Monday, June 27, 2011

A New UBS Depositor Plea in SDNY (6/27/11)

The USAO SDNY press release is here. The plea agreement is here

Taxpayer: Kenneth Heller, Age 81.
Banks : UBS AG and Wegelin & Co.
Entities: Yes.
Guilt: By Plea Agreement - tax evasion (3 counts - maximum potential incarceration 15 years).
Other Charges and Potential Charges: If from the underlying conduct they are either dismissed if charged or will not be charged. But, "this Agreement does not bar the use of such conduct as a predicate act or as the basis for a sentencing enhancement in a subsequent prosecution including, but not limited to, a prosecution pursuant to 18 U.S.C. §§ 1961 et seq."
Tax Loss: Not specified, but plea agreement requires that, by sentencing, defendant file accurate returns for 2007 and 2008. The agreement further requires defendant pay taxes "on such terms and conditions as will be agreed upon between the defendant and the IRS."
Civil fraud penalty: Defendant stipulates to the civil fraud penalty.  (This is oddly worded; the parties have not agreement upon the civil tax liability to which the civil fraud penalty applies; there is often some portion of the civil tax liability that is not subject to the civil fraud penalty; it is unclear whether the defendant will be able to so assert, but I think the language used will permit him to do so.)
FBAR Penalty: The plea agreement says 50% of highest amount (which readers will recall is standard for plea deals).  The plea agreement says, based on information then available, is $9,816,000. This amount can be adjusted for other information. (This is curious because the DOJ Tax press release says that $26,420,822.43 went into one of the accounts.)
Sentencing Factors: Base offense level of 20 (based upon tax loss of between $400,000 and $1,000,000); sophisticated means +2; acceptance of responsibility -3 (but Government can contest if by and during allocution he does not accept responsibility); criminal history category I; indicated sentencing range 30-37 months; the Government agrees that a sentence below the Stipulated Guidelines Range is warranted in this case.
Court: SD NY
Judge: P. Kevin Castel

Thomson Reuters Press Report of 6/27/11.


  1. I think this man is an attorney. He supposedly has a bad reputation. I wonder if his sentence will be harsher than what we have seen in the past.

  2. To @7:49am, hasn't there been agreement with prosecutors to provide a much lesser sentence because of health concerns for target.

    What did this attorney do to make so much money and transfer it under the noses of the IRS? Was the money from illicit sources? Would his background be taken into consideration as a "sophisticated means" ?

    At least some real money is showing up at last.

  3. @ 6:59
    Honestly I do not know. It would just seem to me with him being a former attorney, with the large dollar amount and the use of sophisticated means there could be a harsher sentence then what we have seen with multiple UBS account holders in the past. I read an article about this guy when he was intitially caught up in the offshore mess and it basically said the guy was known as a jerk. On the other hand, he has quite distinguished legal representation and is paying a massive penalty so maybe a deal is in play to keep him out of jail. A 9.8 million dollar penalty is huge.



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.