UBS Client Rubinstein Pleads Guilty Over Tax Return

June 29, 2009 by admin
Filed under: IRS, UBS 

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).

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