Vanguard News Network
VNN Media
VNN Digital Library
VNN Reader Mail
VNN Broadcasts

Old August 18th, 2009 #1
Mike Parker
Senior Member
 
Join Date: Jul 2007
Posts: 3,311
Default The End of Swiss Banking?

UBS to name 5,000 accounts under U.S. deal: paper

Sun Aug 16, 2009
By Jonathan Lynn

GENEVA (Reuters) - The deal initialed last week between the United States and Switzerland over UBS will involve the disclosure of around 5,000 holders of secret Swiss accounts, weekly newspaper NZZ am Sonntag said on Sunday.

Another Swiss weekly, Sonntag, said around 4,500 names would be handed over.

The landmark deal, ending a dispute in which the U.S. tax authorities had sued UBS to disclose 52,000 U.S. clients suspected of tax evasion, dispels a big cloud hanging over the world's second biggest wealth manager.

It also formally leaves Switzerland's cherished banking secrecy intact, although many Swiss private bankers say it has been badly damaged.

NZZ am Sonntag, citing its own researches and reports in the U.S. press, said the deal would be based on the existing U.S.-Swiss double taxation agreement of 1996, and therefore not require any changes to Swiss law.

As a result, the Swiss cabinet will be able to implement the deal directly, without going through parliament, it said.

UBS will also escape having to pay a fine, it said.

The deal will probably be signed this week, a source familiar with the situation told Reuters on Friday.

A spokesman for the Swiss justice department declined to comment, noting that the two sides had agreed not to release details of the deal until it is signed. A spokesman for UBS also declined to comment.

HIDDEN LIMITS

NZZ am Sonntag said the names of those to be disclosed would be those suspected of committing tax fraud under the terms of the double taxation agreement, which obliges Switzerland to provide help if Washington seeks it in a criminal investigation.

Accounts below a certain size would not be reported, but this limit would be kept confidential so that account-holders could never be sure whether they were vulnerable, it said.

However, account-holders threatened with disclosure would be able to challenge the move in the Swiss courts, it said.

NZZ am Sonntag said the U.S. government had backed off from the original demands of the Internal Revenue Service (IRS) because the U.S. Treasury Secretary did not want to provoke another financial crisis by pushing UBS over the edge.

Under a previous agreement, UBS settled criminal charges that it had facilitated tax fraud by paying $780 million and handing over data on about 250 U.S. clients.

U.S. prosecutors said on Friday that a California client of UBS would plead guilty to criminal charges arising from an investigation into tax evasion at UBS, the fourth prosecution arising from that deal.

Criminal charges arising from that case, and the disclosure of further names from the latest deal are keeping pressure on suspected offenders to report themselves voluntarily under an amnesty program running to September 23.

Sonntag said that the total amount of fines likely to be paid by account-holders disclosed in last week's deal would be around 4 billion Swiss francs ($3.74 billion).

But it said a British lawyer was already trying to drum up support for a class action by UBS customers who feel they have been betrayed by the bank.

It quoted Konrad Hummler, partner in Swiss private bank Wegelin, as saying that Swiss banks would suffer from any further disclosure of customer data by UBS, even if in purely formal terms that did not breach Swiss law or banking secrecy.

"Everyone is talking about success -- the IRS, the Swiss government, UBS. But that can't possibly be the case," he said.

"Although we still don't know any of the details, we can guess some things: the customer has been made a fool of -- he was promised something which retroactively no longer applies," he said.

($1=1.070 Swiss Franc)

http://www.reuters.com/article/newsO...090816?sp=true

AUGUST 17, 2009

UBS Tax Crackdown Widens to Hong Kong

By CARRICK MOLLENKAMP

The U.S. crackdown on clients of UBS AG is widening into a global hunt, with the government detailing in court documents how the Swiss bank and outside advisers helped Americans hide money using enterprises set up in Hong Kong.

For the first time in the government's long-running bid to ferret out the names of U.S. tax-evaders from the Swiss bank's client list, plea agreements entered in the case are providing a clearer picture of UBS's sophisticated efforts to help Americans hide income or the existence of foreign bank accounts.

On Friday, John McCarthy, a UBS client in California, agreed to plead guilty to one count of failing to file an annual report to the Treasury Department. A document filed with the plea shows the tax scheme relied in part on channeling funds to a Swiss UBS account held in the name of a Hong Kong entity, the second time accounts in the Asian financial hub have figured in these cases.

UBS agreed last week with the U.S. to hand over some of its client names.
.The Hong Kong link is important because the Justice Department and Internal Revenue Service are apparently using that as a clue of wrongdoing as they plow through some 250 names that UBS turned over to the U.S. government, say people familiar with the Justice Department probe. The bank handed over the names as part of a criminal settlement it agreed to in February.

Separately, the U.S. has been pursuing a civil case against UBS. Last week, the two sides reached a settlement that is expected to lead to the Swiss bank handing over the names of thousands of U.S. account holders. Lawyers representing UBS clients believe the bank will turn over names associated with 5,000 to 10,000 accounts. Details on the settlement are expected this week.

UBS declined to comment on Mr. McCarthy's case, as it has with other individual cases.

Documents filed on Friday in the U.S. District Court for the Central District of California in Los Angeles underscore Swiss advisers' role in helping clients sidestep U.S. financial regulators. As part of his agreement to plead guilty, Mr. McCarthy and the Justice Department agreed to a statement of facts that details the UBS tax structure.

The documents state that Mr. McCarthy, of Malibu, Calif., controlled a UBS account opened in Switzerland in 2003 in the name of a Hong Kong entity, COGS Enterprises Ltd. Mr. McCarthy, with the help of UBS and an unnamed Swiss lawyer, moved funds from a Los Angeles business into an unidentified U.S. bank account and then into the COGS account at UBS. He directed the transfer of more than $1 million to the COGS account, the statement of facts said.

Between 2003 and 2008, Mr. McCarthy talked with UBS representatives and the Swiss lawyer in Beverly Hills and Switzerland to hash out details of his business, according to the statement. UBS representatives told Mr. McCarthy that "a lot of United States clients don't report their income and just take it off the top."

At one point, the Swiss lawyer recommended to Mr. McCarthy that he set up a Liechtenstein foundation that would serve as an umbrella over a Panamanian or Hong Kong corporation. That "would allow for an extra layer of privacy and help to conceal" Mr. McCarthy's identity, said the statement of facts.

Mr. McCarthy also transferred funds into other UBS accounts from a bank in the Cayman Islands, the statement says. He is due to appear in federal court on Sept. 14. He faces a maximum penalty of five years in prison and fines totaling $250,000.

"Mr. McCarthy has accepted responsibility for his conduct," said his lawyer, Steven Toscher. "He, like many other U.S. taxpayers, has made serious mistakes regarding the use of foreign bank accounts. Mr. McCarthy has decided to get right with his tax obligations and his case should serve as a strong signal to other taxpayers."

Jeffrey Chernick of New York, who pleaded guilty in July to filing a false tax return, also used a Hong Kong corporation and offshore bank accounts to conceal from the IRS commissions paid for sales, according to a statement of facts agreed to by the Justice Department and Mr. Chernick. A lawyer for Mr. Chernick declined to comment.

Hong Kong, of course, can be used as a legitimate tax-planning jurisdiction and gateway to mainland China. But tax lawyers say the former British colony's corporate legal system allows structures to be assembled with ease, mirroring in many ways how corporations are formed in the U.S. or Europe. These lawyers say the IRS might also face challenges investigating corporations set up in Hong Kong, which has come under fire in the past for not sharing tax information with other jurisdictions.

In a statement, a spokesman for the Hong Kong government said Hong Kong has "stringent and effective anti-tax avoidance legislation" and doesn't have laws protecting bank secrecy. A law that would align Hong Kong with international standards on exchange of tax information was submitted to lawmakers last month.

According to a person familiar with the UBS structures, a number of outside fiduciary advisers offered templates for setting up offshore structures on behalf of UBS clients.

In a statement Friday, U.S. Attorney Thomas P. O'Brien said the Justice Department and IRS were "aggressively pursuing those who shirk their federal tax obligations by hiding funds in secret bank accounts in Europe and Asia."

Before the settlement was reached last week in the civil proceedings, UBS and the Swiss government had claimed that UBS couldn't provide account identities to the U.S. because it violated Swiss privacy law.

—Peter Stein contributed to this article.
Write to Carrick Mollenkamp at [email protected]

http://online.wsj.com/article/SB1250...s_Most_Popular
 
Old August 18th, 2009 #2
Gabry Ponte
Banned
 
Join Date: Aug 2009
Posts: 2,024
Default

Everyone is going to Singapore now because of its secrecy laws and it is not a member of the banking act so it doesn't have to conform to their laws.

Lebanon also has good secrecy laws.
 
Old August 22nd, 2009 #3
Mike Parker
Senior Member
 
Join Date: Jul 2007
Posts: 3,311
Default

Ex-Wives and Others Eagerly Await the UBS Tax-Cheater List

By STEPHEN GANDEL – Fri Aug 21

It's not just the U.S. government that wants to get its hands on the list of Americans who hold secretive Swiss bank accounts. Ex-wives, creditors and former business partners are also salivating over the idea that a settlement between the U.S., the Swiss government and a Swiss bank may lead to the public disclosure of as many as 4,450 U.S. individuals that used the foreign bank accounts to hide money. Prominent New York City divorce lawyer Raoul Lionel Felder says he is already getting calls from clients who want to know what they can do to get their portion of the money they always suspected their ex–loved one had tucked away overseas.

"You see allegations of Swiss bank accounts in divorce proceedings all the time," says Felder, whose clients have included Rudy Giuliani, Robin Givens and the former Mrs. Martin Scorsese. "A lot of divorces are going to get opened up." (See the top 10 tax dodgers.)

Tax evasion may only be the beginning of the legal problems facing holders of secret UBS accounts. On Aug. 19, UBS, Switzerland's second largest bank, agreed to hand over the names of thousands of American clients suspected by the IRS of evading taxes. The settlement comes after well over a year of investigation by the U.S. government into allegations of tax fraud at the Swiss bank. Should the names become public, lawyers say a raft of lawsuits could hit the account holders from creditors and business partners who may have long believed that the individuals using the accounts were hiding money that wasn't rightfully theirs.

One lawyer for UBS account holders says he has at least one case in which a client used a Swiss bank account to hide assets from creditors in bankruptcy proceedings. Lying in bankruptcy court can result in jail time, though the statute of limitations on bankruptcy proceedings is generally six years. Divorce proceedings, however, have no statute of limitations in most states in the country. So no matter when the divorce happened, a divorce settlement could be thrown out if it is disclosed that an ex-spouse used one of the UBS accounts to shield a portion of their assets. What's more, the new settlement is likely to be harsher toward the party that lied during the original divorce proceedings. (Read "U.S. vs. UBS: A Fight over Secret Swiss Bank Accounts.")

Lawyers for UBS clients, though, say the stiffest penalties for using the UBS accounts will still probably come from the IRS. The accounts that the U.S. government is getting access to hold an average of $4 million each. Account holders found guilty of tax fraud could have to hand over as much as 50% of the money in the accounts, and many will likely receive prison time. Of the 2,144 individuals convicted of U.S. tax evasion in 2008, 1,957, or 91%, were sentenced to some form of incarceration. Some may have served that time at home with an ankle bracelet or in a halfway house, but most went to prison. According to Steve Johnson, a law professor at the University of Nevada, Las Vegas, the average prison sentence over the past 10 years for tax evasion has been 25 months.

Still, it's not clear how many of the UBS account holders will be made public. The IRS is giving account holders who have cheated on their taxes a period of clemency that lasts until Sept. 23. If they turn themselves in by then, the IRS says in most cases the agency will waive jail time, and is likely to impose a smaller fine. Most disclosures made to the IRS are subject to confidentiality, so other creditors might not ever find out about the hidden accounts.

But if a UBS client used the Swiss bank account to defraud a bankruptcy court, or others, it is not clear the IRS will allow them to enter the clemency program. Lying in divorce proceedings, though, may not be enough to get someone kicked out of the clemency program, but ex-spouses could still find out about the accounts. Attorney Charles Falk of Porzio, Bromberg & Newman says he had a situation a year ago in which a husband had filed joint tax returns before his divorce. So when the client made a voluntary disclosure to the IRS that he had used a Swiss bank account to evade taxes, his ex-wife was notified of the disclosure as well. She had technically violated tax laws as well because her name was on the income filings, even though she never knew the account existed. A new divorce settlement was reached with the man handing over more money to his ex-wife.

"People hid money in Swiss bank accounts not just to avoid the IRS, but other creditors as well," says Martin Press, a lawyer representing a number of UBS clients. "If these names become public, we are going to see a number of cases of bankruptcy fraud, corporate fraud and divorce fraud."

http://news.yahoo.com/s/time/2009082...gtd2l2ZXNvdGhl
 
Reply

Tags
switzerland, tax havens

Share


Thread
Display Modes


All times are GMT -5. The time now is 01:43 PM.
Page generated in 0.28926 seconds.