UBS Client Pleads Guilty to Failing to Report $6.1 Million in Swiss Bank Accounts

A Saddle River, N.J., man pleaded guilty today to failure to file a Report of Foreign Bank or Financial Accounts (F-BAR. Juergen Homann appeared today before Judge Stanley R. Chesler in Newark, N.J., and accepted responsibility for concealing more than $5 million in Swiss bank accounts.

According to court documents and statements made in court, Homann failed to file an F-BAR for calendar year 2007. Homann also failed to report his account at UBS AG in Switzerland on his individual income tax return for that year. Additionally, Homann failed to report income earned on his UBS bank account. The UBS account, originally opened in the late 1980's in the name of a Liechtenstein foundation, was transferred into the name of ELM Finance Limited, a nominee Hong Kong corporation. Homann established ELM with the assistance of Swiss lawyer, Matthias Rickenbach, who was indicted in August 2009 for conspiring to defraud the United States. From 2001 through 2008, Homann held approximately $6.1 million in assets in the ELM account at UBS in Switzerland.

According to court documents and statements made in court, in 2005, Homann, with the assistance of Rickenbach and a Swiss banker, conducted a sham loan by transferring $5 million from an account in the name ELM Finance Limited to a second Hong Kong entity in order to obtain financing for Homann’s U.S. business without alerting authorities that he controlled the assets in the ELM at UBS. Further, Rickenbach and a Swiss banker persuaded the defendant not to seek out and enter into the IRS’s Voluntary Disclosure program.

Judge Chesler scheduled sentencing for Jan. 6, 2010. Homann faces a maximum sentence of five years in prison and a maximum fine of $250,000 or twice the amount of financial gain to the defendant or loss to the IRS. Additionally, Homann has agreed to pay a civil F-BAR penalty based on 50% of the highest balance contained in the UBS account.

"As the IRS voluntary disclosure program enters its final few weeks, those who are hiding income and assets in offshore accounts would be well-advised to promptly come in and come clean before the government learns about their accounts through other channels," said John A DiCicco, Acting Assistant Attorney General of the Justice Department’s Tax Division. "Those who think they can ‘stay below the radar’ face a real risk of prosecution and jail if convicted, and they will still owe the taxes due, together with interest and civil penalties."

For those who are not participating in the Voluntary Disclosure Program, we are working very closely with the Tax Division and the IRS to investigate and prosecute cases where individuals have sought to hide assets and income offshore," said Acting U.S. Attorney for the District of New Jersey, Ralph J. Marra, Jr.

"The IRS is serious about pursuing people with hidden offshore accounts, and we are stepping up our international efforts," said IRS Commissioner Doug Shulman. "People should make sure they meet their filing requirements. Failure to do so can carry serious consequences. We encourage people who have been hiding money offshore to come forward by Oct. 15 to take advantage of the special provisions in our voluntary disclosure effort."

In February 2009, UBS entered into a deferred prosecution agreement pursuant to which the bank admitted to helping U.S. taxpayers hide accounts from the IRS. As part of their agreement, UBS provided the United States government with the identities of, and account information for, certain U.S. customers of UBS’s cross-border business.

In June 2009, UBS client Steven Michael Rubinstein, a Boca Raton, Fla., accountant, pleaded guilty to filing a false tax return. In April 2009, another UBS client, Robert Moran, a Ft. Lauderdale, Fla., yacht broker, pleaded guilty to filing a false tax return. In July 2009, UBS client Jeffrey Chernick of Stanfordville, N.Y., pleaded guilty to filing a false tax return. In August 2009, UBS client John McCarthy, a resident of Malibu, Calif., pleaded guilty to failing to report his ownership of and interest in a foreign financial account.

Acting Assistant Attorney General DiCicco and U.S. Attorney Marra commended the IRS agents who investigated the case, as Trial Attorney Michael P. Ben’Ary of the Tax Division and Assistant U.S. Attorney Marc-Philip Ferzan who are prosecuting the case.

United States 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 an F-Bar with the United States 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/.