Tuesday, September 27, 2011

Another UBS Client Pleads -- With the Baggage of Illegal Income (9/27/11)

Michael A. Hase, a former comptroller for the U.S. Agency for International Development, has pled guilty to Theft of Government Property and Tax Perjury. The bullet points are below, but I caution the reader that this is an illegal source income case where the Government's main angst is about the conduct underlying the Theft Count. This limits the ability to make inferences to legal source income as is the bulk of the cases involving the current offshore financial account initiative. Notwithstanding that, since the tax Guidelines produced the highest offense level, the tax Guidelines governed with one level added for the theft crime. I link the Information here, the Plea Agreement here, the Statement of Facts here, and the USAO Press Release here.

Taxpayer: Michael A.Hase
Bank : UBS AG and its predecessor Swiss Bank Corporation Jersey Islands;
Entities: No
Guilt: By Plea Agreement - 2 counts - theft of government property 18 USC 641 (one count); tax perjury (Section 7206(1)) (1 count covering 10 years).
Maximum Incarceration Period: 13 years (10 years on theft count; 3 years on tax count)
Admits: Failure to File FBARs but not charged or pled
Unreported Income: $909,156.66
Tax Loss: $254,564.14
FBAR Penalty: $1.937,934.53 + (Based on 50% of the indicated highest balance of $3,875,934 in 2006).
Offense Level (Before AOR): 21 (20 for tax count plus 1 for multiple offense)
Offense Level After AOR: 18 (Criminal History I).
Guidelines Range: 27 - 33 months
Restitution: $36,325.52 (for theft count)
Court: D DC.
Judge: ?
For an earlier U.S. AID announcement of Hase's arrest on the Theft  of Government Property charge, see here.
I will try to update my spreadsheet tomorrow.

I present the tax count below. It is noteworthy because false returns for a year are usually pled as a separate count (as is the case with tax evasion). But, like tax evasion, there is no legal requirement that multiple years. Still, it is unclear why the Government included 10 years in the Count (the early years were perhaps open because of his absence from the country).  All of the years would have been included under relevant conduct if only one year had been charged.  Still there must have been a reason for charging multiple years.  Note in this regard that the Plea Agreement does not provide for contractual restitution and any remedies that might flow from that; rather the Plea Agreement just obligates Hase to file amended returns and either pay or reach some agreement with the IRS (to the extent unable to pay).

From on or about April 15, 2001 through on or about May 25,2010, in the Northern District of Georgia and elsewhere, MICHAEL E. HASE, a United States citizen, did willfully make and subscribe to U.S. Individual Income Tax Returns (Forms 1040) for the calendar years 2000 through and including 2009, which were verified by a written declaration that they were made under the penalties of perjury and which he did not believe to be true and correct as to every material matter. Specifically, MICHAEL E. HASE falsely reported on those U.S. individual Income Tax Returns (Forms 1040), which were filed with the Internal Revenue Service (i) that he did not have signature authority, financial interest or control over any foreign bank accounts where he well knew that he did in fact have signature authority, financial interest or control over a foreign bank account maintained at UBS AG, and (ii) failed to report the interest earned on those deposits in the foreign bank account maintained at UBS AG.

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