Another One Bites the Dust - Plea regarding Undeclared Swiss Bank Account

On 2/16/10, according to a DOJ Tax announcement here, one Dr. Andrew Silva pled to a Klein / defraud conspiracy and to making a false statement (presumably 18 U.S.C. § 1001). On its face it would appear that DOJ Tax is upping the ante. (See also Main Justice discussion here. * see footnote below)  Previously all that was required was a single plea – the defendant could take his pick between a tax perjury count and an FBAR failure to file count. The maximum sentence for Dr. Silva's plea counts of conviction is 10 years in the aggregate (5 years each count). One might infer that DOJ Tax is ratcheting up as one way of telling the target community that it will get steadily worse as an inducement to come to the table sooner rather than later.

But this case has some wrinkles that may have made it more egregious. The first tip off is that the DOJ Tax announcement here states that the announcement is made by DOJ Tax, ICE, the U.S. Postal Service and the IRS. This was a significant coordinated effort that seems disproportionate for ordinary offshore tax cheating. And, the disproportion is a result of the wrinkles. (See also the Main Justice rehash of the announcement here.)

Key Points that I think are worthy of note are:

1. The undeclared bank account was from his mother.
2. An unidentified Zurich branch of an unidentified Swiss Bank is involved.
3. The bank is headquartered in England and also has offices in Zurich, Geneva, and the Eastern District of Virginia . Now, wonder which one that is?
4. The bankers advised the defendant to and assisted him is disguising the account.
5. The bankers advised the defendant to structure -- yes the bad word -- the amount of cash that he transported into the U.S.
6. When the bank wanted to close down the account, a Swiss attorney and the banker refused to wire money into the U.S. to avoid leaving a trail that U.S. law enforcement could follow; instead the attorney assisted Dr. Silva in structuring -- again the bad word -- by sending the payments into the U.S. The structuring was mailing 26 packages with cash aggregating in excess of $200,000. Although this is a separate crime (actually crimes), Dr. Silva does not plead guilty to it or them.
7. The defendant admits (although he does not plea to) filing false income tax returns that failed to report income for the years 1997 - 2008 (which probably will up the sentencing ante even though he did not plea) and failing to file the FBARs for those years.
8. The investigation apparently arose because some agents (apparently not IRS) caught Mr. Silva structuring cash to avoid reporting requirements.
9. The announcement emphasizes that others should take heed.

Wonder when the squeeze will be put on the unidentified bank?  And wonder when / if the Swiss enablers will be indicted?

Update 2/17/2010

I thought I would add certain points appearing in a Tax Notes Today Article by Amy Elliot.

1. The bank is HSBC Holdings PLC. I thought that was evident, but I guess I should specifically identify it.
2. Bryan Skarlatos is quoted as saying that other banks are being considered, mentioning specifically "HSBC, Credit Suisse, Julius Baer, and Bank of Israel."  Other banks will follow.
3. The examination started as a customs investigation.
4. Practitioners indicated concern that the amount involved seems to be so low - $250,000. Ed Robbins, a prominent practitioner and former prosecutor, is quoted as indicating surprise because normally $1,000,000 is the cutoff to make prosecution attractive to a prosecutor.
5. A sham Lichtenstein trust was used.

* footnote on Main Justice.  Mainjustice.com was formerly a news site for Justice Department news.  It has since been discontinued, so the link no longer works.  The demise of Mainjustice.com is covered in this offering:  What Happened to Main Justice.com? (Auger and Auger 3/7/21), here.