Tuesday, April 14, 2009

Get in Line Brother & Righten That Wrong #3

The bell tolls for another UBS Client:

New York Times Article on Plea by Robert Moran, described as a wealthy UBS private banking client.
Wall Street Journal Article

I am sure more details will come. However, I do note that the New York Times article appears to have an inconsistency. The article says the plea is one count of tax evasion but that the maximum penalty indicated is three years. The maximum penalty for tax evasion is 5 years. Perhaps the reference to tax evasion is nontechnical rather than the technical Code meaning. More likely, the plea is for tax perjury which does carry a 3 year maximum. Technically, the key (but not only) difference between tax perjury is that evasion of a substantial tax due is an element of tax evasion but not of tax perjury. In our experience, charges of tax perjury do have evaded taxes involved but not as elements of the crime. The evaded taxes surface in the sentencing phase because the evaded taxes -- referred to as the tax loss -- for sentencing purposes is the principal driver of the Guidelines calculation which is now advisory under the post-Booker regime. UPDATE: The Wall Street Journal appears more precise in calling it a plea to a false tax return, which probably means tax perjury with the three year maximum.

This seems to be a bit of a light punishment (capping the sentence at 3 years max), but perhaps the defendant was already in the IRS's sight and was incentivized to strike a quick deal so that the IRS/ DOJ could publicize this notch in their belt contemporaneous with the 4/15 tax day filing deadline and the recent roll out of the voluntary disclosure program for offshore accounts discussed here. My hunch is that, as the DOJ lines up its prosecution targets, a 3 year max deal is going to be as good as it gets and it will get a lot worse.

Get in Line Brother & Righten That Wrong.

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