Friday, October 25, 2013

Another UBS U.S. Depositor Convicted (10/25/13)

DOJ announces, here, that Dr. Patricia Lynn Hough has been convicted
convicted today by a jury in Fort Myers, Fla., of 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, and of filing false individual income tax returns which failed to report the existence of those foreign accounts or the income earned in those accounts."  
Key Facts:

Defendant:  Dr. Patricia Lynn Hough
Counts of Conviction:  Conspiracy (1); Tax Perjury (4)
Maximum Sentence on Counts of Conviction:  204 months
Bank:  UBS
Entities:  Yes
Court:  MD FL
Judge:  John E. Steele (Wikipedia entry here)

Key excerpts from the press release are:
According to court documents and court proceedings, Hough owned two Caribbean-based medical schools – The Saba University School of Medicine located in Saba, Netherlands Antilles, and The Medical University of the Americas located in Nevis, West Indies. Hough conspired to defraud the IRS with her husband, Dr. David Fredrick, who is awaiting trial.  They carried out the conspiracy by creating and using nominee entities, including a foundation, and undeclared accounts in their names and the names of nominee entities at UBS and other foreign banks to conceal assets and income from the IRS.  Both schools and associated real estate were sold on April 3, 2007, for more than $35 million, all of which was deposited into undeclared accounts in the name of the nominee entities.  The majority of the sale proceeds were not reported to the IRS on their tax returns and no tax was paid.  
The evidence at trial further proved that Hough and her co-conspirator used emails, telephone calls and in-person meetings to instruct Swiss bankers and asset managers to make investments and transfer funds from their undeclared accounts at UBS. The evidence established that Hough and her co-conspirator caused funds from the undeclared accounts in the names of the medical schools to be transferred to undeclared accounts in their individual names or in the names of nominee entities.  Hough and her husband then used the funds in their undeclared accounts to purchase an airplane, two homes in North Carolina and a condominium in Sarasota, Fla.  
Hough was also convicted of four counts of filing false tax returns for 2005, 2006, 2007 and 2008.  The evidence at trial established that Hough filed false tax returns that substantially understated her total income because she failed to report substantial interest and investment income and in 2007  because she failed to report her half of the proceeds from the sale of the medical schools.  In addition, Hough failed to report on Schedule B of the tax returns that she had an interest in or signature or other authority over bank, securities or other financial accounts located in foreign countries.  
For the prior blog on this defendant and her husband who has not yet been tried:  Two More UBS Depositors Indicted; Big Numbers Involved (5/17/13), here.

Some very large numbers appear to be involved at least for some of the years.  Hence, as with the Ty Warner aka Mr. Beanie Baby conviction by plea, this conviction will test whether courts are really more lenient with offshore tax cheats than onshore tax cheats.  Dr. Hough's case has the added negative factor that she went to trial rather than plead.  According to my statistics, the average incarceration for taxpayers who went to trial is 60.6 months and the median is 72.0 months.  According to those statistics, the average incarceration for guilty pleas is 6.2 months and the median is 0 months.  Quite a difference.

There are some interesting issues from the charges and the verdict, but I don't have time to develop and report them now.  Perhaps later as I find time.

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