are misusing Puerto Rico Act 60 to shelter billions of dollars in income from U.S. taxes," Wyden wrote in a letter to Jarod Koopman, the IRS chief tax compliance officer. "My understanding is that there are dozens of ultra-wealthy investors who received dubious advice from partners at major law firms."

The Senate findings name two tax attorneys, Jeffrey Rubinger and Summer LePree, who Wyden says allegedly helped several high-net-worth clients avoid more than $100 million in taxes by claiming Puerto Rican residency. The committee said public reports indicate both are under criminal investigation for previous work advising clients on the strategy. Neither has been charged in the Senate announcement.

"I am concerned that numerous investors used these legal opinions from Rubinger and LePree to avoid federal income taxes on large capital gains that accrued prior to relocating to Puerto Rico," Wyden wrote.

The case turns on Puerto Rico's Act 60, the island's tax incentive program for new residents and businesses. The law can allow bona fide Puerto Rico residents to avoid federal tax on certain Puerto Rico-sourced income and capital gains. But that benefit generally applies only after a person actually becomes a Puerto Rico resident, not to gains that built up while the person lived in Florida, California, or another state.

The clearest public criminal case is Suresh Gajwani, a 78-year-old Miami-area investor who pleaded guilty in June 2025 to making a false statement to the IRS. Prosecutors said Gajwani did not become a bona fide Puerto Rico resident until Jan. 1, 2020, after his company's stock portfolio had already accrued tens of millions of dollars in gains. The Justice Department said he submitted a false document claiming his company intended to convert to an S corporation as of Jan. 1, 2019, a move prosecutors said was meant to shield about $30 million in capital gains under Puerto Rico's tax program.

Gajwani's case also included unnamed professional advisers. The Justice Department said he was advised by an accountant and an attorney to restructure the company and was told by an attorney that built-in gains accrued before becoming a Puerto Rico resident could be exempt from federal taxes.

Wyden has also scrutinized Dan Morehead, founder of crypto investment firm Pantera Capital. In an October 2025 letter, Wyden said his staff received information that Pantera sold a large position after Morehead relocated to Puerto Rico and generated more than $1 billion in capital gains. Wyden said Morehead's share was hundreds of millions of dollars and questioned whether he treated the gains as exempt even though "the lion's share" allegedly accrued while he still lived in California. Morehead has not been charged with wrongdoing.

The investigation is politically sensitive in Puerto Rico, where Act 60 has long been promoted as a tool to attract investment, entrepreneurs, and high-income residents. Critics argue the program has fueled resentment on the island by giving outsiders tax advantages unavailable to many local Puerto Ricans, while supporters say it brings capital and business activity.

The Senate probe does not accuse every wealthy newcomer to Puerto Rico of wrongdoing. Public figures such as Jake Paul have been associated with the broader trend of wealthy Americans relocating to Puerto Rico, but there is no verified evidence that Paul is part of Wyden's investigation or accused of illegal tax avoidance. Wyden's focus is narrower: investors who allegedly reclassified old U.S. gains as Puerto Rico income and the lawyers who may have told them they could.