TWO CHARGED IN SWISS BANK TAX SCHEME
BOSTON, Mass. - Two Boston area men were charged today in separate cases with concealing their investments in Swiss banking giant UBS AG from the U.S. government.
PETER SCHOBER, 51, of Boston, and GREGORY RUDOLPH, 63, of Brookline, were each charged in separate criminal informations with willfully failing to comply with foreign bank account reporting requirements.
According to the criminal information, 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. It is alleged that 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 allegedly deposited in excess of $1 million into the account from income sources and his existing domestic accounts.
It is alleged that Schober filed Report of Foreign Bank and Financial Accounts (“FBARs”) wtih the Internal Revenue Service (IRS) that omitted any indication that he had an interest in the Small Guard Foundation account. On his individual income tax returns, Schober also allegedly hid his interest in the account. It is further alleged that, in so doing, Schober deprived the IRS of approximately $77,870.67 in taxes.
According to Rudolph’s criminal information, in 2000, Rudolph opened an account at UBS in his own name and over the six months, deposited approximately $1.5 million into it. In May 2001, Rudolph informed UBS that he would like to invest in U.S. securities. It is alleged that in order to conceal the income that might accrue on his investments, Rudolph traveled to Switzerland and with the assistance of UBS bankers, created a shell company registered in the British Virgin Islands named Lucky Overseas Ventures. It is further allege that, as a further step to conceal his UBS holdings, in 2003, Rudolph created another shell corporation, registered in Hong Kong, called Great Island Holdings, in which he transferred into it his holdings in the Lucky Overseas account. According to the information, Rudolph utilized the funds in both accounts for his own benefit and for the benefit of his family members.
It is alleged that Rudolph willfully refrained from filing FBARs with the IRS, and filed Individual Income Tax Returns falsely indicating that he had no interest in foreign bank accounts, and in so doing, deprived the IRS of approximately $25,507 in taxes.
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 IRS 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.
If convicted on these charges, Schober and Rudolph each face 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’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 Tax Division of the Department of Justice.
The details contained in the informations are allegations. The defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.