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.
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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.
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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.
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US may target 10,000 client visits by UBS bank advisors
From Genevalunch.com
US authorities may be taking a new approach to going after the names of US-based clients of Swiss bank UBS. They are reportedly asking for the names of clients its advisors saw in the US. Reuters carries a lengthy article that states this, citing Swiss newsweekly Sonntagszeitung.
The move, if confirmed, may be a compromise in the legal dispute involving UBS and the US tax authority IRS, which wants the bank to divulge details on 52,000 of its US clients. Reuters reports that 60 UBS client advisors visited the US on average three times a year, for three weeks each visit, and saw four clients a day. John DiCicco, acting assistant attorney general in the tax division of the US Justice department, in March 2008 testified to a senate subcommittee investigating the case that “An internal UBS memorandum filed with the court demonstrates that, in 2004 alone, UBS bankers traveled to the United States where they held approximately 3,800 separate meetings with US clients to discuss their clients’ Swiss accounts. (Ed. note: the Sonntagszeitung article speculates that UBS hopes that the US Dept. of Justice may acccept the names of clients visited by UBS client officials as a way to avoid violating Swiss law by having to hand over all client data demanded by the IRS).
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Swiss Banks Avoid US Clients In Wake Of UBS Vs IRS
The Wall St Journal (7/20/09) is reporting…UBS AG’s (UBS) high-profile spat with the U.S. Internal Revenue Service has made some of Switzerland’s other banks wary of looking after U.S.-based clients, prompting some to stop taking money from Americans altogether and endangering the country’s image as a private banking center…Zurich-based retail bank Zuercher Kantonalbank no longer accepts business from U.S. clients, a spokesman for the state-controlled bank confirmed. A spokesman for Basel-based Bank Sarasin & Cie (BSAN.EB), which focuses on wealthy clients, said that it no longer takes U.S. money, in part because of the U.S. pursuit of offshore funds…Others, such as cooperative Raiffeisen Group, and Migros Bank, owned by Switzerland’s largest retailer Migros-Genossenschafts-Bund, still accept U.S. funds but recently put tougher measures into place in dealing with them. Raiffeisen demands a power-of-attorney and correspondence address outside the U.S., while Migros refuses to correspond with clients on U.S. soil.
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U.S. demands UBS “comply in full” in tax evasion case
By Tom Brown, Reuters.com
The U.S. Justice Department said on Tuesday it was pressing ahead with its five-month-old lawsuit against UBS AG to force the Swiss bank to identify thousands of U.S. clients with secret UBS accounts.
Despite recent media speculation about a possible settlement of the case, the Justice Department said in a brief filed with a Florida court that it was seeking to enforce tax compliance with the full weight of U.S. law.
“The United States has a strong national interest in making sure that all U.S. taxpayers comply with the tax laws, including disclosing their offshore accounts, and paying all the taxes they owe,” the department said in the brief.
The U.S. government sued UBS in February in the U.S. Southern District Court of Florida, seeking the names of 52,000 Americans suspected of using the bank to hide nearly $15 billion in assets and evade U.S. taxes.
“The United States has proven its case for enforcement. The Court should order UBS to comply in full,” the Justice Department said in its filing.
In response, a spokesman for UBS said enforcement of the U.S. summons would require the bank to violate Swiss law and was inconsistent with U.S.-Swiss treaty frameworks.
A court hearing on the U.S. government case against UBS has been scheduled for July 13.
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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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Arkansas ends ties with UBS
From swissinfo.ch
Troubled bank UBS has been dealt another blow in the United States. The pension fund for public employees in Arkansas will end its relationship with the bank.
Trustees voted to end the contract with UBS over the US justice department’s probe of the Swiss banking giant, in a move announced on Sunday.
Officials in Arkansas said that UBS currently manages around $160 million (SFr173 million) in stock market investments for the pension fund.
The state’s teacher retirement scheme - a separate entity - has around $532 million invested with UBS.
The Internal Revenue Service has sued UBS to try and force the bank to hand over information on around 52,000 account holders. The agency says that these account holders have an estimated $14.8 billion in assets and are using Swiss bank secrecy to shield the money.
UBS has asked for a Miami federal judge to deny the IRS petition.
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