Tax Litigation Law Office of Scott Kauffman
(949) 751-6456

Hackney Literary Award
Mighty River Short Story Contest Winner

UBS Offshore Bank Account Holder Gets 1-Year Sentence

Former UBS AG client Federico Hernandez received a prison sentence from U.S. Circuit Judge Denny Chin on Friday. Hernandez was sentenced to one year in prison, followed by six months of home confinement, after he admitted hiding nearly $8.8 million from the IRS in offshore bank accounts.

According to Orange County tax fraud attorneys following the case, the sentence is the longest so far in the ongoing crackdown on Swiss accounts held at banking giant UBS AG.

Hernandez, 44, asked the judge for a three-month sentence, home confinement and 500 hours of community service. Prosecutors wanted Hernandez to get one-and-a-half to two years.

Hernandez pled guilty on April 15 to five counts of filing false federal income tax returns. As part of that plea, he agreed to a $4.4 million civil penalty.

There have been 9 other former UBS clients sentenced so far. Those 9 got terms ranging from probation to 10 months, prosecutors said.

UBS accounts were opened by Hernandez in the names of sham British Virgin Islands and Panama corporations in 2001 and 2006. He concealed his ownership from the U.S. Internal Revenue Service.

From 1998 to 2009, Hernandez ran the firm 2020 Emerging Inc, advising wealthy clients on investments, taxes and offshore trusts. By 2006, Hernandez managed $54 million of assets in Switzerland and was worth $20.2 million, prosecutors claimed.

One prosecutor said, "A number of white-collar criminal defense attorneys around the country are following the government's ongoing investigation of offshore banking. Many of the same attorneys are advising clients whether to voluntarily disclose their accounts to the IRS. The court's sentence of Hernandez in this case is very likely to have an effect on that advice."

He was right.

The case is U.S. v. Hernandez, U.S. District Court, Southern District of New York, No. 10-cr-00334.

Source: Reuters "Ex-UBS client gets year prison in tax fraud case" 9/17/2010

No Comments

Leave a comment
Comment Information