Bank : UBS and Wegelin
Entities: Yes
Guilt: By Plea Agreement - See prior blog entry on guilty plea: A New UBS Depositor Plea in SDNY (6/27/11), here.
Count(s) of Conviction: 3 - tax evasion
Maximum Possible Sentence: 15 years.
Sentence Imposed: 45 days.
Age at Sentencing: 82 years*
Tax Loss: $400,000 - $1,000,000 (Apparently this number was not more finitely calculated because this is a single Guideline tax loss range and would not change any of the sentencing calculations).
Civil income tax penalty: Civil Fraud Penalty (75%) agreed to in the plea agreement (see the prior blog), hence, given the tax loss, the civil fraud penalty would be between $300,000 and $750,000.
Restitution: ? (May not have been provided because the tax loss was not quantified sufficiently; the IRS will be able to quantify and collected the tax loss through regular tax processes.)
FBAR Penalty: $9.8 MM (FBAR penalty; 50% of highest balance for one year - see prior blog)
Court: SD NY
Judge: Castel, Kevin
* also with significant, perhaps age related, physical impairments.
Per the article below, Heller cooperated in the investigation of the 3 Wegelin related bankers. See my prior blog New Swiss Enabler Indictments - Bankers Related to UBS and, Allegedly, Wegelin (1/3/12), here.
This is a valuable lesson for all enablers -- be they attorneys, accountants, bankers or otherwise) -- in all contexts -- whether offshore or otherwise: the persons you serve may find it in their interest to turn on you. So, even if you are an innocent enable, a client may remember your role differently when it serves a purpose. Which reminds me of the old joke:
First man: I have a CPA do my income tax return.
Second man: Why do you do that?
First man: It saves me time.
Second man: How much time?
First man: Maybe 5 to 10 years.
-Old Joke
Quoted in Burgess J.W. Raby and William L. Raby, Penalty Protection for the Taxpayer: Circular 230 and the Code, 2005 TNT 105-65.
Article:
Bob Van Voris and Ian Thoma, Ex-UBS Client Heller Gets 45-Day Jail Term for Tax Evasion (Bloomberg 1/20/12), here.
Do you think this is a harsh sentence? 45 days in jail for an 82 year old in ill health does seem harsh, especially when we consider that most of the offshore banking defendants have received sentences like probation and house arrest. The Assor/Cohen-Levy defendants did get multi-year sentences, but that was a rare case that went to trial rather than plea agreement. Heller did not go trial and took a plea. He also already paid an FBAR penalty of almost $10 million.
ReplyDeleteWhy jail time, given his age and health? Was it because he is not sympathetic, having been disbarred previously? The large amount of undeclared foreign income? A judge that wanted to make a point, irrespective of the defendant's age?
On the subject of Switzerland and I am not sure where is the best place to ask this question I went back and read the original US-Swiss-UBS agreement from 2010. I noticed something which I had not observed before which is the agreement refers specifically to US "domicilied persons" which seems to me to be excluding expats living in Switzerland or for that matter expats anywhere outside of Switzerland who use UBS as the regular retail bank for example now matter how much in assets or earnings they have or what level of Swiss tax the pay(In most cantons significantly more than the top US 36% rate). It would seem given how hard fought this agreement was to get in place it would seem difficult for the US to turn around and try to get this information in the future. Additionally this agreement would seem to be the template for all other Swiss banks too when they eventually settle i.e. Credit Suisse, Wegelin etc. So essentially is the US acknowledaging the future necessity of a "residency/domiciliation" based tax system if foreign goverments refuse to give the US info on their dual citizens and US citizen residents. (Note I am the same anonymous who was asking about Canada and tax collection the other day)
ReplyDeleteAsher
ReplyDeleteMy recollection is that this guy was a seriously bad hat and the source of the income may have been illegal or partly illegal income or even some client accounts. Rather than try and bring a protracted legal case on non tax matters (especially given his age and health), the government may have settled for a tax case. In a way, this would serve the government, since it would send a message that even 82 year old people in poor health could be arrested.
45 days seems harsh, but Castel is one of the toughest sentencing judges in SDNY and the guidelines were 30-37. I expected a sentence in the 6-12 month range.
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