Posted on August 31, 2009 by Anthony Lake

IRS Prosecutions of UBS Customers Widen; IRS Offers Voluntary Disclosure

The Federal government is building criminal cases against more than 150 U.S. citizens holding overseas bank accounts with Union Bank of Switzerland (UBS), as reported by Reuters and the Banking Times. The criminal investigations are part of a Federal crackdown on tax evasion by means of overseas accounts and were facilitated by a settlement between U.S. and Swiss authorities earlier this month in which Switzerland agreed to disclose the identities of some 5,000 U.S. citizen account holders, contrary to Switzerland's longstanding tradition of banking secrecy. UBS has already settled charges that it assisted U.S. customers in evading taxes for $780 million.

As the IRS states on its website, under the agreement, the IRS will receive information on accounts of various amounts and types, including bank-only accounts, custody accounts in which securities or other investment assets were held and offshore company nominee accounts through which an individual indirectly held beneficial ownership in the accounts. UBS will give account holders notice if information relating to the acocunt holders is included in the IRS treaty request. "Information provided to the IRS through this process will be thoroughly examined for all potential civil and criminal tax violations." "The IRS will also recommend criminal prosecution in those cases where the facts warrant such an action."

Four U.S. clients of UBS, three in Florida and one in California, are already being prosecuted based on the information provided by UBS. And the number of investigations and prosecutions are expected to grow. In a press release,Tax Commissioner Doug Shulman claimed that the U.S./Swiss agreement "puts in place an apparatus for the IRS to obtain information on thousands of offshore accounts. Further the Swiss government is prepared to work with us regarding similar U.S. requests, if any, involving other financial institutions." U.S. and Swiss authorities are reportedly negotiating for the disclosure of thousands of additional names of U.S. account holders. Commissioner Shulman stated that international tax evasion is a "top priority."

Commissioner Shulman stated that the IRS has set a "voluntary disclosure" deadline of September 23, 2009, for UBS customers with unreported, offshore income, and advised persons to contact a tax professional. Customers receiving notification from the bank may come forward under the voluntary disclosure program--however "once the Swiss government sends [the IRS] the name, all bets are off." UBS customers with any reason for concern should strongly consider promptly contacting tax and legal professionals.

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Posted on May 11, 2009 by Thomas Withers

Lessons from the W.R. Grace Trial

In a case that was more than 4 years old, the not guilty verdicts against W.R. Grace and three individual defendants was a resounding defeat for the government in one of the most important environmental crimes cases ever brought by the Department of Justice. The case was prosecuted by attorneys from both the Environmental Crimes Section of the Department of Justice as well as the Montana United States Attorneys Office.

An exceptionally well written blog maintained over the months of trial by the University of Montana, documented the passionate intensity of the defense in the case, as well as the silent suffering of the good folk of Libby, Montana where the asbestos was mined as vermiculite.

The case had a fascinating pretrial history where the district court judge ordered the government to disclose, not only a list of witnesses, but also expert witnesses months prior to trial, or to face exclusion of the untimely evidence. (A copy of the district court’s order imposing those deadlines is attached.) This Order has a compelling rationale as to why the government should be required to make a pretrial identification of both expert and non-expert witnesses. Initially, the Ninth Circuit Court of Appeals held that exclusion of witnesses was too severe a remedy, 493 F.3d 1119 (9th Cir. 2007), however, on rehearing en banc in, United States v. W.R. Grace, 526 F.3d 499 (9th Cir. 2008), the Ninth Circuit found that a district court has inherent authority to regulate the conduct of a trial before it (as an aside, all criminal defense attorneys need to cite to this opinion in requesting that relief). Interestingly, this Order that became so critical as the case went forward arose out of the trial court simply issuing orders regulating the conduct of the trial before it.

We’ll try and distill other lessons learned from this trial in coming weeks. Yet, no matter what the result, one has to feel empathy for the residents of Libby, where reportedly, more that 200 residents have died of asbestos related disease and where hundreds more are ill from asbestosis.

 

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