IMHO the 700k is blocked as the 128k plus-some are the part that won't be touched.
you will not lose all the 700k, "only" couple of percent.
stop cryin, that's just TAX EVASION catching up to you.
What makes you think that this person will only lose a couple of percent of the 700k? It seems like they have lost all that money so far.
And Tax Evasion, which I don't think this is shouldn't be wrong. If you can go somewhere else and get cheaper taxes then why shouldn't you be allowed to do this?