Thursday, May 16, 2013

Two More UBS Depositors Indicted; Big Numbers Involved (5/17/13)

Two Florida Doctors have been indicted "for conspiring to defraud the Internal Revenue Service (IRS) by concealing millions of dollars in assets and income in offshore bank accounts at UBS and other foreign banks."  The DOJ Tax Press release is here; the indictment is here.  They were enabled by Beda Singenberger, a person who has figured prominently in my blogs and a previously indicted enabler, see blogs on Singenberger, here.  The key information is below::

Defendants:  Drs. David Leon Fredrick and Patricia Lynn Hough, husband and wife.
Charges:  Conspiracy (1); Tax Perjury (4)
Maximum Incarceration:  Conspiracy - 5 years; Tax Perjury 12 years (4 counts times 3 years each), but actual sentence will be determined by the Sentencing Guidelines subject to departures or Booker variances which are common.
Enablers:  Beda Singenberger an unnamed UBS banker ("UBS Banker D.L.")
Banks:  UBS, "Swiss Bank No. 1" (Geneva Private Bank), "Swiss-Liechtenstein Bank No. 1" (Swiss subsidiary of Liechtenstein Bank 1), "Liechtenstein Bank No. 1" (a Private Bank and parent of SLB #1), Swiss Cantonal Bank No. 1 (providing banking services), UK Private Bank No. 1.
Entities/Nominees:  Yes.  A number were involved, both real entities and "Nominee Entities" (these were incorporated in various jurisdictions).

The key portions of the press release:
According to the indictment, Fredrick and Hough, married doctors, served on the Board of Directors of two Caribbean-based medical schools – one located on Saba, Netherlands Antilles, and one located on Nevis, West Indies. Fredrick had an ownership interest in the medical school on Nevis until 2007, when both medical schools were sold.  
The indictment alleges that Fredrick and Hough conspired with each other and with Beda Singenberger, a citizen and resident of Switzerland who is under indictment in the Southern District of New York, and a UBS banker to defraud the IRS. They carried out the conspiracy by creating and using nominee entities and undeclared bank accounts in their names and the names of the nominee entities at UBS and other foreign banks to conceal assets and income from the IRS, including the sale of real estate associated with the medical school on Saba and shares they owned in the medical school on Nevis. The real estate was sold for more than $33 million, all of which was deposited into one of their undeclared accounts in the name of a nominee entity.
It is further alleged in the indictment that Fredrick and Hough used emails, telephone and in-person meetings to instruct Swiss bankers and asset managers to make investments and transfer funds from their undeclared accounts at UBS. It is alleged that Fredrick and Hough caused funds from the medical schools’ undeclared accounts to be transferred to undeclared accounts in their individual names or in the names of nominee entities. Fredrick and Hough then used the funds in their undeclared accounts to purchase an airplane, two homes in North Carolina and a condominium in Sarasota, Fla. Fredrick also transferred more than $1 million to his relatives.
Fredrick and Hough were also charged with four counts of filing false tax returns for 2005, 2006, 2007 and 2008. The indictment alleges that Fredrick and Hough filed false tax returns which substantially understated their total income and failed, on Schedule B, Parts I and III, to report that they had an interest in or signature or other authority over bank, securities or other financial accounts located in foreign countries. U. S. citizens, resident aliens and legal permanent residents of the United States have an obligation to report to the IRS on the Schedule B of a U.S. Individual Income Tax Return, Form 1040, whether they had a financial interest in, or signature authority over, a financial account in a foreign country in a particular year by checking “Yes” or “No” in the appropriate box and identifying the country where the account was maintained. U. S. citizens and residents also have an obligation to report all income earned from foreign bank accounts on their tax returns. 
The indictment itself alleges much of the gory detail.  I don't have the time to do a detailed analysis, nor do I think it would be helpful except perhaps to a few readers.  My other priorities thus require that I focus my attention elsewhere.  The numbers are big, though.  The pattern I see should put the defendants very high up and even possibly at the top of the Sentencing Guidelines.  Accordingly, it would require an incredibly huge downward variance to get to no or minimum incarceration.

I will provide more detail as I get the detail or when and if I get to further review of the indictment.

I will update the spreadsheet at least by the weekend.

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