New York Times – The United States is building criminal cases against more than 150 American clients of UBS as part of a crackdown on tax evasion now made easier by a deal over access to secret account information.

U.S. prosecutors gave their first official confirmation of the initial number of criminal investigations in a filing on Tuesday with a federal court in Fort Lauderdale, Florida. The number of criminal probes is widely expected to mushroom soon, Reuters reported.

In the same court document, the prosecutors requested a sharply reduced prison sentence for ex-UBS banker Bradley Birkenfeld, a key informant in the ongoing U.S. prosecutions of wealthy American clients of UBS.

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New York (HedgeCo.Net) – Wealthy Americans who have been hoarding cash overseas and failing to pay Uncle Sam are getting a break, as the Internal Revenue Service unveils a plan that will greatly reduce their penalties.

The idea comes a month after UBS was charged with helping thousands of American clients hide over $15 billion in secret Swiss bank accounts.  The IRS is forcing the bank to disclose the names associated with 52,000 offshore accounts, something that UBS is trying desperately to contest in order to salvage their U.S. clientele base.  

Should these individuals come forward prior to this release of names, the IRS is offering a reduced penalty of up to 20 percent for not filing a Report of Foreign Bank and Financial Accounts, also known as an Fbar.   However, the clients must be proactive.  Should they not come forward and their names eventually be disclosed, they not only face a penalty equal to 50 percent of the balance of each account, but other fines and possible jail time as well.  

"This is a chance for people to come clean on their own," IRS Commissioner Doug Shulman explained.

The IRS will still require the individuals to pay any back taxes owed over the last six years as well as any applicable fees.  It is estimated that the U.S. loses $100 billion a year in lost tax revenue from offshore activity.

Julie Scuderi
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Email: julie@hedgeco.net

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New York (HedgeCo.Net) – A federal judge has set a July 13 hearing for UBS, in which they may be forced to disclose names associated with 52,000 secret Swiss bank accounts holding more than $14.8 billion in assets.  UBS continues to assert that by providing these names, they are compromising overseas privacy laws as well as the reputation of the bank.    

”Such violations would expose these employees to substantial prison terms, as well as fines, penalties and other sanctions,” UBS said in a court filing last week. “There is simply no reason to have, nor equity in having, such an expedited process here.”

UBS is feeling the heat from a surge of international pressure to crack down on secret tax havens sought by the wealthy.  Estimating the U.S. loses $100 billion a year from offshore tax abuse, President Obama is at the forefront of the campaign to get tough on tax evasion. 

While his Stop Tax Haven Abuse Act was aimed at secret financial centers in the Caribbean, Switzerland has long been regarded as a popular place to stash assets without the watchful eye of Uncle Sam to worry about.  Switzerland does not believe that tax evasion is a crime.    

UBS has already agreed to pay the U.S. $780 million in damages, with $200 million of that going to settle charges brought on by the Securities and Exchange Commission. They have also agreed to exit the U.S. cross-border banking business and close the existing offshore accounts of their American clients.

Offshore banking has also been cast in a bad light thanks to the recent Antigua-based scandal masterminded by Texas financier Robert Allen Stanford.  Stanford’s companies, including Stanford International Bank, are estimated to make up about 10% of the country’s economy with billions in deposits coming from all over the world. 

In 1999, the U.S. blacklisted Antigua, accusing the country of lax regulation and subpar anti-money laundering laws.  The sanctions were lifted in 2001.  Still, deposits in the region continued to soar, and the country insists that their regulatory system is strong.  Antigua is currently conducting their own investigation in the Stanford matters.  

Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net

HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
Be sure to check out our sister sites. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com

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