Tuesday, August 18, 2009

Payback Time for Birkenfeld - Hints at Scope of the Current UBS Account Holder Investigations

The United States yesterday filed a Motion for Sentencing Reduction Pursuant to U.S.S.G §5K1.1 AND 18 U.S.C. § 3553(e) for Bradley Birkenfeld, a former UBS employee involved in the UBS' cross-border activity resulting in U.S. taxation. Although an early informant as to UBS, Birkenfeld apparently did not advise the Government of his own involvement and thus was indicted on one charge of the defraud / Klein conspiracy. He was arrested, pled and gave up even more information. Birkenfeld seems to have been a key source of information that resulted in the U.S. juggernaut against UBS -- deferred prosecution agreement with a whopping fine and John Doe summons proceeding that has resulted in an agreement that UBS will deliver up even more names. It is payback time for Birkenfeld as he moves toward sentencing, hence the U.S. motion to decrease his sentence. One of the paragraphs of the motion is (emphasis supplied):

9. Ultimately, based upon information obtained from UBS as part of the deferred prosecution agreement, the United States is criminally investigating more than 150 Americans across the country who are believed to have concealed income and assets at UBS, in violation of United States law. To date, three such American clients have pleaded guilty to filing false tax returns that failed to disclose the existence of their UBS Switzerland bank account and report the income associated with said account on their United States Individual Tax Return, Form 1040 (United States v. Robert Moran, Case No.09-60089-CR-COHN, United States v. Steven Michael Rubinstein, Case No. 09-60166-CR-COOKE, United States v. Jeffrey Chernick, Case No. 09-60182-CR-COHN). A fourth defendant, John McCarthy, has been charged in the Central District of California with willfully failing to file with the Department of Treasury a Report of Foreign Bank and Financial Accounts (Form TD F 90-22.1 “FBAR”) that would have disclosed his interest in an account at UBS in Switzerland (United States v. John McCarthy, Case No. CR09-00784).
Note to readers, the McCarthy case actually pled last week, but presumably this document filed yesterday may have been prepared to late too incorporate that information. I have discussed the McCarthy case in three earlier blogs.

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