WASHINGTON - UBS client, Steven Michael Rubinstein of Boca Raton, Fla., pleaded guilty today to filing a false tax return for tax year 2004, the Justice Department and Internal Revenue Service (IRS) announced. On April 1, 2009, Rubinstein was charged with filing a false tax return that intentionally failed to disclose the existence of a Swiss bank account maintained by UBS of which he was the beneficial owner and failed to report any income earned on that account.
According to court documents and statements made during the court hearing, Rubinstein maintained a UBS bank account in the name of Hybridge International Ltd., a nominee British Virgin Island corporation. From 2001 through 2008, Rubinstein communicated with bankers at UBS via email, telephone and in person about the purchase and sale of securities worth more than 4.5 million Swiss Francs, the conversion of investments from U.S. dollars to British Pounds, the deposit and transfer of funds into and out of the UBS Swiss accounts, and the repatriation of approximately $7 million into the United States to purchase property and build his personal residence in Boca Raton. Additionally, Rubinstein deposited and sold more than $2 million in South African Krugerrands through his UBS accounts.
According to court records, on or about April 15, 2005, Rubinstein, a chartered accountant who works for an international company that assists clients to build, buy and sell yachts, filed a tax return for 2004 which he signed under the penalties of perjury. The tax return failed to report that he had an interest in, or signature authority over, a financial account at UBS in Switzerland. Additionally, Rubinstein failed to report the income he earned on any UBS Swiss bank accounts.
Additionally, Rubinstein acknowledged that he was required to file Reports of Foreign Bank and Financial Accounts (FBARs) disclosing his UBS bank account for years 2001 through 2007. FBARs must be filed with the U.S. Treasury on or before June 30 of the succeeding year. However, he admitted that he intentionally failed to file FBARs each year. As part of his plea agreement, Rubinstein agreed to pay a fifty percent penalty for the year with the highest balance in the account as of June 30 in order to resolve his civil liability for failing to file FBARs for tax years 2001 through 2007.
"As the FBAR filing deadline of June 30 rapidly approaches, taxpayers should be aware of the serious consequences of failing to report offshore income and foreign bank accounts," said Acting Assistant Attorney General John A. DiCicco. "Taxpayers who hide income offshore and
fail to comply with the FBAR filing deadline face criminal prosecution, jail time, and steep fines."
"Today’s guilty plea resolves the first prosecution of a UBS client based upon records received from UBS pursuant to the historic deferred prosecution agreement executed earlier this year. In accordance with this agreement, UBS has disclosed the identities of wealthy Americans who were illegally hiding money to evade U.S. taxes," said Acting U.S. Attorney Jeffrey H. Sloman. "More prosecutions are expected to follow, as we continue to hold accountable those who conceal money and assets in an effort to avoid their income tax obligations."
"Combating offshore tax evasion by wealthy taxpayers continues to be one of the IRS’ top priorities," said IRS Commissioner Doug Shulman. "The IRS is committed to vigorously pursuing those who illegally hide their money offshore as well as the financial institutions which help them."
Sentencing has been set for Sept. 30, 2009, before U.S. Judge Marcia G. Cooke. Rubinstein faces a maximum sentence of three years in prison and a maximum fine of $250,000 or twice the amount of pecuniary gain to the defendant or loss to the IRS. Rubinstein remains free on a $12 million bail pending sentencing.
Acting Assistant Attorney General DiCicco and Acting U.S. Attorney Sloman commended the investigative efforts of the IRS agents involved in this case. The prosecution is being handled by Senior Litigation Counsel Kevin M. Downing and Trial Attorney Michael P. Ben’Ary of the Tax Division, and Assistant U.S. Attorney Jeffrey A. Neiman.
In Feburary 2009, UBS entered into a deferred prosecution agreement in which the bank admitted to helping U.S. taxpayers hide accounts from the IRS. As part of their agreement, UBS agreed to provide the U.S. government with the identities of, and account information for, certain United States customers of UBS’s cross-border business.
U.S. citizens who have an interest in, or signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 are required to disclose the existence of such account on Schedule B, Part III of their individual income tax return. Additionally, U.S. citizens much file a FBAR, with the U.S. Treasury, disclosing any financial account in a foreign country with assets in excess of $10,000 for which they have a financial interest in or signature authority, or other authority over.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at http://www.usdoj.gov/tax/.