Tuesday, January 8, 2013

Another UBS Client Pleads (1/8/13)

Mary Estelle Curran of Palm Beach, FL, pled guilty to 2 counts of tax perjury, Section 7206(1).  The DOJ Press release is here; the plea agreement is here.

The following are the key stats:

Defendant:  Mary Estelle Curran
Plea: Tax Perjury (2 counts)
Maximum Possible Sentence:  6 years.
Indicated Guidelines Range: 30-37 months
Conviction/Plea Date: 1/8/13
Age at Conviction:  79
Bank: UBS and an unnamed Liechtenstein bank.
Entities: Yes
Estimated Tax Loss:  Per plea - $400,000 - $1 million
High Balance:  > $43,000,000 (year end)
FBAR Penalty:  $21,666,929 (50% of year-end high balance)
Court: SD FL
Judge:  Kenneth L. Ryskamp (Wikipedia entry here)

Article:  David Voreacos, UBS Client Pleads Guilty in U.S. Tax Case in Florida (Bloomberg 1/8/12) here.

Some points I found interesting:

Civil Statute of Limitations Issues

The plea agreement provides:
9. The defendant agrees to cooperate with the Internal Revenue Service ("lRS'') in its civil examination, determination, assessment, and collection of income taxes related to the defendant's 200l through 2007 income tax returns, and further agrees not to conceal, transfer, or dissipate funds or property that could be used to satisfy such taxes, penalties, and interest. The defendant agrees to provide the IRS any documentation in the defendant's possession and/or control requested by the IRS in connection with its civil examination, determination, assessment, and collection of such income taxes prior to sentencing. The defendant further knowingly and voluntarily agrees to waive any statute of limitations with respect to assessment and collection of the defendant's individual and corporate/entity tax liabilities concerning tax years 2001 through 2007.
Question to readers:  Can a taxpayer waive an expired statute of limitations?  I am not so sure.  Section 6401(a)(1) provides that "The term “overpayment” includes that part of the amount of the payment of any internal revenue tax which is assessed or collected after the expiration of the period of limitation properly applicable thereto."  Further, Section 6501(c)(4) provides that extensions by agreement must be signed "before the expiration of the time prescribed."  It is my understanding that, as a consequence of these provisions, an agreement to extend or a waiver of the statute of limitations would not be effective.  Of course, for years in which the taxpayer's conduct rose to the level of fraud, the unlimited statute of limitations would apply.  Section 6501(c)(1).  But, this provision assumes that the fraud unlimited statute of limitations may not be applicable.  Note in this regard that relatively small amounts involved in some of the years (2002, 2003, 2004) and there is no tax loss indicated for 2005.

Waiver of Rule 6(e)

The plea agreement provides:
10. The defendant further agrees that any evidence, including statements and documents, provided to the United States by the defendant pursuant to a Proffer Agreement, without any limitations, can be utilized by the United States in its civil  examination, determination, assessment, and collection of income taxes related to his income tax returns and any related  corporate/entity tax returns, or any other civil proceeding. The United States does not deem this, in any way, to be a waiver of the defendant's attorney-client privilege with respect to any attorney.
I think this is a waiver intended to permit the IRS to use information and documents that might otherwise be subject to Rule 6(e).  I am not sure that legally that can be done, but at least the defendant gives up her right to complain about it.


  1. Just another example of inheriting a nightmare. This has been the situation in a few (many) cases.

    With the amount of money involved, and the resulting penalty, she should have gotten better representation. No one can dispute this case definitely involved a whale... regardless of prior definitions invoked in the comments... $40M is a whale :)

    Does anyone know what happened to the funds in these cases? Does the US have any ability to seize funds, in tax cases, from the foreign banks?

  2. Wow, following up on my prior comment... on of her attorneys was Roy Black.

    Jack - Do you believe this was a case of client "just wanting it over"?

    As you have pointed out, there seems to be many problems with this plea.

  3. I can't speculate on whether the client just wanted it over, although my experience is that that is a feeling of many clients who plead rather than go to trial. In pleading, the larger question that must be addressed is, whether or not the client is guilty, can the Government prove guilt. If there is a high likelihood that the Government can and there are no countervailing defense or mitigating factors that might cause a jury to acquit anyway, then a plea is the logical choice. Mixed with that logic, of course, is wanting to get it over.

    Roy Black does have an outsized reputation. I have no idea whether it is deserved, but he does have the reputation. Of course, another attorney was Nathan Hochman who is one of the country's leading criminal tax lawyers (and was formerly DOJ's AAG Tax. So, Mrs. Curran was well-represented.

    Having said that, the Government apparently had a strong hand to play and yet, except for the insistence on two plea counts (6 year max), got basically the same monetary deal it gets in other cases -- cooperation on back income taxes (back to 2001, which may be unusual) and an FBAR penalty of 50% of the high balance. So, I am not sure what was really achieved by the superstar defense team other than giving the client some assurance, at great cost, that no reasonable stone was left unturned and no expertise not exploited.

    I hope there will be some information coming forward that will give observers such as me a better understanding of the nuance, but having said that, it seems like the standard deal except for the 2 counts. And, as to the 2 counts, I doubt that the additional count will affect the actual sentence -- i.e., she will likely get a sentence well below 36 months (the max for 1 count).

    Jack Townsend

  4. As I noted in the earlier response, she had attorneys of great repute. The Government apparently had a strong hand and imposed the result it typically imposes. The quality of the attorneys probably could not have affected the outcome materially, at least at the plea agreement stage.

    The U.S. does not have the ability to seize funds in foreign banks. The U.S. does have the ability to incentivize the U.S. taxpayer to turn them over.

    Jack Townsend

  5. I wonder why this case took so long to resolve. Is the government just playing out these deals to get announcements during tax season ?

    Its possible that the client tried to get a better plea offer and dragged the process out although I presume at some point DoJ would bring the hammer down.

  6. http://www.google.com/url?sa=t&rct=j&q=liechtenstein%20%20500%2C000&source=web&cd=7&cad=rja&ved=0CFMQFjAG&url=http%3A%2F%2Fwww.businessweek.com%2Fnews%2F2012-06-10%2Fliechtenstein-informs-bank-clients-of-u-dot-s-dot-tax-evasion-request&ei=rEXyUILrGuLw2gWP_oCoBQ&usg=AFQjCNG_J23EgU6XvdrRfS6dIhPVpK6Gew&bvm=bv.1357700187,d.b2I

  7. The statement that the defendant agrees "not to conceal, transfer, or dissipate funds" implies that she would have the ability to do so. Jack, could you elaborate on the US' "ability to incentivize the US taxpayer"? Could she be ordered to turn over the funds and be jailed until she does so?

  8. Yes, she could be ordered to sign documents that, if the Swiss bank honors the document, should release the funds. Should she not do that, she could be held in contempt.

    Of course, she pled guilty to put the matter behind her, so it is unlikely that the Government would have to press for that type of order. And, correspondingly, unless she is very stupid, she will meet her commitment not to dissipate.

    Jack Townsend

  9. Oh, please. Her husband died in 2000 and the alleged wrongdoing continued through 2007 and involved not only UBS, but multiple offshore foundations. This was a a nightmare of her own creation, not one that landed on her lap.


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