A real Act 60 criminal case just closed. Here’s what actually got someone prosecuted.

A Florida investor tried to backdate a corporate filing to make his stock gains look Puerto Rico-sourced. It cost him $15.3 million and almost got him prison time.

Suresh Gajwani held a large stock position that had already gained tens of millions of dollars in value while he was still a Florida resident. He didn't become a bona fide Puerto Rico resident until January 1, 2020. To get around that timing, he backdated a corporate election, claiming his company intended to convert to an S corporation a year earlier than it actually did, so the built-in gains could be treated as Puerto Rico-sourced instead of US-sourced.

The IRS caught it. He pleaded guilty in 2025 to filing a false document. Without the scheme, he would have owed around $7 million in US tax. He's now facing up to 3 years in prison and about $15.3 million in restitution.

The IRS backed this up with formal guidance (Chief Counsel Memorandum 202538025) stating plainly: you cannot recharacterize gains that built up before you moved as Puerto Rico-sourced income after the fact, no matter how the paperwork gets restructured.

The IRS is enforcing the sourcing rules hard right now, specifically the line between what counted as income before residency started and what counted after. That's where the scrutiny lands, especially for crypto and equity gains.

If you're weighing a move, get the residency date and the sourcing timeline right before you file anything. This is general information, not advice for your specific situation.