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Foreign accounts: criminal case proceeds against former UBS banker

A month ago, in a two-part post, we compared the radically revised regime for offshore account tax compliance to global climate change. One of the examples we gave of this new regime was the U.S. government action against the Swiss banking giant UBS.

In 2009, under pressure from U.S. authorities, UBS admitted to facilitating tax evasion by U.S. taxpayers and paid a $780 million fine. To get Uncle Sam off of the company's back, UBS also agreed to disclose the names of at least 4,400 taxpayers from previously undisclosed Swiss bank accounts.

In this post, we will discuss how the U.S. enforcement effort on foreign accounts also extends to individual bankers. In particular, we will focus on the recent case by the U.S. against the man who was formerly the third-ranking official at UBS.

American authorities indicted the man in Florida five years ago. The charges alleged that he had assisted U.S. taxpayers in hiding about $20 billion in assets from the IRS. According to the charges, this concealment was done for about 20,000 U.S. taxpayers though the cross-border services of UBS.

The years that this allegedly occurred were from 2002 to 2007.

After the Swiss banker was indicted, a federal judge eventually tagged him with fugitive status.

Last week, five years after his indictment, the man was arrested in Italy on the U.S. tax charges. Those charges had been communicated to Italy through Interpol.

The U.S. and Italy have an extradition treaty. Using this treaty, U.S. authorities intend to ask for extradition of the Swiss banker from Italy to the U.S. to face tax evasion charges.

Actions like this show how high the stakes are for individuals, not only institutions, in the new offshore account enforcement regime.

Indeed, the number of U.S. taxpayers and tax advisers who have had to face criminal charges for offshore tax evasion already stands at more than 120.

To be sure, in a big country like the U.S., 120 is not a huge number, But the anxiety about potential criminal prosecution is surely a significant driver for many U.S. taxpayers who have chosen to enter limited-amnesty programs such as the Offshore Voluntary Disclosure Program (OVDP).

More than 38,000 taxpayers have already done this, seeking shelter from the stormy effects of offshore enforcement climate change.

Source: The Wall Street Journal, "Swiss Banker Arrested In Italy in U.S. Tax Case," 

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