Thursday, October 11, 2012

Another UBS Client Sentencing (10/11/12)

Wolfgang Roessell has been sentenced.  I previously blogged his guilty plea:  Another UBS Related Taxpayer Plea Agreement (5/31/12), here.

I don't have all the information from the sentencing, but I cut and paste the core information from the blog on the plea and add information from the reports on the sentencing that I have.  I will try to clean up all this tomorrow and update the spreadsheet.

Defendant:  Wolfgang Roessel
Banks:  UBS, Wegelin, Bank A
Entities:  Yes (Cyan United A)
High Balance:  $11,501,868 (derived from statement that penalty was 50% of high balance)
FBAR Penalty: 5,750,933.99
High Balance:  Derived from penalty - $11,501,868
Count of Plea / Conviction:  Tax perjury, Section 7206(1) with 3 year max sentence
Tax Loss: $312,802.95
5K1 Departure Possibility:  Yes
Sentence: 8 months home confinement and 3 years supervised release
Judge:  Kathleen Williams, SD FL (see Wikipedia entry here)

Information from the Bloomberg report (Ex-UBS Client Roessel Avoids Prison in Offshore Tax Case (Bloomberg 10/11/12), here.
“Mr. Roessel does not claim to be an innocent victim,” his attorney, Lee Stapleton, wrote in an Oct. 9 court filing urging leniency. “While he relied on the advice of Swiss professional bankers, he chose to keep the accounts secret and for many years did not advise his accountant that he had a foreign bank account.”
* * * * 
Roessel’s mother had little money until she spent many years with a man who died in 1997 and left his “considerable estate” to her, Stapleton wrote. She died two years later and left her estate to her son in a numbered account at UBS. 
“The funds sat and continued to grow,” Stapleton wrote. “The account was not part of Mr. Roessel’s life either as a place to hide U.S. income or as a foreign based piggy bank. It was an account that held a substantial inheritance.” 
In 2002, Roessel’s banker at UBS, the largest Swiss bank, told him that anonymous Swiss accounts were no longer available to U.S. clients, Stapleton said. He then opened a trust that included the proceeds of his inherited money. 
Numbered Account 
He opened another UBS account in 2004, in the name of Cyan United SA, that invested in U.S.-based securities, according to Stapleton. He deposited money into it from a numbered account at Wegelin for foreign proceeds that he set up in 1980s and that received proceeds from equipment sales in Germany, she wrote. Roessel’s UBS banker visited him several times a year to update him on the account, according to his lawyer. 
The Cyan account has been a “cataclysmic investment” because “he is now a convicted felon who has paid much of his inheritance and life savings to the U.S. government in the form of penalties and back taxes,” Stapleton wrote.
It sounds like Mr. Roessel's lawyer is attributing the plea and conviction to the Cyan entity account.  It is true that virtually all criminal prosecutions have involved entities, but it is unclear that the use of an entity was the sine qua non of this prosecution.


  1. 1. Is this case and other cases one of the approximately 250 UBS clients whose information was disclosed before OVDI was created and did not have the chance to join?

    2. Did everyone of the 3,000 whose information enter OVDI? Or did any of them stick their heads in the sand like an ostrich?

    3. Why is it that the first 250 did not get a chance to join OVDI but the others did?

    Perhaps only an attorney who has handled a lot of UBS cases knows.

  2. Anonymous, I have taken the liberty of numbering your paragraphs (no substantive changes) for easier reference by me and other commenters.

    My responses:

    1. The bulk of the cases that have been prosecuted were, I think, among the initial perhaps 250 UBS cases you mentioned. I don't have statistics on that, but I think that is right. But, some of the prosecutions were not among the 250.

    2. The number of UBS clients turned over in the second round was, I think, over 4,000. I know that some of those did not join OVDP 2009 (as then styled).

    3. Have to ask DOJ Tax that question. However, the general precept of the IRS's voluntary disclosure program is that voluntary disclosure is not available for those who have been targeted. By the time OVDP 2009 was announced, those persons had been targeted and, I presume, known to DOJ Tax and/or the IRS. And, besides, a significant lead time was required for persons to be notified of OVDP 2009 and then join OVDP 2009. The IRS wanted to have prosecutions queued up for prosecution in order to start the program with a bang and the known 250 permitted DOJ Tax to do that, thus encouraging taxpayers to join OVDP 2009.

    Jack Townsend


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