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Justice News

Department of Justice
U.S. Attorney’s Office
Western District of North Carolina

FOR IMMEDIATE RELEASE
Thursday, February 18, 2016

Federal Judge Sentences Buncombe Co. Man To Nine Months In Prison For Tax Evasion

The Defendant Kept Funds Hidden in Secret Off-Shore Account with Swiss Bank UBS

ASHEVILLE, N.C. – U.S. District Judge Martin Reidinger sentenced today Jarrett D. Mitchem, 66, of Hendersonville, N.C. to 9 months in prison on tax evasion charges, Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina.  Mitchem was also ordered to serve 2 years under court supervision after he is released from prison, plus an additional 3 months of home confinement.  The court ordered that he pay $151,089 as restitution to the Department of Treasury.

U.S. Attorney Rose is joined in making today’s announcement Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI).

“Hiding money in secret offshore accounts and failing to report the income generated from those accounts is a crime that my office takes very seriously.  Tax cheats like Mitchem who choose not to pay their fair share and increase the burden on honest taxpayers will be prosecuted for their actions.  Citizens must ask themselves, is it worth a stint in federal prison to be a tax cheat?” said U.S. Attorney Rose.

“The Internal Revenue Service, Criminal Investigation is committed to ensuring respect for our laws; particularly with taxpayers who would use Swiss banks to conceal their foreign investments and income,”  said IRS-CI Special Agent in Charge Holloman.

In February 2009, the Union Bank of Switzerland (UBS) entered into a deferred prosecution agreement with the United States on charges of conspiring to defraud the United States by impeding the IRS, by helping U.S. taxpayer clients hide funds from the IRS in secret offshore accounts.  As part of its deferred prosecution agreement, UBS also agreed to provide to the government the identities of, and account information for, of persons who likely had engaged in actions designed to evade United States income tax liabilities, including Mitchem’s.

According to court records, beginning on or about November 1995, Mitchem opened a Swiss bank account at UBS.  Court records show that in 2005, Mitchem transferred to his UBS account approximately $4 million he inherited from his parents, who also maintained a bank account at UBS. 

Court documents indicate that in or about May 2011 an IRS revenue agent contacted Mitchem regarding the UBS accounts.  According to court records, Mitchem initially withheld some information pertaining to his UBS accounts but agreed to provide the UBS bank records after he was confronted by the IRS agent.  However, court records show that Mitchem only provided bank records for his parents’ UBS account and not his personal UBS account. 

In November 2011, Mitchem filed his federal tax return forms for tax years 2004 through 2007, in which he failed to claim capital gains and substantial interest income from money held in his UBS bank account.   Mitchem admitted in court and in filed documents that he knew his earnings should have been claimed and that he willfully omitted reporting them to avoid the payment of additional income tax.  Mitchem also admitted that the tax loss associated with the unclaimed income from his Swiss bank account is over $150,000. 

Mitchem will be ordered to report to the Federal Bureau of Prison upon designation of a designation of a federal facility.  All federal sentences are served without the possibility of parole.   

The investigation was handled by IRS-CI.  The case was prosecuted by Assistant United States Attorney Don Gast of the U.S. Attorney’s Office in Asheville.

 

Updated February 18, 2016