The information from the UBS scandal is beginning to pay off in guilty pleas. The owner of Michele Watches in Foriday pled guilty to a tax felony for failing to report offshore accounts or the income from them. He skimmed money from his business and it was deposited in UBS accounts established in the names of nominee corporations.
That guilty plea is accompanied by a $5 million penalty (50% of the highest amount in the accounts, which was $10 million). The taxes Barouh would have had to pay if he had paid them appropriately amounted to about $740,000. Not a very good deal, that secret Swiss bank account.....
The case is U.S. v. Barouh (S.D. Fla, No. 10-20034-CR-Jordan, Feb. 4, 2010).
The statement, available on BNA here, says that Barouh had several offshore accounts in Hong Kong, Switzerland and other localities, held mostly in the names of island nominee firms. He started skimming income from his business decades ago, in 1976. Rather fittingly, one of the money managers that Barouh used to hide his assets for him skimmed stole millions of those same assets! But that just led to a settlement, and then ensconcing those funds in another dummy corporation account hidden from the IRS. Barouh started getting worried in 2007, and wanted to repatriate the funds. So he arranged to move the assets to Hong Kong and then have dummy "consulting fees" paid (about $600,000 a year). He even considered consulting a US tax adviser about voluntary disclosure, but the Swiss attorney and money manager told him that wasn't necessary--Swiss attorneys could initiate the disclosure, but he'd be best just moving it out of Switzerland since he wasn't on the list of accounts being disclosed.
[Aside--gee, if Swiss bankers were telling the hidden account holders that they were not in danger of being disclosed then it's bad for UBS either way--either the bank was lying to us about not disclosing to those whose accounts would be disclosed and was actively working to perpetuate tax fraud even in the midst of the crisis or the bank had so lost control of its operations that the information it had agreed to keep secret was being shared with the account holders by its agents, who were actively working to assist tax evasion.]