Fourth UBS Client Pleads Guilty to Tax Crimes as Bank Reaches Legal Settlement With IRS
As a Miami tax evasion criminal defense lawyer, I have been following the federal government’s lawsuit against Swiss bank UBS with great interest. The IRS reached a settlement last week in its lawsuit seeking to force UBS to disclose information on 52,000 American taxpayers who may be hiding assets at the bank. The case grew out of an earlier criminal investigation of UBS, which the banking giant settled by agreeing to disclose a smaller list of names of customers it believed may be guilty of breaking U.S. tax laws. Three of the people on that smaller list have already pleaded guilty in IRS prosecutions, and Bloomberg News reported Aug. 15 that a fourth taxpayer has pleaded guilty to failing to disclose his UBS account.
According to the article, this newest defendant is John McCarthy of Malibu, California, a businessman and UBS client. He reportedly reached a plea agreement with prosecutors, in which he will plead guilty to a charge of failing to file a document disclosing the account’s existence. The article said the account was in the name of COGS Enterprises Ltd., a Hong Kong company that UBS bankers reportedly told McCarthy to set up to hide his identity. McCarthy is accused of transferring profits from a U.S. business into the COGS account in Switzerland, then moving it to another Swiss account to continue hiding it from U.S. tax authorities. The plea deal also requires him to pay a penalty of 50% of the highest value of the COGS account since 2003, and to cooperate with tax authorities.
Given the amounts typically stored in these accounts, that could be a very high penalty. But as a Fort Lauderdale tax evasion criminal defense attorney, I know McCarthy could have faced much more severe penalties if he had not cooperated. People charged with tax evasion -- the likely charge for hiding assets -- face up to five years in prison in addition to back taxes, interest and penalties of up to $100,000 or 50% of the account’s value. Those are for each year in which the account was not disclosed, so taxpayers with five years of undisclosed accounts could face up to 25 years in prison and fines worth more than the account itself. Thanks to the settlement in the larger case, the names of 52,000 more UBS clients could be disclosed to the IRS -- and all of them could face the same steep penalties.
As I have written here before, however, the IRS has already started a program offering lenience to taxpayers who admit the existence of taxable income they haven’t yet declared. Under the voluntary disclosure program, which ends this Sept. 23, taxpayers can receive substantially reduced penalties in exchange for disclosing their overseas accounts and paying back taxes and interest on that income. According to the Associated Press, taxpayers with undeclared income in UBS accounts have been scrambling to take advantage of this program before the bank turns over their names -- which would end their opportunity to participate -- or the end of the program. In fact, the AP reported that taxpayers are coming forward in huge numbers, with one week in July seeing more than 400% more disclosures than all of 2008.
Taxpayers do not need a South Florida tax evasion criminal defense attorney to make this disclosure -- but it’s strongly recommended, especially since the IRS reportedly conducts in-person interviews with many of the voluntary disclosers. I am proud to say that I represent clients who come forward under this program, helping them prove their eligibility, sort out what information must be disclosed and get the best and fairest possible deal with the IRS. According to the AP article, UBS officials reportedly openly advised their clients to take actions that violated U.S. tax laws; many clients may have relied in good faith on this advice, only to later discover that they were breaking the law. As a Miami-Dade tax evasion criminal defense lawyer, my goal is to make sure a voluntary disclosure does not expose them to harsh financial or criminal penalties for what may be a misunderstanding -- and ultimately leaves them better off than they would be in a criminal prosecution.
If you're concerned about tax prosecution for failing to declare an overseas account, I can help. For a free and confidential consultation, please contact my firm through the Internet or call us toll-free from anywhere in Florida at 1-866-ARRESTED.
