Convictions of U.S. Persons Related to UBS and Pictet Accounts (4/12/13)

DOJ Tax has this press release titled Arizona Businessmen and California Attorney Convicted for Hiding Millions in Secret Foreign Bank Accounts at UBS AG and Pictet & Cie (DOJ Tax 4/12/13), here.

Defendants:  Stephen M. Kerr and Michael Quiel
Conviction: by jury verdict
Counts of Conviction:  Tax Perjury (2 counts); FBAR (Kerr only, 2 counts).
Court:
Judge:

Pior conviction by plea:  Christopher M. Rusch - conspiracy (1 count) and FBAR (1 count) on 2/6/13

Key excerpts:

According to the evidence presented at trial, Kerr and Quiel, with the assistance of Rusch and others, including Swiss nationals, established nominee foreign entities and corresponding bank accounts at UBS AG and Pictet & Cie to conceal Kerr and Quiel’s ownership and control of stock and income that were deposited into these accounts. Rusch testified at trial, admitting that he and others caused the sale of the shares of stock through the undeclared accounts . Kerr also hired Rusch to facilitate the domestic sale of 11.4 million shares of stock held in the name of a foreign entity controlled by Kerr and to transfer the proceeds from the sale of the stock to an undeclared foreign account at UBS AG to conceal that the money was income to Kerr that should have been reported on his tax returns.

The evidence established that in order to create a further layer of separation between Kerr and Quiel and the income they concealed in the undeclared foreign accounts, they directed Rusch to transfer some of the money in the undeclared accounts back to the United States through Rusch’s Interest on Lawyer’s Trust Account (IOLTA) before dispersing the money for Kerr and Quiel’s benefit. Rusch transferred approximately $2,000,000 through his IOLTA account so that Kerr could purchase a golf course in Erie, Colo.  Additionally, after transferring approximately $955,000 from Quiel’s undeclared foreign accounts to his IOLTA account, at Quiel’s direction, Rusch wrote checks payable to an Arizona bank account owned and controlled by Quiel. 

According to trial evidence, Kerr and Quiel filed false tax returns with the IRS that failed to report the proceeds of stock sales, interest and dividend income earned through the secret accounts, and further failed to report that they had a financial interest in bank accounts located in Switzerland. Kerr also failed to file FBARs in 2007 and 2008 that reported his offshore accounts to the IRS.  Accountants for Kerr and Quiel testified that neither Kerr nor Quiel disclosed the existence of their offshore accounts in Switzerland during the preparation of their tax returns.

Prior FTCB postings:

1. Taxpayers and their U.S. Lawyer Indicted re Foreign Accounts (FTCB 2/1/12), here.
2. Defendant Waives Attorney-Client Privilege by Asserting Reliance on FBAR Advice Defense (FTCB 7/19/12). here.

Note, they were originally charged with conspiacy