Thursday, July 26, 2012

Another UBS Client is Sentenced (7/26/12)

Luis A. Quintero was sentenced yesterday according to the Press Release from the USAO SDFL, here.

Here are the key facts:

Taxpayer:  Luis A. Quintero
Sentence Date: 7/25/12
Bank: UBS
Entities: Yes (Murano Development Corp (BVI) and Credimax Corporation, S.A. (Panama.)
Guilt: By Plea Agreement
Count(s) of Conviction: FBAR (1 count)
Maximum Possible Sentence:  5 years.
Sentence Imposed: 4 months.
Probation: ?
Age at Sentencing:  64
Tax Loss: ?
Civil income tax with penalties and interest:  ?
Restitution:  ?
FBAR Penalty: $2,000,000 (may be rounded; high balance was $4,005,618)
Court: Southern District of Florida
Judge: Frederico A. Moreno (Wikipedia entry here)

Key quote from press release (emphasis supplied):
Quintero knew that he was required to file an FBAR for foreign bank accounts in which he had an interest. Among other things, Quintero had previously filed FBARs relating to bank accounts in Mexico in the name of one of Quintero's U.S. companies.
JAT Note: Quintero did admit his knowledge of the FBAR requirements and thus his willfulness.  Previous filing of FBARs, even if for an entity, makes the Government's willfulness burden (beyond a reasonable doubt) easier to meet.

Related Articles:

Susannah Nesmith, Ex-UBS Client Gets Four-Month Term For Swiss Accounts (Bloomberg 7/25/12), here,

I will update the spreadsheet and post it later this week.


  1. Just wonder high balance is real value balance or aggregated balance (such as transfer between accounts would doubly counted).

  2. Again

    This DOJ press release states "

    United States citizens who have a financial interest in, or signature authority over, a financial account in a foreign country with an aggregate value of more than $10,000 are required to file with the United States Treasury a Report of Foreign Bank and Financial Accounts on Form TD F 90-22.1. U.S. citizens are also required to disclose the existence of such accounts on their individual income tax returns. "

    This is certainly misleading to most immigrants (green card holders and visa workers). DOJ should be careful of what they put in press release. Some folks would assume that is for "US citizen" only.

  3. There should be no double counting since at any given moment the money is either in account A or account B, it would not be in both places at the same time. However, for someone heavily invested in the stock market, high balance (peak over 8 years) may be much higher than current value. For example, the Euro Stoxx 50 index (largest 50 European stocks) is currently at approximately 40% of its peak, so 50% of high balance would be 125% of current value.

  4. High aggregate balance for FBAR filing is different from OVDI -- which does not double count on the same fund. For example, he has $3000 at anytime of the year, but he puts into account A for two months, then account B for another two months, .... and on, The aggregated balance for FBAR is $18,000 -- even if he has only $3000, but according to FBAR, he has to file FBAR. This is what I am asking the penalty is based on this inflated balance or just simple snapshot balance.

  5. IJ, in the example you describe if the $3,000 is being transfered from account A to B to C and so on, at any one time there will be only one account with $3K and the others will have a balance of zero, so since at any time the maximum balance was 3K such a taxpayer would not need to file an FBAR at all.

    The penalty is based on the highest balance at any time over the 8 years (in OVDI) or fewer years (outside OVDI.)

    Money cannot be in two places or banks at the same time. This is obvious when sending a bank wire or transfering cash. But even if you write a check, the money is only in one bank at a time. The fact that bank B may give you a provisional credit when you bring in a check drawn on bank A (even though the money stays in bank A until the check clears) the money is still only in one bank at a time.

  6. I was not talking OVDI in lieu penalty but FBAR penalty which I don't know if IRS takes out duplicates. If you look at your FBAR filing requirement -- even exact balance is $3000 but has been in 4 different accounts -- that will cause aggregated value to be $12.000.

  7. ij, I am the same Anonymous as above.
    The FBAR form has space for individual accounts, not for a total. The penalty is for either not filing, or filing incorrectly (such as reporting some accounts but not others, incorrect balance, etc.)
    In the above hypothetical, the person never has over $3K at one time in foreign accounts so there is no obligation to file, thus no penalty for not filing.
    Now let's take the case of someone with $100K in foreign account A, then account B, then C, then D. In that case the high balance is still 100K, and if a willful penalty were to be applied, it would be on the 100K high balance. However, the IRS might draw some inference as to willfulness if money is being moved around so much; this would depend on the reasons given for doing so, and whether these reasons seem to plausibly involve something other than wilfulness.
    Jack has previously discussed whether the penalty would apply per form (i.e. per year) or per account.


Please make sure that your comment is relevant to the blog entry. For those regular commenters on the blog who otherwise do not want to identify by name, readers would find it helpful if you would choose a unique anonymous indentifier other than just Anonymous. This will help readers identify other comments from a trusted source, so to speak.