UBS whistle-blower gets 40-month sentence
By Martha Brannigan, MiamiHerald.com
In a surprisingly heavy judgment, Bradley Birkenfeld, the former UBS private banker who blew the whistle on a wide-ranging scheme in which the Swiss bank helped wealthy Americans dodge income taxes through secret accounts, was sentenced to 40 months in prison Friday morning.
The sentence was 10 months longer than the prosecution had asked for. The defense had sought probation, pointing to the major impact of Birkenfeld’s unprecedented cooperation. The prosecutors said Birkenfeld is still helping the government and will remain free until Jan. 8, 2010.
In federal court in Fort Lauderdale, U.S. District Judge William J. Zloch ordered Birkenfeld to pay a $30,000 fine. After prison, he has three years of probation.
Birkenfeld, a tall and athletic man of 44, laid the foundation for the federal government’s most devastating assault ever on Swiss banking secrecy and offshore tax cheats. He wore a gray pinstripe suit, blue shirt, red tie and the beginnings of a goatee.
Drawing heavily on details Birkenfeld provided about UBS’ illegal practices in helping U.S. tax cheats, the Internal Revenue Service filed a civil suit seeking to force the bank to turn over information on thousands of unidentified UBS account-holders with secret offshore accounts.
As a result, the U.S. and Swiss government on Wednesday unveiled details of an agreement under which the IRS will end up getting details on 4,450 secret accounts through diplomatic channels in exchange for abandoning its aggressive court tactics.
Assistant U.S. attorney Jeffrey A. Neiman recommended that Birkenfeld get 30 months in prison for his conviction on one count of conspiracy to defraud the government — down from the 60-month maximum sentence he is exposed to — because of his extensive cooperation.
Zloch had delayed Birkenfeld’s sentencing four times at the request of prosecutors who are continuing to debrief him, but last week turned down a fifth request.
Birkenfeld was one of about 50 UBS private bankers catering to U.S. clients. His special services to rich Americans who wanted to hide money in secret offshore accounts once included slipping through U.S. Customs carrying diamonds stuffed inside a toothpaste tube.
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Voluntary Disclosure
From IRS.gov
Taxpayers with unreported income relating to offshore transactions who wish to voluntarily disclose the information to the IRS can find information on the process.
For a complete understanding of the voluntary disclosure procedures, see Internal Revenue Manual (IRM) 9.5.11.9
Taxpayers wanting to participate in the IRS voluntary disclosure process should call the phone number associated with the state in which they reside. See Contact IRS About Voluntary Disclosure. (Updated 7/29/09)
See also Voluntary Disclosure: Questions and Answers re: the voluntary disclosure process and undisclosed offshore accounts (Updated 8/25/2009).
Swiss Banking Executive and Swiss Lawyer Charged With Conspiring to Defraud the United States
Defendants Aided Wealthy Americans Conceal Assets in Secret Swiss Bank Accounts
From PRNewswire.com
Hansruedi Schumacher and Matthias Rickenbach, both of Switzerland, were indicted today for conspiring to defraud the United States, the Justice Department and Internal Revenue Service (IRS) announced. According to the indictment, Schumacher worked as an executive manager at Neue Zuercher Bank (NZB), a Swiss private bank located in Zurich, Switzerland. Rickenbach worked as a Swiss attorney who provided legal advice and services to U.S. clients. Both are alleged to have aided wealthy Americans conceal assets and income in Switzerland from United States authorities.
According to the indictment, Schumacher and Rickenbach helped wealthy American clients conceal their assets by establishing sham and nominee offshore entities to hide their U.S. clients’ assets and income while allowing these clients to still control the assets and make investment decisions.
The indictment further alleges that Schumacher and Rickenbach regularly traveled to the United States to conduct banking and investment activities with their U.S. clients and that when they traveled they concealed their business activities in the United States by falsely representing to American authorities that they were traveling to the U.S. for personal reasons. While in the United States, the defendants would sometimes bring cash for their clients..
According to court documents, Schumacher and Rickenbach aided their wealthy American clients repatriate money back to the United States using several deceptive means. Schumacher and Rickenbach helped their clients obtain offshore credit cards and created sham loan documents. Additionally, Schumacher and Rickenbach falsified bank documents to generate the appearance that assets of their U.S. clients belonged to Swiss citizens, and they falsified documents to disguise their United States clients’ repatriation of offshore funds as inheritances from foreign citizens.
According to court documents, Schumacher and Rickenbach discouraged their U.S. clients from voluntarily coming into compliance in the United States. Instead, the defendants encouraged their clients to transfer their assets from UBS, a large Swiss bank, to NZB, a smaller bank in Switzerland. The defendants told their clients that their assets and identification would be safer at NZB because they had no presence in the United States and was therefore less likely to be pressured by the American authorities to disclose the identities of their United States clients.
“The Justice Department will continue to investigate leads provided by U.S. taxpayers who have come forward to disclose foreign bank accounts and will prosecute those foreign bankers and banks who illegally helped U.S. clients evade taxes,” said John A. DiCicco, Acting Assistant Attorney General of the Justice Department’s Tax Division. “We encourage foreign banks to come forward and disclose their conduct immediately, before we learn about their criminal conduct from U.S. taxpayers.”
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UBS to Give 4,450 Names to U.S.
The Wall Street Journal is reporting (8/20/09)…
The U.S. could within months begin criminally prosecuting hundreds of wealthy Americans — from the obscure to the “rich and famous” — for using foreign bank accounts to evade income taxes.
In a settlement with the Swiss government detailed Wednesday, the Internal Revenue Service said Swiss bank UBS AG will ultimately turn over the identities behind 4,450 secret accounts.
At least $10 billion had been stashed to avoid payment of U.S. taxes or the disclosure of foreign accounts, according to a person familiar with the matter. The U.S. government investigation and settlement ultimately could produce some 10,000 account identities.
Click link above for complete article.
UBS Tax Crackdown Widens to Hong Kong
By Carrick Mollenkamp, The Wall Street Journal
The U.S. crackdown on clients of UBS AG is widening into a global hunt, with the government detailing in court documents how the Swiss bank and outside advisers helped Americans hide money using enterprises set up in Hong Kong.
For the first time in the government’s long-running bid to ferret out the names of U.S. tax-evaders from the Swiss bank’s client list, plea agreements entered in the case are providing a clearer picture of UBS’s sophisticated efforts to help Americans hide income or the existence of foreign bank accounts.
On Friday, John McCarthy, a UBS client in California, agreed to plead guilty to one count of failing to file an annual report to the Treasury Department. A document filed with the plea shows the tax scheme relied in part on channeling funds to a Swiss UBS account held in the name of a Hong Kong entity, the second time accounts in the Asian financial hub have figured in these cases.
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UBS to name 5,000 accounts under U.S. deal
By Jonathan Lynn, Reuters.com
The deal initialed last week between the United States and Switzerland over UBS will involve the disclosure of around 5,000 holders of secret Swiss accounts, weekly newspaper NZZ am Sonntag said on Sunday.
Click link above for complete article.
Malibu man to plead guilty to using Swiss bank to avoid U.S. taxes
John McCarthy is the first Californian to be prosecuted after Swiss bank UBS agreed to reveal identities of its customers. The IRS is seeking more names from the bank.
By Nathan Olivarez-Giles, LATimes.com
A nationwide crackdown on federal income tax evasion using secret Swiss bank accounts yielded an agreement from a Malibu businessman to plead guilty to hiding at least $1 million abroad.
John McCarthy is the first tax dodger in California — and the fourth nationwide — to be prosecuted after Switzerland’s largest bank, UBS, agreed to reveal the identities of U.S. customers.
The Internal Revenue Service is seeking the names of more than 52,000 U.S. residents who deposited money into secret accounts through agreements with both UBS and the Swiss government. The charge against McCarthy was based on information provided by UBS in February, officials said.
McCarthy funneled the money to a UBS account with the help of a Swiss lawyer and bank officials between 2003 and 2008, court documents said.
Click link above for complete article.
U.S. Builds Crime Cases on Clients of UBS
By Lynnley Browning, New York Times (8/13/09)
Federal prosecutors are building criminal cases against 150 wealthy American clients of the Swiss banking giant UBS as part of a continuing investigation into tax evasion, a person briefed on the matter said Thursday.
Many of the inquiries, which are being handled by dozens of prosecutors around the country, will result in criminal complaints, said this person, who was not authorized to speak publicly. While it is not clear where the government got the 150 names, federal investigators received 285 names from UBS in February as part of a settlement, as well as names from other sources. In February, UBS agreed to pay $780 million to settle charges that it had helped American clients evade taxes on nearly $20 billion hidden in offshore accounts.
Click link above for complete article.
IRS Releases Streamlined Offshore Voluntary Disclosure Form
The IRS has posted to its Web site a three-page “optional format” short form for taxpayers to use when applying for the Voluntary Disclosure Program. The form asks taxpayers to estimate the annual highest aggregate value for their offshore accounts or assets for the years 2003–2008. It also requires them to list estimated total unreported income from offshore accounts for each of those years.
For accounts or assets for which the taxpayer has control or is a beneficial owner, the form requires taxpayers to list any and all financial institutions and the country where the institution is located. Taxpayers must also explain the purpose for establishing the offshore account and list each person or entity affiliated with the account.
Affected taxpayers have until Sept. 23 to apply to participate in the Voluntary Disclosure Program. Under the program, taxpayers making voluntary disclosures of offshore noncompliance can avoid the foreign bank and financial account balance nondisclosure penalty provisions and other provisions pertaining to various information returns. The IRS has published local phone numbers in 50 states and 9 foreign countries that taxpayers can use to contact the IRS about voluntary disclosure.
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