Source: http://federaltaxcrimes.blogspot.ae/2014/11/
Timestamp: 2017-06-29 07:22:19
Document Index: 91408743

Matched Legal Cases: ['§ 5326', '§ 1010', '§ 5326', '§ 1010', 'art 1', 'art 2']

Credit Suisse AG was sentenced today for conspiracy to aid and assist U.S. taxpayers in filing false income tax returns and other documents with the Internal Revenue Service (IRS). Credit Suisse pleaded guilty to conspiracy on May 19. * * * * At sentencing in the U.S. District Court for the Eastern District of Virginia, U.S. District Chief Judge Rebecca Beach Smith entered judgment and conviction and a restitution order requiring Credit Suisse to pay approximately $1.8 billion dollars to the United States by Nov. 28, per the plea agreement. Credit Suisse will pay the Justice Department’s Crime Victims Fund, through the District Court Clerk’s Office for the Eastern District of Virginia, a fine of approximately $1.136 billion and will pay the IRS $666.5 million in restitution. The parties agreed that Credit Suisse cannot challenge the restitution amount, which can also provide a basis for an IRS civil tax assessment.
* * * * The plea agreement, along with agreements made with state and federal agencies, provides that Credit Suisse will pay a total of approximately $2.6 billion—approximately $1.8 billion in a criminal fine and restitution, $100 million to the Federal Reserve and $715 million to the New York State Department of Financial Services. Earlier this year, Credit Suisse negotiated cease and desist orders with the Federal Reserve and the state of New York requiring the bank to take certain remedial steps to ensure its compliance with U.S. law in its ongoing operations in addition to the civil penalties. Credit Suisse also paid approximately $196 million in disgorgement, interest and penalties to the Securities and Exchange Commission (SEC) for violating the federal securities laws by providing cross-border brokerage and investment advisory services to U.S. clients without first registering with the SEC. Together, these actions by U.S. law enforcement and state and federal partners appropriately punish Credit Suisse for its past behavior in these matters.
According to the statement of facts filed with the plea agreement, Credit Suisse employed a variety of means to assist U.S. clients in concealing their undeclared accounts, including by: Assisting clients in using sham entities to hide undeclared accounts;
As part of the plea agreement, Credit Suisse further agreed to make a complete disclosure of its cross-border activities, cooperate in treaty requests for account information, provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed and to close accounts of account holders who fail to come into compliance with U.S. reporting obligations. Credit Suisse has also agreed to implement programs to ensure its compliance with U.S. laws, including its reporting obligations under the Foreign Account Tax Compliance Act and relevant tax treaties, in all its current and future dealings with U.S. customers. On December 5, two former employees of a Credit Suisse subsidiary will be sentenced for their involvement in assisting U.S. customers to evade their taxes. On March 12, Andreas Bachmann, a former banker at Credit Suisse Fides pleaded guilty to a superseding indictment in connection with his work as a banker at Credit Suisse Fides. On April 30, Josef Dörig, a former Credit Suisse Fides employee and owner/operator of a trust company, pleaded guilty to conspiring to defraud the IRS in connection with his role managing offshore entities used by U.S. taxpayers to conceal their accounts at Credit Suisse. The pleas were accepted by U.S. District Judge Gerald Bruce Lee in the Eastern District of Virginia. Bachmann and Dörig each face a statutory maximum sentence of five years in prison.
Canale conspired with others – including Michael Canale, his brother, Beda Singenberger, a Swiss citizen who ran a financial advisory firm, and Hans Thomann, a Swiss citizen who served as a client adviser at UBS and certain Swiss asset management firms – to establish and maintain undeclared bank accounts in Switzerland and to hide those accounts from the IRS. Canale used a sham entity to conceal from the IRS his ownership of the undeclared accounts and deliberately failed to report the accounts and the income generated in the accounts to the IRS. In approximately 2000, a relative of Canale’s who held an undeclared bank account in Switzerland died and left a substantial portion of the assets in the undeclared account to Canale and Michael Canale. Canale and his brother met with Thomann and Singenberger and determined they would continue to maintain the assets in the undeclared account for the benefit of Canale and his brother. Thereafter, in approximately 2005, Canale, with Singenberger’s assistance, opened an undeclared account at the Swiss bank Wegelin. The account was opened in the name of a sham foundation formed under the laws of Lichtenstein to conceal Canale’s ownership. As of Dec. 31, 2009, the account held assets valued at approximately $789,000. For each of the calendar years from 2007 through 2010, Canale willfully failed to report on his tax returns his interest in the undeclared accounts and the income generated in those accounts. For each of these years, Canale also failed to file a Report of Foreign Bank and Financial Accounts (FBAR) with the IRS, as the law required him to do.
Between 1995 and 2012, DUNKI helped U.S. taxpayers evade taxes and hide hundreds of millions of dollars in undeclared accounts at Swiss Bank No. 1. DUNKI provided this advice and assistance to U.S. taxpayers in his capacity as a client advisor at Swiss Bank No. 1, where DUNKI was employed until early 2012. One of DUNKI's co-conspirators was Edgar Paltzer, an attorney based in Zurich, Switzerland, who previously pled guilty in the Southern District of New York for his role in assisting U.S. taxpayers and others to evade taxes. In 1999, DUNKI, Paltzer, and an attorney from Santa Barbara, California ("Attorney 1") began working together in the management of undeclared accounts at Swiss Bank No. 1 for a number of U.S. taxpayers (collectively, the "Dunki/Attorney 1 Clients"). The undeclared assets of the Dunki/Attorney 1 Clients were maintained in accounts held in the names of sham foreign foundations, rather than in the names of the clients individually, to help the clients conceal their ownership of these undeclared accounts from the IRS. Initially, the sham foundations that held the accounts were organized under the laws of Liechtenstein. In December 2008, however, Liechtenstein and the United States signed a Tax Information Exchange Treaty ("TIEA"), under which Liechtenstein agreed to provide the United States with access to certain bank and other information needed to enforce U.S. tax laws. As a result of the TIEA between Liechtenstein and the United States, and to prevent disclosure to the IRS of the undeclared accounts maintained by the Dunki/Attorney 1 Clients, DUNKI and others transferred the undeclared assets of the Dunki/Attorney 1 Clients to new accounts at Swiss Bank No. 1, held by new sham foundations organized under the laws of Panama. Moreover, beginning in August 2009, in response to the investigation of another Swiss bank, UBS AG ("UBS"), for helping U.S. taxpayers maintain undeclared accounts in Switzerland, DUNKI and others helped to further conceal the undeclared accounts of the Dunki/Attorney 1 Clients by using assets in those accounts to purchase gold and other precious metals. The gold and precious metals, which amounted to tens of millions of dollars, were then transferred to escrow accounts opened at Swiss Bank No. 1 and hidden, along with substantial sums of cash, in a vault in Switzerland for the benefit of the Dunki/Attorney 1 Clients. In addition to opening, maintaining, and managing undeclared accounts at Swiss Bank No. 1 for the Dunki/Attorney 1 Clients, DUNKI opened, maintained, and managed undeclared accounts at Swiss Bank No. 1 for other U.S. taxpayers. For instance, between 2000 and 2012, DUNKI helped one U.S. taxpayer hide nearly $300 million in assets at Swiss Bank No. 1, in undeclared accounts held in the names of sham Liberian corporations. Further, between 1995 and 2008, DUNKI helped another U.S. taxpayer maintain approximately $70 million in an undeclared account at Swiss Bank No. 1. When DUNKI met with this taxpayer in the United States, the account statements that DUNKI brought with him were deliberately cut off at the top, to omit the account number and the name of Swiss Bank No. 1, because -- as DUNKI himself acknowledged to the taxpayer -- DUNKI had to be careful not to leave a trace when going through U.S. customs. DUNKI also helped U.S. taxpayers bring funds back to the United States in ways designed to ensure that U.S. authorities would not discover the existence of the taxpayers' undeclared accounts at Swiss Bank No. 1. For example, on at least one occasion, DUNKI met a U.S. taxpayer in the United States and provided the taxpayer with an envelope containing approximately $10,000 in cash, which represented a cash withdrawal from the taxpayer's undeclared account at Swiss Bank No. 1. On other occasions, DUNKI helped send money from a U.S. taxpayer's undeclared account at Swiss Bank No. 1 to another account in Geneva, Switzerland and, from there, to a diamond dealer in Manhattan. Once the money was received by the diamond dealer, the U.S. taxpayer would pick it up and give the diamond dealer a fraction of the money as a commission. * * * DUNKI, 66, a Swiss citizen, resides in Switzerland and has not been arrested. DUNKI is charged with one count of conspiracy to defraud the IRS, which carries a maximum sentence of five years in prison. JAT Comments: Read more »
Regarding so-called quiet disclosures -- when taxpayers file amended returns and delinquent foreign bank account reports without coming in through the offshore voluntary disclosure program or the streamlined program -- Best [senior adviser to the deputy commissioner (international), IRS Large Business and International Division] said, "The IRS recognizes that a quiet filing is a choice that the taxpayer has." But Best added, "We would prefer that taxpayers come in through one of our programs so that we have tracking mechanisms, information gathering mechanisms set up, but ultimately it's up to the taxpayer."
Civil Penalties - Substantial Understatement,
Now, Count 1 in the indictment charges that the defendant knowingly and willfully conspired to defraud the Internal Revenue Service of the U.S. Department of Treasury. The indictment charges that it was an object of the conspiracy that the defendant and other alleged co-conspirators acted to increase the profits of UBS by providing unlicensed and unregistered banking services and investment advice in the United States and by other acts intended to conceal from the Internal Revenue Service the identities of the bank's U.S. clients who willfully evaded their income tax obligations by, among other things, filing false income tax returns and failing to disclose the existence of their UBS accounts to the Internal Revenue Service. Please note that the defendant is not charged with a substantive violation of the tax laws. Now, it is a federal crime for anyone to conspire or agree with someone else to defraud the United States or any of its agencies. To defraud the United States means to cheat the Government out of property or money or to interfere with any of its lawful Governmental functions by deceit, craft or trickery. A conspiracy is an agreement by two or more persons to commit an unlawful act. In other words, it is a kind of partnership for criminal purposes. Every member of the conspiracy becomes the agent or partner of every other member. The Government does not have to prove that all the people named in the indictment were members of the plan or that those who were members made any kind of formal agreement. Read more »
Per the Wikipedia entry on “Lies, damned lies and statistics,” here Mark Twain popularized the saying which he attributed it to Benjamin Disreali, 19th Century British Prime Minster, but there is no evidence that Disreali actually said it. There is, as usual, a more nuanced aphorism: “It is easy to lie with statistics, but easier to lie without them,” attributed to Fred Mosteller, one of the most eminent statisticians of the 20th Century. I doubt that the statistics presented by Mr. Rothenberg lie in any material way either in the data, the data set, and the implications desired from the presentation of the statistics. But, that may not always be the case with statistics from DOJ Tax. (For example, I have questioned some of the criminal statistics and, upon inquiry to DOJ Tax to explain them, received no response; that's another story, however.)
Rothenberg discussed the division's 95 percent litigation and 96 percent appeals win rate, which included a 63 percent success rate in appeals brought by the government. He added that if the government decides to appeal a taxpayer victory, practitioners should advise their clients of the odds of success. Posted by
It is further part of Mr. Weil's defense that this misconduct was in direct violation of UBS' policies and rules, including the U.S. Country Papers, and was done without Mr. Weil's knowledge or approval. This misconduct was not reported to Mr. Weil and was concealed by those who committed the misconduct. It is further a part of Mr. Weil's defense that Mr. Weil was also advised by lawyers for UBS that the existence of the U.S. cross-border business, including the non-W-9 business, was agreed to by the IRS and permitted by the QI Agreement and U.S. Tax Law. Lawyers and subordinates also advised Mr. Weil that the U.S. cross-border business, including the non-W-9 business, was operated in a way that was compliant with the QI Agreement and U.S. Tax Law. Now, evidence that the defendant in good faith followed the advice of counsel would be inconsistent with the element of willfulness. Willfulness has not been proved if the defendant, before acting, made a full and complete good faith report of all material facts to an attorney he considered competent, received the attorney's advice as to the specific course of conduct that was followed and reasonably relied upon that advice in good faith.
The criminal justice system in the United States today bears little relationship to what the Founding Fathers contemplated, what the movies and television portray, or what the average American believes. To the Founding Fathers, the critical element in the system was the jury trial, which served not only as a truth-seeking mechanism and a means of achieving fairness, but also as a shield against tyranny. As Thomas Jefferson famously said, “I consider [trial by jury] as the only anchor ever yet imagined by man, by which a government can be held to the principles of its constitution.” * * * * In 2013, while 8 percent of all federal criminal charges were dismissed (either because of a mistake in fact or law or because the defendant had decided to cooperate), more than 97 percent of the remainder were resolved through plea bargains, and fewer than 3 percent went to trial. The plea bargains largely determined the sentences imposed.' * * * * The practice of plea bargaining never really took hold in most other countries, where it was viewed as a kind of “devil’s pact” that allowed guilty defendants to avoid the full force of the law. But in the United States it became commonplace. And while the Supreme Court initially expressed reservations about the system of plea bargaining, eventually the Court came to approve of it, as an exercise in contractual negotiation between independent agents (the prosecutor and the defense counsel) that was helpful in making the system work. Similarly, academics, though somewhat bothered by the reduced role of judges, came to approve of plea bargaining as a system somewhat akin to a regulatory regime. * * * *
In addition to mandatory minimums, Congress in 1984 introduced—with bipartisan support—a regime of mandatory sentencing guidelines designed to avoid “irrational” sentencing disparities. Since these guidelines were not as draconian as the mandatory minimum sentences, and since they left judges with some limited discretion, it was not perceived at first how, perhaps even more than mandatory minimums, such a guidelines regime (which was enacted in many states as well) transferred power over sentencing away from judges and into the hands of prosecutors. One thing that did become quickly apparent, however, was that these guidelines, along with mandatory minimums, were causing the virtual extinction of jury trials in federal criminal cases. Thus, whereas in 1980, 19 percent of all federal defendants went to trial, by 2000 the number had decreased to less than 6 percent and by 2010 to less than 3 percent, where it has remained ever since. The reason for this is that the guidelines, like the mandatory minimums, provide prosecutors with weapons to bludgeon defendants into effectively coerced plea bargains. In the majority of criminal cases, a defense lawyer only meets her client when or shortly after the client is arrested, so that, at the outset, she is at a considerable informational disadvantage to the prosecutor. If, as is very often the case (despite the constitutional prohibition of “excessive bail”), bail is set so high that the client is detained, the defense lawyer has only modest opportunities, within the limited visiting hours and other arduous restrictions imposed by most jails, to interview her client and find out his version of the facts. Read more »
The federal jury in Fort Lauderdale, Florida, reached its verdict after deliberating about 90 minutes yesterday. Weil, 54, was indicted in 2008 on a charge of conspiring to help as many as 17,000 U.S. taxpayers hide $20 billion from the IRS. Weil was arrested last year in Bologna, Italy, and waived extradition. Weil, who didn’t testify, had faced five years in prison. * * * * “The verdict shows you the difficulty of going after senior management who can at times blame the bank’s customers and lower-level employees for the bank’s mistakes,” Nathan Hochman, a former assistant attorney general who oversaw the Justice Department’s tax division, said in a phone interview. “It’s difficult to prove a historical case beyond a reasonable doubt when the government heavily relies on witnesses who have received very favorable treatment.” * * * * Prosecutors argued that Weil knew that UBS used sham corporate structures to help U.S. clients hide their identities from the IRS, and its bankers used cloak-and-dagger methods to deliver them cash and account statements. “This conspiracy lasted for years and years, all done to conceal this business and hide these clients,” Mark Daly, a Justice Department trial attorney, said yesterday in summarizing a case that began Oct. 14. “It’s a pyramid. At the top, you’ve got the senior executives who have the power to either grow or shut down this business.” * * * * Menchel [Weil's lawyer] argued in his summation that prosecutors failed to prove that Weil was part of a single conspiracy involving taxpayers. He also said that Weil was unaware of the activities of a group of bankers below him. Read more »
GEOGRAPHIC TARGETING ORDER The Director, Financial Crimes Enforcement Network (FinCEN), U.S. Department of the Treasury, is authorized to issue an order that imposes certain additional reporting and recordkeeping requirements on one or more domestic financial institutions or nonfinancial trades or businesses in a geographic area to carry out the purposes of and prevent evasions of the Bank Secrecy Act. See 31 U.S.C. § 5326(a); 31 C.F.R. § 1010.370; Treasury Order 180-01, IT IS HEREBY FOUND that reasonable grounds exist tor concluding that the imposition of the additional reeordkeeping and reporting requirements described in this Geographic Targeting Order ("Order") upon the Covered Businesses described below is necessary to carry out the purposes of and prevent evasions of the Bank Secrecy Act. See 31 U.S.C. § 5326(a); 31 C.F.R. § 1010.370. THEREFORE, IT IS ORDERED THAT: Part 1 - Definitions. ** * * 1.2 ''Covered Business" means the following trades and businesses located in the Covered Geographic Area, including their agents, subsidiaries, and franchisees:(a) garment and textile stores;(b) transportation companies;(c) travel agencies;(d) perfume stores;(e) electronic stores (including those that only sell cell phones):(I) shoe stores;(g) lingerie stores;(h) flower/silk flower stores;(i) beauty supply stores; and(j) stores bearing "Import" or "Export" in its name. 1.3 "Covered Geographic Area" means the area in the City of Los Angeles, California, south of East 8th Street, north of East 16th Street, and between Santee Street and South Central Avenue. 1.4 "Currency" shall have the same meaning as provided in 31 C.F.R. § I 0 I 0.330(c)(I). * * * * 1.10 "Order Period" means the 180-day period beginning, October 9, 2014 and ending the close of business on April 6, 2015. Part 2- Special Reporting, Recordkeeping, nnd Customer Identitification Obligations of the Covered Businesses. 2.1 A. Covered Business which, in the course of a trade or business in which such business is engaged, receives currency in excess of $3,000 in 1 Transaction (or 2 or more related Transactions in a 24-hour period) shall make a report of each such Transaction or Transactions by filing a FinCEN Form 8300. Each such FinCEN Form 8300 must be:(a) completed in accordance with the terms of this Order and the FinCEN Form 8300 instructions (when such terms conflict, the terms of this Order shall apply): and(b) e-filed through the Bank Secrecy Act E-filing system. * * * * 2.3 It shall be unlawful for the Covered Business to process, accept, or receive funds for, or otherwise participate in a Transaction that is the subject of this Order unless the Customer conducting the Transaction provides an officer, director, employee, or agent of the Covered Business with identification in one of the following forms:(a) a driver's license or an identification card issued by a State of the United States, the District of Columbia, or a Territory or Possession of the United States;(b) a military or military dependent identification card;(c) a non-resident alien registration card:(d) a foreign national identity card:(e) a passport n2/ or(f) a combination of other unexpired documents, with an individual's name and address, and a photograph. n2 Because a passport does not contain an individual's permanent address, when a Customer provides a passport as form of identification, a Covered Business would need to review additional identification that specifies the Customer's address. Read more »
31 USC 5331(a),
Prosecutors claimed Baravarian helped clients who opened accounts in Israel, didn’t declare them to the IRS and accessed money through loans from the Los Angeles branch. Six taxpayers testified as government witnesses, including three who pleaded guilty and two who avoided prosecution by entering an IRS disclosure program. On cross-examination, all six admitted they didn’t conspire with Baravarian to cheat on their taxes, defense attorney Marc S. Harris said. “These taxpayers did what they did on their own, and they didn’t pay taxes on their accounts,” Harris said. “Dr. Baravarian had nothing to do with that. The linchpin of the case was that the loans were fake, and they were a mechanism to access that money. Dr. Baravarian helped people get legitimate loans for legitimate purposes.”
Addressing the concern that the IRS may not accept non-willful certification for taxpayers transitioning from the OVDP to the streamlined program, Price [Daniel Price, supervisory attorney with IRS Chief Counsel] said the Service is concurring with non-willful certification in most of those cases. In the case of assertions that are clearly deficient, Price said the IRS is giving taxpayers another chance by requesting additional information. "We're giving taxpayers and their reps an opportunity for a do-over, but we do expect actual statements of facts," he said. Martin R. Press of Gunster, Yoakley & Stewart PA [attorney for Zwerner in the much publicized FBAR penalty case] noted that only U.S. willfulness counts for purposes of the streamlined program. For the most part, he said, what someone does overseas is not a factor, even if a foreign account is willfully unreported in the foreign country of residence. "The IRS is taking that seriously for purposes of the streamlined program," Price confirmed. However, the IRS has left itself some wiggle room, Press noted. For example, deliberate evasion of foreign residence country income tax is a negative factor.