Thursday, October 28, 2010

Other UBS Account Holders are Charged

The Boston Globe reports here that two other UBS account holders were charged in separate cases.  The individuals are Peter Schober and Gregory Rudolph.  According to the article, in each case, the charge is for a single count of failure to file the FBAR presumably for a single year (maximum sentence of 5 years).  The charging documents apparenlty assert that they avoided tax in the amounts of $77,871 and $25,507 respectively.  I will do a supplemental posting to this blog with more details when I get them.

USAO Press Release


  1. Are these charges different than those of previous UBS prosecutions? It seems that most of the others were tax evasion charges. I wonder if the government may be raising the ante and maybe will come down with a 50% Fbar penalty along with some serious jail time. You have to wonder if they will ever apply multiple 50% Fbar penalties that wipe out the undisclosed funds. Presumably, the really bad thing is the incarceration. Being wiped out financially would be a close second.
    If they ramp up the harshness in dealing with these cases while continuing to give no guidance as to post October 15, 2009 voluntary disclosures, I think it may likely freeze people with undisclosed issues into paralyzing fear of taking corrective action. I guess sooner or later post October 15th disclosures will close and the word will get out as to the costs and penalties.
    This must be a horrible situation to be in. Really horrible if you are a nondisclosed UBS account holder!

  2. Thanks for the post Jack. If this report is correct, more precisely that the numbers presented are accurate, we have deteriorated from the sublime to the ridiculous! If this is truly how the DOJ is allocating its resources, we all need to re-think whether this system is truly serving the people, but it may be early to pre-judge. For an interesting view on this topic see Asher Rubinstein's comment on Linda Beale's blog at

  3. I hope to have more detail on this item later today or this weekend. However, to address your question, I don't think these charges are different than than the earlier rounds. The deal has usually been a plea to either a 7206(1) charge or an FBAR charge. 7206(1), tax perjury, is a 3 year felony, and the FBAR charge is a 5 year felony. The maximum sentences are, however, usually irrelevant because the sentences are very well below the maximum of even the 3 year felony. (Note in this case the very low tax loss numbers which will generate a little in the way of a sentence under the advisory guidelines and the judge will likely given no incarceration or home detention at worst.)

    One question that might be asked is the strategy of making the choice between a 7206(1) plea and an FBAR plea. All other things being different, one would think that the 3 year plea would be better. Some defendants, however, perceive that, at least for cosmetic purposes, the FBAR plea is better than the 7206(1) plea, which is after all a plea to tax perjury. Failure to file an FBAR just has a different ring to it than tax perjury, even though the maximum theoretical sentence is greater. And perhaps it is more than cosmetic (e.g., bar or licensing asscoiations, qualifying to do business) in which a failure to file an FBAR may be perceived differently.

    As to the FBAR civil penalty, the pattern has been to impose one FBAR civil penalty on the highest amount over a given period. The FBAR civil penalty could apply to each year, subject to potential constitutional limitations for excessive fines.

    I suspect that, at some time, the Government may ramp up the punishment, but really doubt that we will see multiple FBAR penalties imposed in the truly draconian way that seems to be allowed by the statute.

  4. Supposedly the goal of the IRS is to bring these taxpayeres home to reach the funds. The DOJ seems to have the opposite goal in mind. When you consider that pleading or conviction to a felony, and incarceration, prevent these individuals from making a living and being productive assets, the whole conflicted approach of the government is foolish in the end.

  5. Again Panamian corporation, shell companies
    and other form of concealments seem to get the
    ire of the Service. tax loss of $25k is absurdly low.


Please make sure that your comment is relevant to the blog entry. For those regular commenters on the blog who otherwise do not want to identify by name, readers would find it helpful if you would choose a unique anonymous indentifier other than just Anonymous. This will help readers identify other comments from a trusted source, so to speak.