Foreign Bank Account Records and the Required Records Exception to the Act of Production Doctrine

For those exposed on foreign accounts (i.e., no FBARs and no income tax reporting), the Government is brandishing a weapon that some taxpayers may not anticipate -- end-runs around the Fifth Amendment that would otherwise apply to avoid incriminating oneself. The end-runs are the "required records" exception to the Fifth Amendment and possibly the "foregone conclusion" exception to a Fifth Amendment act of production claim. I have previously blogged on the foregone conclusion exception here and focus here on the required records exception.

Just for background, there is now no Fifth Amendment privilege for the contents of documents (not even diaries which are, after all, not made under compulsion), but there is a Fifth Amendment privilege under the "act of production" doctrine relating to the testimonial aspects of compulsory production of documents (i.e., identifying documents, acknowledging their existence, etc.). So, the Fifth Amendment privilege is alive and well for compulsory document production in many cases. Hence, the Government needs end-runs such as the required records exception and the foregone conclusion exception.

Corruptly in Obstruction Crimes (Including Tax Obstruction) Really Means Something

In United States v. Doss, 630 F.3d 1181 (9th Cir. 2011), a nontax case, the Ninth Circuit addressed the circuit split over the term "corruptly persuades" in 18 USC 1512(b)(1). Section 1512 is captioned "Tampering with an witness, victim or informant." The crime defined in Section 1512 is not a tax crime, nor is it a crime normally encountered in criminal tax trials. Still, as I have developed in an article, the crime's corruptly element may help define the similar element in the tax obstruction statute, 26 USC Section 7212(a). Both crimes are derived from the concepts in 18 USC Section 1503, the traditional obstruction of justice crime. See John A. Townsend, Tax Obstruction Crimes: Is Making the IRS's Job Harder Enough, 9 Hous. Bus. & Tax. L.J. 255, 334-335 (2009)).

Wikileaks Takes Aim at Swiss Bank Secrecy

Wikileaks is reported to be in the process of vetting and publishing some "secret" Swiss bank data.  See the Reuters article here.  As reported, this is not the first time.  The new data has information about "around 2,000 bank clients -- including prominent business people, artists and around 40 politicians -- who have parked their money offshore" -- "probably to avoid tax."  The data comes from 3 financial institutioins, including Julius Baer.

The Hammer is Hammered or Slammered - Tom Delay and the Reliance on Professional "Defense"

I read in the paper yesterday and today about Tom Delay's three year sentence for money laundering and conspiracy. Among other claims (e.g., political persecution), Mr. Delay is reported to have claimed that "Everything I did was covered by accountants and lawyers telling me what I needed to do to stay within the law." See Washington Post Article (at p. 2) here. Readers will recognize this as the reliance on professionals so-called "defense" that raises its head in many tax prosecutions. In tax prosecutions, the Government must prove that the defendant acted willfully (under Cheek, meaning that the defendant intended to violate a known legal duty).  To the extent the defendant relied on professionals, the defendant did not act willfully. In this light, therefore, reliance on professionals is not a defense but rather an element that the Government's proof beyond a reasonable doubt must negate.

One of the problems with the "defense," of course, is that in order to put the issue in play in the trial in chief, the defendant will usually have to take the stand to say that he or she relied. Most defense attorneys in white collar crime cases (of which Mr. Delay's prosecution and tax prosecution are simply subsets) are loath to have their clients take the stand and usually for very good reasons -- the testimony alone may be what nails the coffin and, even worse, if the judge thinks he was laying might be considered some type of obstruction of justice to enhance the sentencing.

Fifth Circuit on the Nature of 7206(1), Commonly Called Tax Perjury

In United States v. Bishop, 629 F.3 462 (5th Cir. 2010), the Fifth Circuit affirmed the defendant's conviction for 3 counts of tax perjury (Section 7206(1)). The panel rejected the defendant's arguments that (1) her trial violated the Sixth Amendment right to speedy trial, (2) that "the trial court violated her constitutional right to present a complete defense by preventing her from arguing that her case was a 'perjury case' rather than a 'tax case;'" and (3) the trial court erred in denying her motion for new trial based on ineffective assistance of counsel.

The Fifth Circuit's panel decision, authored by Judge Garza, addresses the first and the third issues well. Those issues are not unique to criminal tax trials, so I refer the interested reader to the opinion. I address here the third issue -- dealing with the 'perjury case' issue.

For context, section 7206(1) defines the crime as:

Any person who willfully makes and subscribes any return, statement, or other document, which contains or is verified by a written declaration that it is made under the penalties of perjury, and which he does not believe to be true and correct as to every material matter

The panel first sets up the issue as being subject to "plain error" review. Turning to the merits of the defendant's argument under the plain error review standard, the panel says (discussion quoted in full, with parallel citations omitted):

Bishop's allegation of error stems from the district court's ruling preventing her attorney from asking IRS Special Agent Robert Whalen whether this case was "basically a perjury case." The Government objected to the question, and the court sustained the objection, observing, "This is a tax case." Bishop then moved on in her cross-examination. Her counsel took no steps to inform the district court that barring the question potentially violated Bishop's constitutional rights or to clarify the nature of the defense she was pursuing. Her argument on appeal, therefore, must be reviewed for plain error. To establish plain error, Bishop must demonstrate: (1) there was an error; (2) the error is "plain"; and (3) the error affected her substantial rights, was prejudicial and affected the outcome of the district court proceeding. United States v. Olano, 507 U.S. 725, 731-32 (1993). We will correct a plain error only if the error "seriously affects the fairness, integrity or public reputation of judicial proceedings." Id. at 736.

Bishop's argument hinges on a misreading of our discussion of § 7206(1) in State v. Adams, 314 F. App'x 633, 638 (5th Cir. 2009). In that case, we stressed, in obiter dicta, that a § 7206(1) false return case is "a perjury case," unlike, for example, a tax evasion or failure to file case. We interpret those remarks simply to distinguish a charge under § 7206(1) from other types of tax-related charges. We did not hold, nor would it make sense to hold, that false return cases are not "tax cases." n1 Regardless, even if Bishop's characterization of Adams were accurate, she could not show that the district court's ruling affected the outcome of its proceedings, as is required for a reversal based on plain error. The court's lone ruling on her questioning of Whalen did not prospectively prevent her from emphasizing the elements of the Government's case that she considered weakest. Moreover, we see no reason to think that the jury's verdict would have been any different even if she had emphasized those points in the manner she says she would have preferred. Reversal on this point is not warranted.
FOOTNOTE
n1 In fact, later in the opinion, we made clear that Adams was a "tax case." 314 F. App'x at 652 (referring to another case as "also a tax case").

I am not sure exactly what the defendant's attorney hoped to gain strategically by classifying the Section 7206(1) charges as a perjury case.  I do think that counsel was properly entitled to ask that question and argue the point, though.  In my judgment, that is a fair characterization of the Section 7206(1) crime.  Although not admitting that point, the panel rejects the argument under the plain error standard because (i) defendant's counsel 's failed to press the point and (ii) the context, in the panel's mind, showed that error (if there were one) did not influence the jury's verdict.

Perhaps readers can address the issue of whether the defendant was prejudiced by the failure to characterize the case as a perjury case.

Conviction in Foreign Account Plus Case (1/16/11)

There is a recent opinion in United States v. Simon (ND IN No. 3:10-cr-00056) \about which I previously blogger here. The new opinion is here. The new opinion, dated 1/1/11, is short and cryptic -- assuming some familiarity with earlier rulings in the case to understanding the judge's exasperation. The new opinion rejects the defendant's post trial motion for judgment of acquittal and alternative motion for new trial. The Court's opening paragraph under Background, gives the reader an indication of how the court will rule:

A 23-count indictment was handed down in April 2010, charging Mr. Simon with filing false federal income tax returns (Counts 1-4), failing to file foreign bank account reports (FBARs)(Counts 5-8), mail fraud (Counts 9-19), and fraud involving federal financial aid (Counts 20-23). More than seventeen pretrial motions required four hearings, numerous oral rulings [Doc. Nos. 25, 33, 71 and 109], and three detailed written opinions and orders [Doc. Nos. 62, 74 and 100]. Trial began on November 2, 2010. Evidentiary objections were the rule, rather than the exception, during trial, and the court frequently had to restate earlier evidentiary rulings. Mr. Simon seemed to change his theory of defense mid-trial, requiring additional briefing.

The Government dismissed Count 5, and, after trial the jury convicted on all remaining counts except Counts 13, 14 and 16 (mail fraud counts). Not a good day for Mr. Simon.

The issue I previously blogged was the Court's rejection of the claim that the IRS's extension of time for signatories on foreign accounts to file delinquent FBARs by 6/30/11 operated to preclude prosecution for the original delinquencies which, if they occurred with the required willfulness, were criminal acts at the time. In this new opinion, the Court begins its Discussion as follows:

Mr. Simon's renewed motion for judgment of acquittal is premised on arguments previously raised, considered, and rejected.

And, the Court concluded its Discussion with the following:

The court carefully considered Mr. Simon's arguments, has given detailed reasons for rejecting them, and believes that it properly ruled on each of the issues raised. Mr. Simon hasn't presented any authority or identified any error or circumstance that would warrant reconsideration at this stage of the proceedings or a new trial.

Not a good opening or closing discussion for the defendant.

There is not a whole lot in between that I think particularly worthy of note for readers of this blog. The opinion is short so it might be worth scanning by those whose interest is piqued.  I mention the case only because the underlying scheme did involve foreign accounts and foreign entity intrigues and there were FBAR count convictions. The Government has another notch under its belt in this area. But, it is clear from this and the prior opinion that this was not a garden variety foreign account case. The facts underlying the federal financial aid fraud counts makes this case quite an outlier to the cases I have encountered involving foreign accounts. I just wonder whether, if facts had not involved federal financial aid fraud, the dispute between Mr. Simon and the IRS / DOJ Tax (which also had some other predicate intrigues) could not have been resolved short of criminal prosecution.

Another Set Back for the Remaining Daugerdas Defendants - Economic Substance is Sufficiently Malleable to Establish a Line a Citizen Could Know (12/29/10)

Judge Pauley, USDC SDNY, served up a loss for the Daugerdas defendants just before Christmas. The opinion in United States v. Daugerdas, 759 F. Supp. 2d 461 (SD NY 2010) is here. The defendants made the now standard argument in complex tax shelters, particularly those based on extrapolations of Helmer, that, given Helmer, the law was not sufficiently clear to establish a legal duty that the defendants could know. I have previously blogged on facets of this issue before. See here.

As occurs frequently, Judge Pauley conflates two distinct -- albeit related -- concepts. The threshold issue is whether the duty was knowable -- a legal inquiry that is separate from what the defendants might have known or intended. James and its progeny establish that the duty must be sufficiently clear that a citizen (not necessarily the actual defendant in the dock) could know the duty. Only if that question is answered in the affirmative is the Cheek issue reached -- did the defendant know the knowable legal duty? That is an issue for the jury to determine after trial so long as the prosecutors have enough evidence to survive a motion for acquittal.

Without citing James or its progeny, Judge Pauley does address the James threshold issue. Bottom line, he holds that the economic interest concept as a bar to claimed benefits and as interpreted by the courts (it is a judicial doctrine, after all) was sufficiently certain to give the hypothetical citizen a line that could be crossed (aka was knowable), leaving the issue for trial of whether these particular defendants knew the line they allegedly crossed. Could have known is not sufficient for a criminal conviction. The Government will have to prove that the did know. But that is another chapter.

False Statements (18 USC 1001) and Knowledge of Criminality (12/28/10)

18 USC Section 1001(a) criminalizes false statements to executive, legislative and judicial and is one of the chief weapons in the Government's arsenal for fighting tax crimes. 18 USC § 1001 requires, inter alia, that the false statement be made "knowingly and willfully." Willfully is a word of many nuances. Certainly, in the Title 26 tax crimes context, willfully means at a minimum knowing that the conduct is illegal. So, the question is which nuance applies to § 1001? Does the speaker commit the crime by making a knowingly false statement to a federal agent or must the speaker also know that making a knowingly false statement to a federal agent is a crime? The CTM says cryptically on this issue: “As used in Section 1001, the term "willful" simply means that the defendant did the forbidden act (e.g., made a false, fictitious, or fraudulent statement) deliberately and with knowledge.” CTM 24.08 (2008). With knowledge of what – the falsity or the falsity and its criminality? I think the CTM fairly read intends the former rather than the latter.

In a recent case (United States v. Moore, 612 F.3d 698 (D.C. Cir. 2010)), Judge Kavanaugh in a concurring opinion focused on this issue although siding with the majority because the defendant had not properly raised the issue at trial. The facts are that, incident to a drug investigation, the USPS intercepted a drug package addressed to "Karen White" and then, after substituting white powder for the drug, had a USPS employee deliver it to the address. At the address, the USPS employee delivered the package to the defendant, a male, upon his representation that he was Karen White's boyfriend and upon his signing the receipt with a false name. The defendant was thereafter first charged with drug crimes and the jury hung. He was tried a second time for the same charges but with a false statement charge added for his conduct in accepting the package. On the second trial, the jury hung again on the drug charges but convicted on the false statement charge. On appeal, Moore urged that the falsity was not "materially false" (another element in Section 1001). The panel unanimously handily rejected that argument. Speaking to the substantive issue of whether "knowingly and willfully" requires knowledge of criminality, Judge Kavanagh echoed the concerns of Judge Kozinski of the Ninth Circuit in dealing with the somewhat amorphous crime of the defraud conspiracy (the Klein conspiracy in tax context) and that is not surprising because, as Judge Kavanaugh cites, Judge Kozinski has addressed this concern in the context of 18 USC § 1001. I quote (pp. 703-704) (parallel citations omitted):

Proper application of statutory mens rea requirements and background mens rea principles can mitigate the risk of abuse and unfair lack of notice in prosecutions under § 1001 and other regulatory statutes. In § 1001 cases, that means proof that the defendant knew that making the false statement would be a crime. To be sure, "ignorance of law is no defense" is a hoary maxim. But it does not automatically apply to today's phalanx of federal regulatory crimes. See WAYNE R. LAFAVE, CRIMINAL LAW § 5.6, at 298-311 (5th ed.2010). For some regulatory offenses -- particularly statutes like § 1001 that proscribe only "willful" conduct -- the Supreme Court has recognized an ignorance-of-law or mistake-of-law defense, or has required affirmative proof of the defendant's knowledge that his or her conduct was unlawful. See Bryan v. United States, 524 U.S. 184 (1998); Ratzlaf v. United States, 510 U.S. 135, 141-49 (1994); Cheek v. United States, 498 U.S. 192, 199-201 (1991); Lambert v. California, 355 U.S. 225, 229-30 (1957); cf. Liparota v. United States, 471 U.S. 419 (1985); Dan M. Kahan, Ignorance of Law Is an Excuse -- But Only for the Virtuous, 96 MICH. L. REV. 127, 150 (1997) (noting that"courts permit mistake of law as a defense [] selectively across malum prohibitum crimes"). For criminal statutes prohibiting "willful" violators, those cases together require proof that the defendant was aware that the conduct was unlawful.

Rumors that Offshore Bank Inquiry Expands to Other Swiss Banks and even to Wall Street

Lynnley Browning of The New York Times today here passes on rumors -- presumably from a reliable unnamed source -- that

1. "federal authorities are looking at Wall Street banks that provide banking services to the regional companies, known as cantonal banks."

2. "the Wall Street banks might have been used by the regional banks to pool client money so that individual clients could not be identified by the United States authorities." The article does caution that "There is no indication that the Wall Street banks, which the two people declined to identify, have knowingly engaged in wrongdoing."

3. "The new investigation centers on Basler Kantonalbank, one of the larger regional companies, but includes other cantonal banks as well, the people briefed on the investigation said, declining to identify them." Readers will recall that Renzo Gadola worked with (not for, perhaps) Basler Kantonalbank. I blogged previously on his original charge here and on his guilty plea just two days ago here.

Swiss Enabler for Offshore Accounts Pleads Guilty (12/23/10)

I reported last weekend on criminal charges against Renzo Gadola, a Swiss person, previously a UBS banker who served as an intermediary between U.S. depositors and at least one Swiss bank. The blog is here. The charges were presented by criminal information which often presages a plea agreement. The criminal information is here. Yesterday, Gadola pled guilty. The guilty plea and statement of facts are here and here. Just a few comments:

1. The guilty plea document itself is mostly standard fare. The plea is to the one conspiracy count charged in the criminal information. The parties' agreements as to the sentencing factors do strike me as unusual, so I will comment on them below.
2. The Statement of Facts appears to be a restatement, perhaps verbatim of most or all of the allegations in the criminal information. I summarized certain of the key allegations in my prior post.

The agreement does not give us the Base Offense Level or the tax loss which drives the Base Offense Level. The Base Offense Level, of course, is the starting point for Guidelines calculations. The agreement does, however, give information from which the starting point can be derived, so let's see what the agreement says. Paragraph 10 provides:

10 The United States and the defendant agree that, although not binding on the probation office or the Court, they will jointly recommend that the Court make the following findings and conclusions as to the sentence to be imposed:
   a. Adjusted Offense Level: 12 (U.S.S.G §§ 2Tl.l(b))(2), 2Tl.9)
   b. Abuse of Position of Trust or Use of Special Skill: 2 (U.S.S.G. §3B1.3)
   c. Total Offense Level: 14

The Guidelines and its earlier iterations require that the Base and Adjusted Offense Levels be determined for conspiracies either under first under § 2T1.9.  However, the § 2T1.1 calculation may apply if it (i) "most closely addresses the harm that would have resulted had the conspirators succeeded" in the Klein conspiracy and (ii) produces an Adjusted Offense Level in excess of 10. The agreement does not spell out exactly how the Adjusted Offense Level of 12 was reached, but it appears that number was likely reached by applying § 2T1.1 (a signal may be the reference to 2T1.1 in paragraph 10.a. of the Plea Agreement). So, focusing on § 2T1.1, an adjusted offense level of 12 would mean that the Base Offense Level was 10, because the use of foreign accounts would require a sophisticated means enhancement of 2 under § 2T1.1(b)(2). (Actually, that is not technically correct, for the Base Offense Level could have been less than 10 and § 2T1.1(b)(2) would increase the adjusted offense level to 12, but bear with me on the assumption that the Base Offense Level is 10.) Now, what is the tax loss under the tax table, § 2T4.1, that produces a level of 10? It is between $5,000 and $12,500. (If the Base Offense Level were less than that range, of course, so would the Base Offense Level be less than 10, but § 2T1.1(b)(2) would then kick up the Adjusted Offense Level to 12.) So, we can conclude that the tax loss assumed in the Adjusted Offense Level was $12,500 or less.

That number -- $12,500 -- is very low for the type of conspiracy alleged in the criminal information and repeated in the Statement of Facts. Even just considering the family mentioned in the conspiracy, an intended tax evasion of only $12,500 or less would hardly have justified the efforts alleged and admitted. Moreover, Gadola was doing it for other U.S. Swiss bank depositors and their achieved and intended tax evasion would far exceed that number and would -- at least should -- be considered as relevant conduct. So, what does this mean? It means that the prosecutors and Gadola's lawyer gerrymandered the Guideline's factors in order to produce a sentencing range that would induce Gadola to plead. At least that is how I read the tea leaves; others may read them differently, and if so I hope they will comment.

Of course, there is the standard disclaimer that the Probation Office and the Court are not bound by their agreements as to the Guideline factors.  (Plea Agreement paragraph 10.)

Now, looking at the agreed Total Offense Level of 14, the defendant will likely qualify for the acceptance of responsibility downward adjustment of 2 (3 only if above 16). (The prosecutors agreed to recommend the acceptance of responsibility adjustment in paragraph 6 of the Plea Agreement.) So the sentencing level for applying the Sentencing Table in Chapter 5, Part A contemplated by the Plea Agreement is 12 which is a Zone C range of 10-16 months, requiring some actual incarceration. The Government agreed to recommend sentencing at the low end of the range. (Plea Agreement paragraph 6.) But the parties have agreed that they may argue for variance (Plea Agreement paragraph 3), so, presuming that Gadola does not stub his toe in this process, his lawyer may be able to make serious variance arguments.  Still, one has to wonder whether courts will find the enablers are attractive for mercy as the depositors who they enabled.

Another Chapter Closes in the Tax Shelter Wars - Deutsche Bank Admits Crimes and Takes $553,633,153 Hit (11/22/10)

Yesterday, the USAO SDNY and Deutsche Bank ("DB") announced that had agreed to a nonprosecution agreement ("NPA") requiring, among other things, the following:

1. DB admits criminal wrongdoing.
2. A payment of $553,633,153, representing DB's total fees from its participation in tax shelter activity, the tax and interest the IRS was unable to collect from the taxpayers entering those shelters, and a civil penalty of over $149 million.
3. DB provided a detailed Statement of facts admitting its tax shelter shenanigans.
4. DB must implement and maintain an effective compliance and ethics program. Incident to this commitment, DB must install a government-appointed independent expert to oversee the program. The independent expert is Bart Schwartz of Guidepost Solutions.
5. The shelters involved, with the ubiquitous, sometimes tongue in cheek, acronyms included:
   a. BLIPS (involving KPMG)
   b. FLIP/OPIS (involving KPMG)
   c. Short Option Strategies (SOS) (involving Jenkens & Gilchrist (Daugerdas et al), KPMG,. E&Y and others.
   d. PICO and POPS (involving "various accounting firms and other entities)

Obviously, with this settlement and the predicate settlements with KPMG and Jenkens & Gilchrist the Government is signaling to those players and those tempted to play in these games with deep pockets and reputations that their pockets will be lighter and their reputations tarnished.

The documents related to the settlement are:
Nonprosecution Agreement (including Statement of Facts)
USAO SDNY Press Release
DB Press Release

Another Swiss Bank Enabler is Charged with Tax / Klein Conspiracy

On December 15, 2010, another Swiss Bank enabler, one Renzo Gadola, was charged with a tax / Klein conspiracy to defeat the lawful functioning of the IRS by assisting United States clients evade U.S. taxes through the use of Swiss banks. The U.S. Attorney Press Release (containing a link to the criminal information is here).

At all relevant times, Gadola was a citizen and resident of Switzerland and a registered investments advisor with the U.S. SEC. He was employed as a private banker by UBS from 1995 through August 2008. In February 2009, he began working as an independent investment adviser under the business name of RG Investment Partner AG. For the matters alleged in the indictment, he partnered with an unindicted co-conspirator names in the indictment under the pseudonym SWISS BANKER, who is alleged to have been executive director UBS's North American business until 2003 and then an investment advisor in Switzerland after that. Gadola and SWISS BANKER assisted U.S. clients in establishing and maintaining undeclared accounts (i.e., accounts not declared to the U.S. in the tax returns or FBARs). Gadola and SWISS BANKER had numerous U.S. clients and met frequently with some of these clients in the U.S.

Sentencing Case on Emphasis on Restitution Rather than Incarceration in Financial Crimes Cases (11/10/10)

In United States v. Ciccolini, 2010 U.S. Dist. LEXIS 120292 (N.D. OH 11/11/10), here, a sentencing opinion, the defendant pled guilty to two felony counts -- 1 each of structuring transactions and tax perjury (Section 7206(1)). The defendant, a 68 year old ordained priest, embezzled substantial monies from a residential drug and rehabilitation center. The following are some key points of the decision:

1. The counts were grouped under S.G. 3D1.4. The structuring count produced that highest offense level (22), so 4 levels were added for the tax count, producing an offense level of 26, The offense level of 26 produced a Guidelines sentencing range of 63 - 87 months incarceration.

2. In reaching the offense level of 26, the court rejected an acceptance of responsibility downward adjustment. Although Ciccolini pled guilty, he equivocated about his guilt and some elements (amounts involved, etc.).

3. The Court then moved to a consideration which it labeled "3553(a) Factors and Payment of Restitution." Under Booker and progeny, the Guidelines calculation of a sentencing range is only advisory. The court noted that the defendant had repaid the charity the $1,288,263 he admitted embezzling (although the court noted earlier in the opinion that he had embezzled substantially more) and that he had made substantial payments toward the tax liability. Nevertheless, the Court moved to a philosophical discussion of the interplay between sentencing and restitution in financial crime cases, reasoning:

IRS Considering Another Round of Voluntary Disclosure for Offshore Accounts

The IRS first round of voluntary disclosures for offshore financial accounts ended October 15, 2009  The IRS touts the results of that round as very successful.  Since the end of the program, additional taxpayers have made voluntary disclosures, basically under the same process but without any assurance of what the penalty regime would be.  Practitioners have been concerned that, without some certainty as to the penalty costs, many taxpayers with undisclosed foreign financial accounts will stay underground. 

According to this WSJ Article, Commissioner Shulman has indicated that the IRS is "seriously considering another special Voluntary Disclosure Program.  As expected, he said that the penalties would likely increase over the penalties available under the first program ending October 15, 2009.

There was no indication of what the treatment might be for those making a voluntary disclosure after October 15, 2009.  It seems to me that those coming in before the new program is announced should get a break as well -- perhaps the mid point between the penalties available under the first program and those available under the second.

Another UBS Related Defendant is Charged for Offshore Accounts (12/9/10)

Caveat:  The Charges in the indictment discussed below was dismissed in 2012.  See my blog on the dismissal, Family Member Enabler Charge Dismissed re Offshore Accounts (5/24/12), here.

The Government has charged yet another UBS related person. The story in a nutshell is that Samuel Phineas Upham, who, I am told, is the son of Sybil Nancy Upham, previously indicted (although named in this' indictment as "Family Member A"), assisted Family Member A with respect to her accounts, held through entities, by actively engaging in the cover up of those accounts and the proceeds from the accounts, even after the hammer had fallen on UBS. I use Mr. Upham in this blog entry to distinguish him from his mother.  His mother's indictment is here.  Further, Mr. Upham assisted Family Member A in the preparation of false returns. The charges are: (1) the ubiquitous Klein conspiracy count (Count One) and (2) aiding and assisting, Section 7206(2) for three years (2005 - 2007) (Counts Two through Four). The indictment is here.

Just a few points that I noted in reviewing the indictment (some points are redundant in part to the summary in the above paragraph, and I note that these are just allegations in the complaint and have not yet been proved):

1. The co-conspirators named in Count One are (i) Family Member A and (ii) Swiss Financial Adviser A. Swiss Financial Adviser A's background and general role in the conspiracy are described in paragraph 6.b. of the indictment. My guess is that Swiss Financial Adviser A will not come into the U.S. voluntarily anytime soon.

2. The Conspiracy Count allegations elaborate efforts to cover up, even after the hammer had fallen on UBS.

3. Sham entities were used -- a Lichtenstein Foundation and a Hong Kong corporation.

Offshore Charges / Convictions Spreadsheet

I offer readers a spreadsheet (see links at right for the current version) where I have attempted to compile certain data regarding the Government's charges and convictions in the offshore account initiative.  I caveat the use of this spreadsheet in that the information is incomplete and perhaps even wrong in some of the particulars.  I request that my readers to email me at jack@tjtaxlaw.com to advise any additional information needed to make it more complete and accurate.  As I am advised or have my own updates, I will post new versions.  Also, I am adding some statistical analyses periodically as I refine the spreadsheet.

I recommend that users download the file rather than just open it from the web.  Downloading it and using it on your local computer is the best way to use all the features (particularly the sorting and database functions in the excel table on page 1 of the file and reviewing the statistics on page 2 of the file).

Thanks in advance for those of you who help me make this spreadsheet more accurate and complete.

Note to Readers - Back in Focus on this Blog

I apologize to my readers for my absence from new postings on this blog.  I have been distracted by a vacation to Europe (Tuscany and then Sicily), work and teaching, and a bout of the flu.

For today, I offer something that is a bit off topic but still, I think, notable.  I post Judge Allegra's decision in Principal Life Insurance Co. v. United States, 2010 U.S. Claims LEXIS 856 (2010).  I teach a class in Tax Procedure, and I think this opinion masterfully treats some seminal concepts in the area of Tax Procedure.  Hence I offer it for the readers consideration if they have an interest in this area of the law.

Now, I am off to San Francisco for the Annual ABA Criminal Tax Fraud Conference.  I hope that I will be able to squeeze in some postings at least by Saturday.

Another Foreign Bank -- in Israel -- Gets In Line

Bank Leumi, Israel's largest bank, "is asking its clients to declare that they are not U.S. persons or reveal their accounts to U.S. authorities."  See Reuters report here and Tax Justice Network blog here.  The report says taht other foreign banks are sending similar letters.  Scott Michel, a prominent U.S. practitioner in this area, is quoted as saying:  "Most [offshore] banks will have to do this sort of thing."