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BOSTON INVESTOR PLEADS GUILTY TO HIDING ASSETS AT UBS

November 23, 2010

Used Offshore Corporations to Conceal Income From IRS

BOSTON, Mass. - A Boston man pleaded guilty today to concealing his investments in Swiss banking giant UBS AG from the U.S. government.

PETER SCHOBER, 51, pleaded guilty to willfully failing to comply with foreign bank account reporting requirements. Under federal law, when filing an Individual Income Tax Return (Form 1040), U.S. taxpayers are obligated to report their worldwide income. Taxpayers who have a financial interest in, or signature or other authority over, a financial account in a foreign country with an aggregate value of more than $10,000 at any time during a particular year are also required to file with the Internal Revenue Service a Report of Foreign Bank and Financial Accounts (FBAR), as indicated on Schedule B of Form 1040.

From at least 2000 to 2008, UBS AG helped U.S. taxpayers conceal their Swiss-based accounts and the income earned in those accounts from the IRS. UBS and the U.S. taxpayers, assisted by independent Swiss attorneys and financial advisers, hid these assets from the IRS by listing sham offshore companies as the account holders of UBS accounts, when in fact the U.S. taxpayers actually owned and controlled the accounts. In February 2009,UBS entered into a deferred prosecution agreement with the United States, in which the bank admitted to helping U.S. taxpayers hide accounts from the IRS. As part of this agreement, UBS provided the U.S. Government with the identities of, and account information for, certain U.S. customers of UBS's U.S. cross-border banking business.

In December 2000, Schober, with the assistance of UBS representatives and agents, established Small Guard Foundation, a Panamanian corporation with no operations, and in 2002 opened an account at UBS in its name. Schober established the account in the shell corporation's name for the purpose of concealing his control over funds deposited into the account. Over the next five years, Schober deposited in excess of $1 million into the account from income sources and his existing domestic accounts.

Schober filed FBARs that omitted any indication that he had an interest in the Small Guard Foundation account. On his individual income tax returns, Schober similarly hid his interest in the account. In so doing, Schober deprived the IRS of approximately $77,870 in taxes.

Sentencing is scheduled for February 9, 2011. Schober faces up to five years imprisonment, to be followed by three years of supervised release and a $250,000 fine.

United States Attorney Carmen M. Ortiz, John A. Dicicco, Acting Assistant Attorney General of the Department of Justice’s Tax Division and William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation - Boston Division, made the announcement today. The case is being prosecuted by Assistant U.S. Attorney Jonathan Mitchell of Ortiz’s Economic Crimes Unit and Trial Attorney Mark Daly of the Justice Department’s Tax Division.

 

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