Tuesday, July 31, 2012

Two Other UBS Clients Sentenced (7/31/12)

DOJ Tax has announced the sentencing of two other UBS clients.  The press release is here. The key facts are:

Taxpayers:  Sean Roberts and Nadia Roberts
Sentence Date: 7/30/12
Banks: UBS (also accounts in Isle of Man branch of UK bank, Hong Kong, New Zealand,, South Africa, and Liechtenstein bank through Swiss branch)
Entities: Yes (Interline Trade Associates, Limited (a nominee Isle of Man trust), Excalibur Investments Limited, Modest Winner, Tisours, LLC)
Enablers:  "UBS BANKER C.U.;"  "ACCOUNT MANAGER B.S., owner of a Zurich-based financial services company.
Guilt: By Plea Agreement
Count(s) of Conviction: Tax Perjury (1 count) for each of the Roberts
Admissions:  Filing false income tax returns for 2004 - 2008
Maximum Possible Sentence:  3 years.
Sentence Imposed: 1 year and 1 day (eligible for good time credit, 18 USC 3624(b), which can knock off up to 47 days).
Probation: ?
Ages at Sentencing:  ?
Tax Loss: $709,675
Restitution:  $709,675

Civil income tax with penalties and interest:  The defendants agree to cooperate in determining tax liabilities for 2003 forward for individuals and their corporation.

FBAR Penalty: $2,500,000+ (derived high balance is $5,000,000+)
Court: Eastern District of California
Judge: Anthony W. Ishii (Wikipedia entry here)
Key quotes from press release:
From 2004 through 2008, the Robertses transferred more than $1.2 million from FRI Mississippi to the Excalibur UBS account, and caused the transfers to be falsely deducted as interest payments on corporate income tax returns as a sham aircraft loan. 
Court records also established that, in or about May 2008, the Robertses closed their Excalibur UBS account and transferred over $4.8 million to an account in Excalibur's name at a Swiss branch of a Liechtenstein bank. This was done after the Robertses learned that UBS was under investigation by U.S. authorities and that they should leave UBS to ensure the continued secrecy of their account. In 2008, the Robertses transferred more than $1.4 million from FRI Mississippi to the Excalibur account at the Liechtenstein bank, and again caused the transfers to be falsely deducted on a corporate income tax return. Also in May 2008, the Robertses opened a bank account in the name of Modest Winner, a nominee Hong Kong entity, at the Liechtenstein bank. In 2008 and 2009, the Robertses transferred funds from another of their entities, Tisours, LLC, to that Modest Winner account. In 2009, the Robertses transferred that account to a bank in Hong Kong. The Robertses also maintained numerous undeclared foreign bank accounts in New Zealand and South Africa held in their own names. Many of the financial transactions were done with the assistance of the same operator of the Swiss wealth management and tax advisory business.
Quote from Plea Agreement:
[O]n or about April 14, 2009, the defendant caused to be filed a false joint U.S. Individual Income Tax Return, Form 1040, for the year 2008.  The defendant signed the return under penalties of perjury with the declaration that the return and accompanying schedules and statements were examined by the defendant and that to the best of defendant's knowledge and belief, the return and accompanying schedules were true, correct, and complete.  The defendant willfully concealed from his return preparer, who prepared the 2008 tax return, the existence of the Excalibur accounts at UBS and LIECHTENSTEIN BANK, the Modest Winner account at LICHTENSTEIN BANK, his other foreign accounts, and any income earned from those accounts.  On Schedule B, Part III of the 2008 tax return, the defendant willfully failed to report that he had an interest in or signature or other authority over a financial account at a foreign bank, including at UBS and LIECHTENSTEIN BANK, both in Switzerland, and willfully failed to file an FBAR reporting his interest in the accounts.  The defendant also willfully under-reported the total income earned from FRI Mississippi on his individual tax returns by causing the false interest expenses to be deducted on FRI Mississippi's corporate tax return.
Plea Agreement Provision for 5K.1 Departure for Assistance. The defendants agree to cooperate in investigation and prosecution of others.  As usual, in Government's sole opinion, but provides that the recommendation will be of not more than 50% of the guidelines range.

JAT Comments:

1. Just from the press release, these guys seem to have been very bad actors.  Hence, their sentencing seems to be overly lenient.
2.  It does look like DOJ Tax is setting its sights on some of the Roberts' Swiss enablers.  The Roberts' agreement to cooperate coupled with what looks like an expected 5K.1 departure request by the Government could account for the seemingly light sentence.
3.  My prior blog entry on their guilty plea is: Another UBS Charge and Guilty Plea - Husband and Wife (6/21/11), here.


  1. Tax loss of $700K with FBAR penalty of $2500K. So the ratio of FBAR penalty to tax loss is 3.6 -- what a sweet deal for him ! I bet most folks inside OVDI would have to pay much high ratio of in lieu penalty to tax loss. Mine is 4.5.

  2. In your case it will be 4.5, only if you voluntarily agree to pay. If you opt out, i am pretty sure you will not pay any FBAR penalty.

    In my case i am looking at a tax loss of about $3200 and a FBAR penalty of about $35000.However i have paid a total tax of about $340000 (340k) for the period from 2003-2010 from my US income and i am an immigrant. I am going to opt out. My reasoning would be that in those OVDI years, i have paid a total tax of 340k from my US income and why would i try to evade $3200 (which is 1% of the tax i had paid). My FBAR penalty should be zero.

  3. Can you believe that these two clowns are presently suing UBS, claiming that UBS is somehow to blame for their own tax fraud?!! This is the same nonsense that the Russian tax fraud, Igor Olenicoff, used and his case was thrown out on summary judgment earlier this year. Note that these two defendants, the Roberts, have retained the same attorney that filed the Olenicoff lawsuit against UBS! Do these people ever learn? Do Mr. and Mrs. Roberts not understand that the Olenicoff case was thrown out of court?

  4. good luck on your opting-out and i think you can get much better deal than paying 1000% penalty on tax owed.

  5. @anon, may I ask why you entered OVDI in the first place?

  6. Fear and the fact that the OVDI stated no diminimus income.
    Probably no different that ij

  7. Exactly, and at that time I thought I was one of the very few who could have this non-compliance problem. Now, we know it is rather common.among immigrants

    Also we know better FBAR penalty from IRM -- it gives IRS discretion that means we have room to settle a better penalty than OVDI offers.

  8. ij, so where are you with your opt out? Do you see light at the end of the tunnel? I am neither seeing a light nor a tunnel

  9. inside a very dark long tunnel -:)


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