UBS Client Rubinstein Pleads Guilty Over Tax Return
By Mort Lucoff and David Voreacos, Bloomberg.com
A Florida millionaire pleaded guilty to filing a false tax return that failed to disclose secret accounts he held at UBS AG, the largest Swiss bank by assets.
Steven Michael Rubinstein, 55, of Boca Raton, was the first U.S. taxpayer charged after UBS gave more than 250 customer names to the Internal Revenue Service under a Feb. 18 agreement to avoid prosecution for helping wealthy Americans evade taxes. He entered his plea today in federal court in Miami.
UBS handed over account data on Rubinstein, a chartered accountant who has worked since 1994 at an international yacht company. He is cooperating with a U.S. probe of scores of U.S. taxpayers. He pleaded guilty to filing a false return in 2004 and admitted failing to disclose UBS accounts from 2001 to 2007.
“Today’s guilty plea resolves the first prosecution of a UBS client based upon records received from UBS,” Jeffrey Sloman, acting U.S. attorney in Miami, said in a statement. “More prosecutions are expected to follow.”
Rubinstein, who was arrested on April 2, faces up to three years in prison. He also admitted failing to file reports of foreign bank and financial accounts, or FBARs. He must pay back taxes, fines and a penalty of 50 percent of the highest annual balance from 2001 to 2007. He is free on $12 million bail.
Rubinstein admitted UBS helped him set up the British Virgin Islands corporation Hybridge International Ltd. Over seven years, his UBS bankers helped him buy and sell securities worth 4.5 million Swiss francs ($4.1 million), he admitted.
Real Estate, Krugerrands
He also admitted transferring $3 million from UBS to a Monaco account and then to the U.S. to buy property and build his home in Boca Raton. In all, he transferred $7 million from a Monaco account to build his home. He also used his UBS accounts to deposit and sell more than $2 million worth of South African Krugerrands.
UBS, based in Zurich, avoided prosecution by admitting it helped taxpayers hide money in Swiss accounts to dodge paying U.S. taxes. UBS also agreed to make reforms and pay $780 million in fines and penalties.
As part of its agreement, UBS admitted that from 2000 to 2007, its Swiss private bankers helped wealthy Americans evade U.S. taxes by setting up sham offshore companies in tax havens. UBS said it created misleading forms saying those offshore companies, not taxpayers, were the beneficial owners.
On Feb. 19, the U.S. government sued UBS to try to force disclosure of the identities of as many as 52,000 American account holders who allegedly hid their secret Swiss accounts.
Passports, Boat Keys
A U.S. magistrate judge at a bail hearing April 8 ordered Rubinstein to surrender his U.S. and South African passports and keys to his 45-foot boat.
Rubinstein’s home is worth $5 million to $6 million, he said at the hearing. He said he owned two condominiums in Boca Raton worth about $1 million and a condominium near Tel Aviv worth about $800,000. He said he also owned a 2007 Mercedes and a 2002 Mercedes and leased a Lincoln Navigator.
Rubinstein’s attorney, Robert Panoff, declined to comment.
The case is U.S. v. Rubinstein, 09-cr-60166, U.S. District Court, Southern District of Florida (Miami).
US Tax Spat Returns UBS To Spotlight As Swiss, US Seek Pact
By Katharina Bart, The Wall Street Journal
UBS AG (UBS) was again at the center of relations between Switzerland and the U.S. Tuesday as the two countries launched talks aimed at agreeing a double-tax treaty which experts say could have implications for the Swiss bank’s ongoing legal battle with the Internal Revenue Service.
Switzerland wants a speedy resolution to the talks after inking double-taxation agreements with several European countries in recent weeks, a spokeswoman for the finance department said Tuesday.
At the same time, the IRS is continuing with its demands for access to data on more than 50,000 UBS clients through the civil court in a move that strikes at the heart of Switzerland’s traditional banking secrecy.
But even if the IRS succeeds in its demands, UBS is likely to continue to refuse to hand over data because doing so would violate Swiss law. Therefore, if the court case persists, the Swiss government is expected to seek a political solution that falls back on the terms of the planned tax treaty between the two countries, experts say.
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IRS May License Tax Preparers to Help Close ‘Tax Gap’
By Ryan J. Donmoyer, Bloomberg.com
The Internal Revenue Service is considering registering or licensing paid tax preparers such as H&R Block Inc. and Jackson Hewitt Tax Service Inc. as part of a broad review of the way Americans file tax returns, Commissioner Doug Shulman said.
Shulman told a House Ways and Means subcommittee today he is preparing a “comprehensive set of recommendations” that may include new regulations for preparers to help recover an estimated $290 billion in uncollected taxes. He later told reporters that may include a registration or licensing requirement.
Requiring paid tax preparers to register or become licensed would establish a national accreditation framework for the industry for the first time, with the goal of improving accuracy of tax filings and ending fraud that investigators say fleeces both taxpayers and the government.
“This is nothing less than a transformational shift,” Shulman said.
Sixty-one percent of individual tax returns are done by paid preparers, according to IRS Taxpayer Advocate Nina Olson, the chief ombudsman for U.S. taxpayers, who has recommended licensing of preparers since 2002.
“Untrained and unscrupulous preparers present a serious problem,” Olson wrote in a 2006 report to Congress.
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