Swiss court confirms transfer of UBS data to the US
The Swiss Federal Administrative Court has announced that an agreement with the US, allowing Swiss bank UBS to disclose account information of clients suspected by the US Government of tax evasion, is binding.
A Jurist report states that the agreement, approved last month by the Swiss Parliament, allows UBS to turn over information of 4 450 US clients to the US Internal Revenue Service (IRS) and may prevent the US Department of Justice (DOJ) from resuming a lawsuit against UBS in which it had sought the names of 52 000 UBS clients.
The court also announced that they have rejected a challenge to the law by a UBS client who had objected to the data transfer. In announcing its ruling, the court noted the importance of the US-Swiss agreement, saying ‘the economic interests of Switzerland as well as the interests in fulfilling obligations that have been entered into in international law are of major significance and outweigh the individual interests of the complainant in this case’.
The report says that the ruling could potentially affect 100 other appeals from UBS clients, which are currently pending.
Ex-UBS client in NJ pleads guilty in IRS tax case
By Jonathan Stempel, Reuters.com (7/1/30)
A former UBS AG client in New Jersey who once played for the Soviet Union’s national soccer team pleaded guilty on Thursday to concealing $2.6 million he had held in an offshore account from the U.S. Internal Revenue Service.
Click link above for complete story.
Sen. Carl Levin Statement on Swiss Rejection of UBS Settlement
WASHINGTON (June 8, 2010) – Sen. Carl Levin, D-Mich., made the following statement today regarding the Swiss rejection of the UBS settlement:
“The U.S.-Swiss treaty that was rejected today by the Swiss lower house would have allowed UBS to provide the names and account information for U.S. clients suspected of opening Swiss accounts to evade U.S. taxes. Rejection of the treaty is an international embarrassment that can be laid at the feet of Swiss legislators who are willing to continue to allow their banks to facilitate U.S. tax evasion.
“It was two years ago, in July 2008, that the United States first issued a summons to UBS to get the names of an estimated 52,000 U.S. clients with hidden Swiss accounts that had not been reported to the IRS. The Swiss government intervened to block the summons and prevent disclosure of the names. After a year of delay, in August 2009, a settlement was reached in which the United States agreed to give up its right to all 52,000 names in exchange for getting prompt access to information on key accounts, estimated at 4,450 or less than ten percent of the total. Now the Swiss, despite multiple U.S. concessions and having strung out the UBS case for two years, have failed to live up to their end of the bargain.
“The United States should reject any further attempts by the Swiss to delay the UBS case. It is time to move forward with the summons in court and force UBS to provide the names and account information for all 52,000 suspected U.S. tax cheats.
“This travesty underscores the need for legislation that I’ve introduced which, among other measures, would empower the U.S. Treasury Secretary to take action against any foreign bank or jurisdiction that impedes U.S. tax enforcement by, for example, prohibiting U.S. banks from accepting wire transfers or honoring credit cards from the foreign bank facilitating U.S. tax evasion.”
UBS and The IRS - What’s Next (Summary)
In February 2009, UBS AG, Switzerland’s largest bank, entered into a deferred prosecution agreement with the U.S.:
1. Admitting guilt on charges of conspiring to defraud the U.S. by impeding IRS tax collection.
2. Paid $780 million in fines.
3. Agreed to provide the identities and account information of U.S. Taxpayers with “cross-border” UBS accounts.
To date, UBS has supplied the IRS with the names of 323 Americans who wired money from their U.S. accounts to Switzerland. By August 2010, UBS has agreed to disclose an additional 4,450 U.S. Taxpayers with cross-border UBS accounts.
The Swiss Government has issued an edict mandating that UBS cease and desist “turning over” the identities of U.S. Taxpayers to the IRS. UBS has proposed a course of conduct which insulates itself from conflicts with the Swiss legislature and the U.S. authorities.
UBS has proposed to send to each U.S. Taxpayer a USB stick (i.e., a flash drive) with their “cross-border” UBS bank account records. Once the USB stick is sent to the U.S. Taxpayer, the IRS may commence a civil tax audit, subpoena the USB sticks and obtain all tax information sought from UBS.
U.S. Taxpayers with unreported foreign bank accounts (and income) are subject to IRS civil tax audits with civil penalties (monetary penalty, only) and criminal tax prosecutions (monetary penalty and jail).
The IRS, under a civil tax audit:
1. May summon evidence which support culpability for a crime (e.g., tax evasion) and civil penalties (e.g., 75% fraud penalty).
2. May trigger investigation into money laundering (i.e., when U.S. Taxpayers attempt to repatriate into the U.S., funds from undisclosed foreign bank accounts, they may be culpable for money laundering).
3. Use evidence obtained under a civil tax audit to support a subsequent criminal prosecution (including culpability for 3rd party co-conspirators for obstructing tax collection and conspiracy).
UBS Client Who Hid $6.1 Million From IRS Avoids Jail
By David Voreacos, Bloomberg.com
A New Jersey businessman who admitted using a UBS AG account to hide $6.1 million from U.S. tax authorities was sentenced to five years probation by a judge who credited his cooperation with prosecutors.
Juergen Homann, 67, also was fined $60,000 and ordered to perform 300 hours of community service by U.S. District Judge Stanley Chesler in Newark, New Jersey, yesterday. Homann, who faced as long as five years in prison after he pleaded guilty Sept. 25, has helped prosecutors pursuing offshore tax evasion, said Assistant U.S. Attorney Marc Ferzan.
“His cooperation was very significant to the government,” Ferzan said in an interview.
Click link above for complete article.
Jerseyan admits tax fraud charges in probe tied to UBS
By Ted Sherman, Star-Ledger Staff, NJ.com (9/26/09)
A wealthy New Jersey international trader pleaded guilty yesterday to federal tax fraud charges in the wake of a growing criminal investigation tied to UBS AG, the world’s largest private bank.
Juergen Homann, 66, of Saddle River, admitted he failed to file tax forms for six years showing more than $6 million held in secret accounts overseas.
Homann, a naturalized U.S. citizen who also holds a German passport, said he received advice from an unidentified UBS Swiss banker and others on setting up a Liechtenstein foundation used to keep his accounts hidden from the Internal Revenue Service.
He later created a Hong Kong corporation used to orchestrate a sham $5 million loan from his own accounts to a subsidiary of a company he controlled.
Among those who helped him, Homann said, was Swiss lawyer Matthias Rickenbach, who was indicted in August on charges of helping others evade U.S. taxes.
In the proceeding before Judge Stanley Chesler in federal court in Newark, Homann, hands clasped behind his back as he answered questions without hesitation, pleaded guilty to a one-count information charging him with failure to file mandatory reports detailing foreign bank and financial accounts.
Assistant U.S. Attorney Marc-Philp Ferzan told the court Homann is already cooperating with federal prosecutors in its ongoing inquiry of UBS. Homann’s attorney, Cynthia Eddy, declined comment.
Homann was caught up in the federal probe that has targeted hundreds of Americans after admissions by UBS that it helped clients hide nearly $20 billion in assets. Federal authorities say Swiss bankers routinely traveled to the United States to market Swiss bank secrecy to clients interested in evading U.S. taxes.
Click link above for complete article.
Sixth UBS Client Pleads Guilty to Tax Charges
By WebCPA.com Staff
A retired Boeing sales manager is the latest UBS client to plead guilty to filing a false tax return after the Swiss bank agreed to disclose the identities of some of its U.S. clients.
Robert Cittadini of Bellevue, Wash., accepted responsibility for hiding up to $1.86 million in accounts at the Swiss bank and failing to report the income he earned from the accounts on his 2001 to 2003 tax returns. Cittadini also did not file a Report of Foreign Bank and Financial Accounts, or F-BAR form, for each of those years.
Cittadini initially opened an account with UBS in the early 1990s in his own name, but around 2001, Swiss banker Hansruedi Schumaker, who was indicted in August 2009 on conspiracy charges, helped him transfer assets from his UBS account to an account named for Mataropa Finance Limited, a nominee Hong Kong corporation that helped him hide the assets. Swiss lawyer Matthias Rickenbach, also indicted in August, was a director of the Hong Kong entity.
Sentencing in Cittadini’s case is scheduled for Jan. 8, 2010. He faces up to three years in prison and a $250,000 fine. He also has agreed to pay a civil F-BAR penalty based on 50 percent of the highest account balance from 2001 to 2007.
“This is a time of reckoning for those who thought they had found a safe haven for cheating,” said U.S. Attorney Jenny A. Durkan in a statement. “People who avoid paying their fair share hurt all of us who follow the law and conscientiously pay our taxes.”
In February 2009, UBS entered into a deferred prosecution agreement in which the bank admitted to helping U.S. taxpayers hide accounts from the IRS. As part of the agreement, UBS provided the U.S. government with the identities and account information of some U.S. customers of the bank’s cross-border business. Cittadini’s case is the sixth guilty plea arising from that information.
In June 2009, Steven Michael Rubinstein, a Boca Raton, Fla., accountant, pleaded guilty to filing a false tax return. In April 2009, another UBS client, Robert Moran, a Ft. Lauderdale, Fla., yacht broker, pleaded guilty to filing a false tax return. In July 2009, Jeffrey Chernick, of Stanfordville, N.Y., pleaded guilty to filing a false tax return. In August 2009, John McCarthy, a resident of Malibu, Calif., pleaded guilty to failing to report his ownership of and interest in a foreign financial account. In September 2009, Juergenn Homann of Saddle River, N.J., pleaded guilty to failure to file an F-BAR form.
Over the summer, UBS agreed to hand over information on an additional 4,450 U.S. clients under an agreement brokered by the Swiss and U.S. governments.
IRS Corporate Audit Division Will Examine UBS Tax Evasion Cases
By Ryan J. Donmoyer, Bloomberg.com
The U.S. Internal Revenue Service is shifting audits of wealthy Americans suspected of offshore tax evasion to an elite division that usually examines businesses as it prepares to receive data on 4,450 UBS AG Swiss bank accounts.
The tax agency posted internal job listings yesterday seeking auditors to work for a newly created office within its Large and Mid-Size Business division that will be tasked with monitoring what it called the “global high-wealth industry.”
The move centralizes responsibility for auditing wealthy individuals suspected of offshore tax evasion in a unit with the most experience navigating international tax treaties and untangling complex cross-border business structures.
“That’s where the most sophistication is at IRS,” said Michael Murphy, a former deputy IRS commissioner who is now a consultant for the law firm Sutherland Asbill & Brennan LLP in Washington.
Responsibility for auditing wealthy individuals is currently split among IRS divisions devoted to small businesses and self-employed wage earners and investors, which don’t have as much experience in cross-border transactions, Murphy said.
The IRS says it anticipates handling up to 10,000 new cases related to UBS, including thousands of people who come forward voluntarily in exchange for reduced penalties before Sept. 23.
Click link above for complete article.
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.
Click link above for complete article.
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.
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