Skokie Businessman Sentenced To Federal Prison For Evading $1 Million In Taxes Related To Secret Offshore Swiss Bank Account
CHICAGO — The owner of a cemetery monument business in north suburban Skokie was sentenced today to a year and a day in federal prison for evading more than $1 million in federal taxes on more than $3.3 million in income, including interest on millions of dollars he held in a secret offshore financial account with UBS, a global financial services firm headquartered in Switzerland. The defendant, PETER TROOST, pleaded guilty in March to the felony charge that was filed in February in U.S. District Court.
Troost, 78, of Skokie, has already paid $1,039,343 in back taxes to the Internal Revenue Service, as well as a civil penalty of approximately $3.75 million, but U.S. District Judge John J. Tharp, Jr., said those payments alone would not sufficiently deter wealthy individuals from failing to meet their voluntary tax obligations.
Judge Tharp also fined Troost $32,500 and ordered him to serve 200 hours of community service during a year of supervised release after he is incarcerated. He was ordered to begin serving his sentence on Dec. 2.
“Troost did not evade his taxes out of financial need or desperation. He operated a profitable and successful business; he had more than enough money to pay his taxes. He made a deliberate, conscious decision not to do so,” the government argued at sentencing.
Troost owns and operates Troost Memorials, a closely-held company that designs and sells cemetery monuments and gravestones. The business is located in a strip mall Troost owns at 9853 Gross Point Rd., Skokie, and he owns another strip mall located at 1816-44 Arlington Heights Rd., in Arlington Heights. The defendant is not involved with Peter Troost Monument Company, of Hillside, which is a different company from Troost Memorials.
Troost was the first taxpayer charged in Federal Court in Chicago in connection with an ongoing investigation of U.S. taxpayer clients of UBS and other overseas banks that hid foreign accounts from the Internal Revenue Service. In February 2009, UBS entered into a deferred prosecution agreement with the United States, admitting that it helped taxpayers hide accounts from the IRS. As part of the agreement, UBS provided the government with the identities of, and account information for, certain customers of UBS’ U.S. cross-border banking business.
According to Troost’s plea agreement, from at least 1999 until 2009, he transferred hundreds of thousands of dollars from the United States to his individual offshore UBS account for the sole purpose of evading domestic income taxes. He maintained at least one offshore UBS account between 1981 and 2009, while maintaining at least one additional joint account. He managed both accounts with the assistance of a UBS personal banker based on the island of Jersey. In addition to failing to report interest income, Troost admitted that he intentionally failed to report all of his income from his monument business and his rental properties.
Between 1999 and 2009, Troost failed to report income from all sources totaling $3,338,929, on which he owed $1,039,343 in federal taxes. In addition, Troost stated on his returns for each of those years that he did not have an interest in a financial account in a foreign country, when, in fact, he knew he maintained the offshore UBS account.
The sentence was announced today by Gary S. Shapiro, United States Attorney for the Northern District of Illinois, and James C. Lee, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago.
Defendants convicted of tax offenses face mandatory costs of prosecution and remain civilly liable to the government for any and all back taxes, as well as a potential civil fraud penalty of up to 75 percent of the underpayment plus interest. Federal tax law requires U.S. taxpayers pay taxes on all income earned worldwide. Taxpayers must also report foreign financial accounts if the total value of the accounts exceeds $10,000 at any time during the calendar year. A deliberate failure to file a Report of Foreign Bank and Financial Accounts (FBAR) with the U.S. Treasury Department can result in a penalty of up to 50 percent of the amount in the account at the time of the violation.
The government was represented by Assistant U.S. Attorney Brian Havey.