The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian financial provider is battling the US Justice Department’s demand that it surrender assets held in two trusts it administers to cover $27m in unpaid federal income tax arrears owed by their settlor/beneficiary.

Equity Trust Bahamas, part of the Bahamas-based Equity Group that has $2bn in assets under custody and administration, is fighting efforts by US federal prosecutors to persuade the south Florida federal court to issue an order that it “must take all necessary steps to repatriate the remaining assets held by” the trusts within 30 days.

At the heart of the clash is whether Bahamian or US and Florida state laws govern the Kroner Family Tust 20004 and Kroner Family 2007 Trust Settlement B trusts, both of which are domiciled in this nation and overseen by Equity in its capacity as trustee. US prosecutors are demanding that the assets held in these trusts be released, and returned to the US, to settle federal income tax debts owned by family patriarch, Burt Kroner.

They alleged, in February 27, 2026, legal filings obtained by Tribune Business, that Mr Kroner is “living a lavish lifestyle” funded by trust assets he has kept offshore in The Bahamas out of reach of the Internal Revenue Service (IRS) “while not displaying any intention of voluntarily paying his tax debt”.

However, Equity Trust Bahamas has hit back in its March 4, 2026, response by urging the south Florida federal court to issue a summary judgment in its favour and “reject” repatriation of the trusts’ assets on the basis that Mr Kroner has no ownership interest in them. It also urged the court to rule that the US federal government’s “tax liens” cannot attach to the trust property.

Settlors typically relinquish control of all the assets they inject into a trust when it is created or settled. As a result, Equity Trust Bahamas is arguing that Mr Kroner no longer has any ownership rights or interests in the assets held in the two trusts targeted by the US Department of Justice - meaning they cannot be used to cover the tax arrears.

And, further, the Bahamian financial institution is also asserting that the two trusts are “discretionary” trusts. This means that the beneficiaries, who include Mr Kroner, have no automatic ability to access or obtain trust assets as the power to determine whether this occurs now rests with Equity Trust Bahamas as the trustee.

This, the latter added, provides additional confirmation that the trust assets are no longer Mr Kroner’s property. And, as a result, the US Justice Department “cannot compel Equity to disburse all of the trusts’ assets to satisfy Burt Kroner’s tax debts”.

And, while acknowledging that this may seem “unfair”, Equity Trust Bahamas argued that Mr Kroner will be unable to escape his $27m debt so long as the US Justice Department uses the tax liens it already possesses to attach to - and seize - and distributions from the two trusts whenever they are paid out to him.

To support its position, Equity Trust Bahamas provided the south Florida court with a legal opinion from Peter Maynard, the former Bahamas Bar Association president and head of the Peter Maynard & Company law firm. However, this was dismissed by the US Justice Department in legal filings that alleged that the Bahamian institution and Mr Kroner were seeking “only to add their spin on Bahamian law” as it urged the south Florida court to ignore this.

Setting out its demands that the trust assets be returned to the US “within 30 days” of the south Florida court so ordering, the US Justice Department asserted: “Defendant Burt Kroner owes the US $27m. And he has not voluntarily paid a penny to the IRS. This tax collection suit, at last, seeks to require the defendants to repatriate assets Mr Kroner has unlawfully shielded from the IRS for nearly 15 years.

“Over the course of two decades, Mr Kroner has used every procedural tool to delay collection while he lived in a multi-million home, purchased luxury vehicles and took lavish vacations. Until the US obtained a preliminary injunction limiting the Kroner defendants’ distributions from The Bahamas’ trusts to $42,000 per month, Mr Kroner received $76,000 per month from The Bahamas’ trusts which are central to his scheme to avoid collection of his IRS debt.

“Repatriation of the assets held by The Bahamas’ trusts is necessary and appropriate for the enforcement of the internal revenue laws for three reasons. First, Mr Kroner owes the US over $27m and lacks sufficient domestic assets to satisfy his tax debt. Second, federal tax liens attach to the assets held by The Bahamas’ trusts under Florida law,” the US Department of Justice added.

“Despite the trust deeds, The Bahamas’s trusts are governed by Florida law, not Bahamian law. Finally, neither the Kroner defendants nor Equity Trust Bahamas have raised affirmative defenses that prevent collection of the assets held by The Bahamas’ trusts. Thus the court should order repatriation of the assets held by The Bahamas’ trusts.”

However, Equity Trust Bahamas pushed back strongly and quickly against the US Justice Department’s demands by arguing that Bahamian law - not the US federal or Florida state variety - governs the trusts and the assets in them.

“In this action, the [US] government is attempting to seize all of the assets held by two Bahamian trusts to satisfy the tax debts of Burt Kroner, who is one of several beneficiaries of the trusts,” the Bahamian financial provider argued. “Burt Kroner, however, does not own or control the trusts or the property therein.

“Rather, Equity, which is a Bahamian company that serves as trustee of the two trusts, has complete discretion to decide how, when and if to distribute trust property to Burt Kroner, including the discretion to give Mr Kroner nothing at all. Given Burt Kroner’s complete inability to compel distributions to himself, his only ‘right’ is to have requests for distribution considered by Equity.

“If Equity grants a distribution request, then whatever Equity chooses to provide him becomes his property. This arrangement is entirely compliant with Bahamian law. Indeed, the [US] government has acknowledged as much. And there has been no argument or evidence in this case to suggest that Equity or the beneficiaries failed to abide by the terms of the trust deeds at all times.”

Equity Trust Bahamas added that, because the IRS and US Department of Justice “cannot escape these indisputable facts”, they can only argue that Florida law permits them to reach and seize the trust assets. However, it asserted that Bahamian law governs both trusts especially since Mr Kroner’s rights as a discretionary beneficiary “were created in The Bahamas long before he had any knowledge of any tax dispute.

“There is similarly no dispute that the trust deeds are expressly governed by Bahamian law. The trusts are administered in The Bahamas, and the trustee is a Bahamian corporation. Florida had no role in creating the interests Burt Kroner has in the trusts,” Equity Trust Bahamas countered.

“Because, under Bahamian law, Burt Kroner does not have any right to trust property until it is actually distributed to him by Equity in its discretion - and because the [US] government’s rights to Burt Kroner’s property are no greater than the rights of Burt Kroner himself - the [US] government cannot compel Equity to disburse all of the trusts’ assets to the government to satisfy Burt Kroner’s tax debts.

“There is nothing unfair about this outcome, and it does not enable Mr Kroner to use the trusts to escape his tax liability. So long as the [US] government still has its tax liens, those liens will attach to any distributions that Burt Kroner receives from the trusts. Put simply, as a matter of trust law, given that the government does not dispute (nor even allege) that these trusts were lawfully established and operated at all times, the trusts cannot now simply be ignored at the [US] government’s whim.”

The IRS and US Justice Department, though, are unlikely to give up easily. They are alleging that some $5m, which was placed into the 2007 trust, came from a purported “gift” to Mr Kroner by a former business associate, David Haring. However, the US federal tax court later ruled that this was instead income that was liable to be taxed. A further $10m injected into the 2004 trust allegedly represented proceeds generated by Mr Kroner selling his business.

“Today, Mr Kroner owes the IRS over $27m and has millions stashed offshore in The Bahamas’ trusts. Yet the IRS has not received a penny. The court should end that discrepancy by ordering repatriation of the assets held by The Bahamas’ trusts,” the US Department of Justice reiterated.

“Ordering the defendants to repatriate assets held by The Bahamas’ trusts is necessary and appropriate. Mr Kroner owes the US $27m. And he has not displayed any intention of voluntarily paying his tax debt. Instead, Mr Kroner transferred his assets offshore and filed for bankruptcy.

“All the while living a lavish lifestyle at the expense of payment of his taxes. Because Mr Kroner will not voluntarily satisfy his debt, the court should issue an order requiring the defendants to repatriate the assets held by the Bahamian trusts.”

The US Department of Justice also alleged that Mr Kroner switched between Bahamian law and Florida law as governing the trusts when the need arose, arguing before the separate US federal bankruptcy court that the latter applied but changing to argue that this country has jurisdiction over them in the current south Florida federal court.

“The Kroner defendants should be estopped from arguing that Bahamian law governs The Bahamas’ trusts,” it argued. “In bankruptcy court, Mr Kroner consistently asserted Florida law to shield his assets from his creditors. In December 2024, Mr Kroner filed an amended schedule of exemptions where he claimed, under oath, that the Florida Trust Code allowed him to exempt The Bahamas’ trusts from his bankruptcy estate.

“Similarly, Mr Kroner has raised Florida’s homestead laws to protect the 2004 trust’s 65 percent interest in his home. Now, Mr Kroner claims that Bahamian law governs The Bahamas’ trusts, not the Florida law. The court should not allow Mr Kroner to raise Florida law in bankruptcy court, and raise Bahamian law in this court.”

Equity Trust Bahamas, though, noted that the US Justice Department had at no time alleged - whether in its legal filings or otherwise - that it had done “anything unlawful or improper” in relation to the two trusts.

“The [US] government acknowledges that the trusts are expressly governed by Bahamian law but improperly contends - without applying the appropriate choice of law analysis for federal tax lien cases - that Florida law applies,” Equity Trust Bahamas argued.

“Here, it is not contested that Burt Kroner’s property rights in the trusts were created in The Bahamas, not Florida. The trust deeds, which specify the nature of Burt Kroner’s property interest in trust assets, are explicitly governed by Bahamian law, provide for the administration of the trusts in The Bahamas, and are overseen by Equity as trustee, which is a Bahamian corporation located in The Bahamas.

“Equity has adequately proven Bahamian law through the written report of its expert on Bahamian trust law, Dr Peter Maynard, and through its citation to the legal authorities identified in Dr Maynard’s report, none of which was challenged by the [US] government in any way.”