Wednesday, June 10, 2009

Convicted Tax Evader Complains About His Enabler

Ok, I will get to the really big news about the SDNY indictment of Paul Daugerdas and his some of his alleged co-conspirators, but first I thought I would offer a light moment -- at least a light moment for tax crimes geeks.

Bloomberg reports here that convicted tax felon Igor Olenicoff -- the mega-millionaire -- who pled guilty to massive tax fraud via his friendly UBS banker (who also pled guilty) is complaining that the devil -- aka UBS -- made him do it. The article has a good summary of the twisted background of UBS's activity generally and in relation to Mr. Olenicoff. Perhaps UBS really is the devil; that could explain, perhaps, why the judge was so lenient at sentencing -- 2 years probation, 150 hours of community service, and paying what he already owed of $52 million in taxes, penalties and interest.

It is a substantial article and good reading. I pick some of the snipetts I think are choice:

Snippet #1

The judge asked Olenicoff why he had failed to fill in a box on his tax returns asking if ye controlled foreign bank accounts. “It’s not crystal clear to me why someone of Mr. Olenicoff’s intelligence would answer a question that seems to be so easily proved to be false,” the judge said. He praised Olenicoff’s business success and charitable work for eastern European orphans.

“You are an incredible man,” the judge said. “When I find out that people of your stature and standing lie on your tax returns, it frustrates me, saddens me.”

Olenicoff told Carney that bankers gave him bad advice.

“Should I have known that that income should have been reported here probably two years into it?” Olenicoff said. “Yes, your honor. I probably should have checked the box, but I didn’t.”
Does he equivocate as to his responsibility? Sure the bankers gave him bad advice. He is not guilty of anything for receiving bad advice. He is guilty for his own actions which, after all, required willfulness, an intentional violation of a known legal duty.

Snippet #2:

“I would have clearly gotten my ears boxed in by the Justice Department,” Olenicoff says at his Newport Beach office, which is filled with paintings, sculptures and artifacts from Russia and his travels to Latin America and Greece. “Once you do something wrong, you fess up to it and you pay for it.”
Well, the lesson is that you fess up when you know you are going to get your ears boxed in. Isn't that why most defendants plead?

Snippet #3:

Still, he believes UBS hasn’t been sufficiently penalized for aiding tax evasion over seven years.

“They pay $780 million,” Olenicoff says. “That’s lunch money for them, right? But there’s nobody being penalized for this. I have been -- and I paid. There will be 52,000 Americans that will be somehow affected by their fraud. The bank needs to be exposed and needs to pay for its wrongdoing.”
How about his payment of the $152 million in tax, penalties and interest that he already owed. Isn't that lunch money for him? Did he refuse to pay the cost of the society that had earned him so much for mere lunch money?

Snippet #4:

Olenicoff says no one at UBS told him about the qualified intermediary accord.

“Had somebody said, ‘Igor, we have this QI agreement, right, and so we have to report it or you have to report it,’ the answer would have been real simple: ‘Sure,’” he says.
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