Susanne D. Rüegg Meier, a citizen and resident of Switzerland, pleaded guilty on July 19, 2017, to conspiring with U.S. taxpayers and other Swiss bankers to defraud the United States as the head of a team of bankers for Credit Suisse AG between 2002 and 2011. She was responsible for the accounts of over 1,000 clients and handled approximately $400 million in assets. Her conduct led to an estimated U.S. tax loss of between $3.5 and $9.5 million. Sentencing in this case is scheduled for early September 2017; Rüegg Meier faces a maximum of five years in prison, a period of supervised release, and restitution penalties.
On May 10, 2017, U.S. Attorney General Jeff Sessions issued a memorandum to all Federal prosecutors, laying out the core principles of charging and sentencing policy for the Department of Justice under the Trump Administration. Namely, prosecutors have been instructed to "charge and pursue the most serious, readily provable offense" and "disclose to the sentencing court all facts that impact the sentencing guidelines or mandatory minimum sentences." Exceptions to the "strict application" of these guidelines must be clearly documented and then approved by a U.S. Attorney, Assistant Attorney General, or designated supervisor. This new policy memorandum explicitly rescinds certain policies set forth by the Obama Administration.
The US Department of Justice recently determined that the Singapore affiliate of UBS (UBS AG) "has complied with an Internal Revenue Service (IRS) summons for bank records" related to a taxpayer whose liabilities are at issue. The international financial institution refused to produce the records when first served the summons. After a petition was filed to enforce the summons formally, UBS and the IRS resolved the matter amicably and the petition was voluntarily dismissed.
On Monday, a federal judge for the Eastern District Court of Louisiana approved a settlement between BP and the United States for $20 billion to settle claims related to the 2010 oil spill in the Gulf of Mexico. Of that amount, $5.5 billion represented a Clean Water Act penalty, which is nondeductible under Internal Revenue Code sec. 162(f) (barring deductions for "any fine or similar penalty paid to a government for the violation of any law"). However, $15.3 billion of this settlement qualifies for a business tax deduction.
On January 27, 2016, the Department of Justice announced that it reached its final non-prosecution agreement under Category 2 of the Swiss Bank Program with HSZH Verwaltungs AG (HSZH). The department has executed agreements with 80 banks since March 30, 2015, when it announced the first Swiss Bank Program non-prosecution agreement with BSI SA.
During the last two weeks of 2015, the United States Department of Justice announced that Bank Lombard Odier& Co Ltd, DZ Privatbank (Schweiz) AG, Bank J. Safra Sarasin AG, Coutts & Co Ltd, Gonet & Cie, and Banque Cantonal du Valais reached resolutions under the department's Swiss Bank Program. These banks collectively will pay penalties of more than $285 million.
Once again, the Department of Justice has flexed its muscles and shown dishonest financial professionals that if they help clients hide assets offshore or create sham entities for clients to evade taxes, they will be prosecuted. The tax preparers in this case helped their wealthy clients to conceal millions of dollars of assets and income in secret foreign bank accounts, filed false federal income tax returns, maintained an offshore account in the name of a sham corporation and failed to disclose the account to the IRS. They also failed to file a Report of Foreign Bank and Financial Accounts (FBAR). Two of the three tax preparers have been sentenced to 36 and 50 months in prison and ordered to pay fines of nearly $300,000. The third tax preparer is still at large. To learn more, click here.
On May 5, 2015, the Department of Justice Tax Division announced Kevin Bertram, former CEO of Distributive Networks LLC (a wireless technology company), was sentenced to serve 30 months in federal prison, followed by three years of supervised release, and ordered to pay restitution in the amount of $897,921 to the IRS for failing to pay nearly $1,000,000 in payroll taxes.
After helping taxpayers hide assets in offshore bank accounts for more than 10 years, Bank Leumi entered into an agreement with the Department of Justice in which it will pay the United States $270 million as a penalty and will make a full and complete disclosure of its U.S. Taxpayer-held accounts. As recently as 2011, Bank Leumi admits to taking affirmative and extensive steps to assist U.S. Clients in concealing assets offshore including secretly meeting with U.S. Clients in hotels, parks and coffee shops, using nominee corporate entities in Belize and other foreign tax jurisdictions, hiding the true account owner identities, providing mail hold services to make account detection more difficult, and assisting clients who had accounts at UBS and other financial institutions undergoing criminal investigation by the Department of Justice in moving funds to other secret accounts.For more information, click here.