From at least the early 2000s, up until 2010, LANDEGGER maintained undeclared bank accounts on his own behalf at the Swiss Bank. In 2005, a representative of the Swiss Bank (“Swiss Bank Representative-1”) recommended to LANDEGGER that for the protection of LANDEGGER and the Swiss Bank, LANDEGGER utilize the services of an attorney based in Zurich, Switzerland, to form a sham entity to hold LANDEGGER’s undeclared accounts at the Swiss Bank. Thereafter, a sham trust was formed to hold LANDEGGER’s undeclared accounts at the Swiss Bank and further conceal LANDEGGER’s ownership of those accounts from the IRS. The sham trust, which was organized under the laws of Lichtenstein, was named “Onicuppac,” which is the word “Cappucino” in reverse.
In April 2009, LANDEGGER, Swiss Bank Representative-1, and another individual had a meeting in Switzerland, the purpose of which was to discuss the future of LANDEGGER’s undeclared accounts at the Swiss Bank, in light of the public news that another Swiss bank, UBS AG, had been investigated by United States law enforcement authorities for helping U.S. taxpayers maintain undeclared accounts. During that meeting, LANDEGGER and Swiss Bank Representative-1 discussed the possibility of LANDEGGER disclosing his undeclared accounts to the IRS, including by entering the IRS’s offshore voluntary disclosure program (the “OVDP”). LANDEGGER affirmatively rejected the possibility of disclosing his undeclared accounts to the IRS, whether by entering the OVDP or by any other method. Instead, LANDEGGER and Swiss Bank Representative-1 determined to empty the accounts of their assets by slowly moving the undeclared assets out of Switzerland. Thereafter, between May 2009 and July 2010, LANDEGGER, with the assistance of Swiss Bank Representative-1 and others at the Swiss Bank, emptied the assets from his undeclared accounts at the Swiss Bank by transferring a portion of those undeclared assets to a new, declared account in Canada, and by transferring the remainder of the undeclared assets to an account maintained by another individual in Hong Kong.
During the time LANDEGGER maintained his undeclared accounts at the Swiss Bank, capital gains and losses were generated in the account from LANDEGGER’s investments in foreign securities. Between 2007 and 2010, the high value of LANDEGGER’s undeclared assets was over $8.4 million. For each of the calendar years from at least the early 2000s through 2010, LANDEGGER failed to file FBARs with the IRS, as he was required to, disclosing his signatory or other authority over his undeclared accounts at the Swiss Bank.
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As part of his plea, LANDEGGER has agreed to pay a civil penalty of over $4.2 million and back taxes of over $71,000.JAT Comments:
- Greed can make some very smart / successful people do very stupid things.
- I don't know the bank or the bank representative, but will update the blog when I do.
- The wording for the FBAR failure to file is odd -- indicating that he failed to disclose his signatory or other authority. I thought he had the ultimate beneficial ownership which is not mere signatory of other authority.
- The wording of the high amount is odd because it does not give the relevant period in which the high balance was over 8.4 million. Presumably, only six years could be included.
- Given the multi-year nature, the back taxes of "over $71,000" seems a little low.
- The press release states at the beginning that he pled to failure to file FBAR reports (plural), but the sentencing exposure of 5 years indicates that he pled as to only one failure to file.