UBS Depositors Fail on Pleadings in Civil Case Against UBS (2/2/13)

Several UBS depositors have just suffered a reversal in a civil suit they filed against UBS.  Roberts et al. v. UBS AG, 2013 U.S. Dist. LEXIS 12779 (ED CA 2013) here..  Readers may recognize some from the list of plaintiffs (where appropriate with a link blog discussions to their plea convictions or sentencings):

• Nadia Roberts and Sean Roberts, discussion of plea conviction here.  
• Bernhard Gubser and Heidi Gubser, who entered the OVDI and thus were not prosecuted or convicted (hence not subject to a blog discussion).
• Anton Ginzburg, discussion of plea conviction here.
• Arthur Joel Eisenberg, discussion of sentencing here:
• Jeffrey Chernick, individually and on behalf of SHAMBA, a foreign corporation, SIMBA, a foreign corporation - discussion of sentencing here.

All of these were represented in the action by William J. King, LEAD ATTORNEY, The WJK Law Firm, Tustin, CA.

Here is the Court's short presentation of the plaintiff's individual circumstances:

Execution Of The Scheme As To Plaintiffs
The Roberts
The Roberts are married. In 2004, Sean Roberts ("Mr. Roberts") owned a UBS AG  account in the Isle of Mann and UBS AG  banker Claude Ullman convinced Mr. Roberts to transfer his account to UBS AG's  Swiss location. UBS AG  engaged defendant Beda Singenberger ("Mr. Singenberger") to create a third-party trust for Mr. Roberts but neither UBS AG  nor Mr. Singenberger "advised plaintiffs of the illegal nature of said third party trust and/or plaintiffs' reporting requirements." UBS AG  failed to advise the Roberts of the QI Agreement, that their accounts violated the QI Agreement, and that the Roberts "needed to take steps to advise the IRS and mitigate their damages." In February 2009, UBS AG  sent information to the IRS about the Roberts but delayed until November 2009 to advise the Roberts of an amnesty Voluntary Disclosure program.
In June 2011, the Roberts entered into plea agreements to plead guilty to filing a false tax return.
The Gubsers
The Gubsers were married during 1978-2008 and held a Swiss UBS AG  account which they allowed to sit and which experienced income growth during 2004-2009. UBS AG  never advised the Gubsers that they were subject to the QI Agreement. In December 2010, the Gubsers "realized that they may be subject to prosecution by the IRS for failing to declare a 40-year old account originating in Switzerland." The Gubsers participated in the Voluntary Disclosure program.
Dr. Ginzburg
In 2000, UBS AG  banker Gian Gisler ("Mr. Gisler") advised Dr. Ginzburg to change the structure of Dr. Ginzburg's UBS AG  funds. UBS AG representatives advised Dr. Ginzburg to close a Liechtenstein-based trust structure in favor of a Hong Kong-based trust, that Dr. Ginzburg "would not have to pay any taxes on any capital gains or dividends until the funds were repatriated" to Dr. Ginzburg's country of future domicile, the United States or Israel, and that he would pay only taxes on possible capital gains and dividends when he repatriated the funds. Dr. Ginzburg was never informed of the QI Agreement, and in November 2008, UBS AG  froze his accounts to prevent him to mitigate market losses. UBS AG  representatives refused to disclose information about Dr. Ginzburg's accounts and liquidated the stock portfolio at 2009 levels to result in a $1.5 million loss.
In July 2011, Dr. Ginzburg pled guilty to criminal tax fraud.
Mr. Eisenberg
Mr. Eisenberg held a UBS AG  account in the Grand Caymans and during a vacation there, entered a UBS AG  branch to inquire about the account. He was informed that his account was on the "abandoned accounts" list and transferred to Switzerland. Mr. Eisenberg traveled to Switzerland and defendant Hansredi Schumacher ("Mr. Schumacher") advised Mr. Eisenberg to set up a trust. Mr. Eisenberg permitted Mr. Schumacher to set up a Liechtenstein account and was advised "that he would not be required to disclose his account because of the trust formation." In 2010, Mr. Eisenberg discovered that UBS AG  double charged fees during the account's life.
UBS AG  failed to advise Mr. Eisenberg of the QI Agreement, the need to report his account for taxes, and release by UBS AG  of his name to the United States to preclude Mr. Eisenberg to correct defects or seek voluntary disclosure. The IRS prosecuted Mr. Eisenberg who entered into a December 2010 agreement to plead guilty to filing a false tax return and paid $2.5 million penalties on a $65,000 tax bill.
Mr. Chernick
Mr. Chernick succeeded in manufacturing toys with his Shumba corporation. In 2000, UBS AG  executive director Phillip Bigger ("Mr. Bigger") recommended to move Mr. Chernick's Cayman Islands account to UBS AG's  Hong Kong office, and Mr. Chernick opened up UBS AG  Hong Kong accounts. Mr. Chernick was advised to hold U.S. securities in the Hong Kong accounts "without disclosing that Chernick would have to report such holdings to the U.S. or otherwise advising him of the QI Agreement terms." In 2002, defendant Matthias Rickenbach with UBS AG's authorization "caused the setup of a sham entity to hold Shumba and Simba." In 2006, Mr. Bigger caused Mr. Chernick to close his Shumba account at the UBS Hong Kong office and transferred the account's assets, including U.S. securities, to a UBS AG  Zurich account. UBS AG  failed to inform Mr. Chernick of the QI Agreement requirements to file IRS forms or UBS AG  withholding of taxes.
Mr. Chernick entered into a July 2009 agreement to plead guilty to filing a false tax return.

New Swiss Enabler Indictments - Bankers Related to UBS and, Allegedly, Wegelin (1/3/12)

Three Swiss enablers, reputedly employed by or affiliated with Wegelin & Co., have been indicted in NYC.  The indictment is here; the USAO SDNY press release is here, see quote below].

The three are Michael Berlinka, Urs Frei, and Roger Keller.  The amount of money hidden allegedly exceeds $1.2 Billion (with a B).

The bullet points are:

Enabler Defendants:  Michael Berlinka, Urs Frei, and Roger Keller

Unindicted Co-Conspirators:  (i) the U.S. taxpayers involved (numbering over 100, although only U.S. taxpayers A - W (numbering 23) and two by name, Arthur Joel Eisenberg, see here, and Kenneth Heller, see here) are discussed specifically in the indictment; and (ii) other Swiss enablers, such as Client Advisor A, Managing Partner A, Swiss Asset Manager, Swiss Bank A Executive and Gian Gisler, see here.and Beda Singenberger, see here.

Banks : Principally Swiss Bank A (reputedly Wegelin & Co.); UBS AG and Swiss Bank No. 1 (unknown) play roles.

Entities: Yes (the taxpayers frequently employed entities)

Charges:  One count of conspiracy (both the ubiquitous Klein / defraud conspiracy and offense conspiracy to violate 7206(1) (tax perjury) and 7201 (evasion), charged as a single count).

Maximum Incarceration Period: 5 years (10 years on theft count; 3 years on tax count)

Court: USDC SDNY

Judge: Jed D. Rakoff (see Wikipedia entry here)

Another Sentencing for Taxpayer with UBS Account

There is another sentencing of taxpayer. The DOJ Tax press release is here. The key facts (which may be supplemented as I learn additional key facts) are:

Taxpayer: Arthur Joel Eisenberg
Bank: UBS AG
Entities: Yes
Guilt: By Plea Agreement - one count of tax perjury
Sentence: Incarceration 0; home confinement 0; Probation 3 years
FBAR penalty: $2.1 million (Reportedly 50% of high balance)
Court: WD Washington State
Judge: John Coughenour

I have updated the spreadsheet.

Addendum 3/7/10:  Bill Singer's Street Sweeper Blog (Forbes).

Posner and Yoon on What Judges Think of the Qualify of Legal Representation in Federal Criminal Cases

I just reviewed Richard A. Posner and Albert H. Yoon, What Judges Think of the Quality of Legal Representation, 63 Stan. L. Rev. 317 (2011). I thought some snippets from the article about federal criminal cases might be interesting to readers (some is repetitive, depending upon context in the article; also some footnotes are omitted):

[pp. 319-320]

We found that judges perceive significant disparities in the quality of legal representation in criminal cases, and that these disparities occur in 20% to 40% of the cases they hear. Federal judges generally rate prosecutors as comparable in quality to public defenders and significantly better than court-appointed counsel or retained counsel.