UBS Client To Admit Failure To Report Swiss Account To IRS
By David Voreacos and Carlyn Kolker
Bloomberg
August 15, 2009
A California client of UBS AG agreed to plead guilty to a charge of failing to file a tax report for an offshore bank account holding more than $1 million.
John McCarthy opened a Swiss account in 2003 in the name of COGS Enterprises Ltd., a Hong Kong entity, and failed to file a Foreign Bank and Financial Accounts report, or FBAR, according to a charge filed yesterday in federal court in Los Angeles. McCarthy signed a plea agreement and will make an initial appearance Sept. 14, prosecutors said.
Three other UBS clients have pleaded guilty since the bank gave 250 customer names to the Internal Revenue Service under a Feb. 18 agreement to avoid prosecution for helping Americans evade taxes. UBS, the largest Swiss bank by assets, has settled a U.S. lawsuit seeking the names of Americans suspected of evading taxes through 52,000 secret Swiss accounts.
“The case against Mr. McCarthy is the latest victory in the Justice Department’s crackdown on offshore tax evasion,” John DiCicco, acting assistant attorney general for the Justice Department’s Tax Division, said in a statement.
Steven Toscher, McCarthy’s lawyer, didn’t respond to a message seeking comment yesterday.
While banking with UBS in the Cayman Islands, McCarthy’s bankers told him, “a lot of United States’ clients don’t report their income and just take it off the top,” according to his plea agreement.
Swiss Lawyers
McCarthy skimmed money from his U.S. business into a domestic bank account in 2003, and with the help of UBS representatives and his Swiss lawyers, transferred that money into his COGS account in Switzerland, according to the plea agreement.
McCarthy, a resident of Malibu, California, met with UBS bankers and his Swiss lawyers over the next five years to discuss UBS accounts, the agreement said. His Swiss lawyer advised him to set up a Liechtenstein foundation or a Panamanian or Hong Kong corporation to “create an extra layer of privacy” and help hide his identity, according to the plea agreement.
As recently as last year, former UBS employees, together with McCarthy’s Swiss lawyer, helped McCarthy move his funds from UBS to another, unnamed Swiss bank in an effort to continue to conceal his accounts from U.S. authorities, according to the plea agreement.
As part of the plea, McCarthy agreed to cooperate with prosecutors and will pay a penalty totaling 50 percent of the highest amount of his COGS account since 2003, prosecutors said in yesterday’s statement.
Court papers filed yesterday didn’t indicate the nature of McCarthy’s business.
On Aug. 12, the Justice Department announced it had reached an agreement with UBS in a dispute over the disclosure of 52,000 secret Swiss accounts. Details of the settlement haven’t been made public.
The case is U.S. v. John McCarthy, 09-00784, U.S. District Court, Central District of California (Los Angeles).
August 17th, 2009 at 07:23
“U.S. Witch Hunt Backfires”
That is what the headlines will read in the NY Times 6 mos from now when the rich Europeans run with their money out of the US banks because the European countries will began to demand the names of their citizens that have accounts here. They can already smell those tax dollars. As soon as we finish with the Swiss, the EU vultures with their 60-70% tax claws will be after their “tax evaders” like we were after ours”.
August 17th, 2009 at 11:18
More US wealthy opt to surrender their citizenship
http://www.wealth-bulletin.com/rich-life/rich-monitor/content/1054959505/