Wednesday, February 18, 2009

White Collar: UBS and Justice Department Reach Deferred Prosecution Agreement in Massive Tax Fraud

UBS, the world's largest private bank has reached a deferred prosecution agreement with the U.S. Department of Justice. The agreement requires UBS to pay $780 million to settle charges that it helped wealthy Americans evade payment of taxes. The agreement pierces Swiss secrecy laws as it requires the bank to turn over the the U.S. government the names of American account holders. This list could include as many as 19,000 names. These people will become liable to civil tax proceedings and, in some instances, may be charged with criminal tax violations.

In the agreement UBS admitted to engaging in a conspiracy to defraud the IRS. The other members of the conspiracy would be the account holders who failed to pay adequate taxes.

The agreement imposes on the bank the obligation to make periodic reports to the United States about its offshore undeclared banking business that involves U.S. residents. While UBS will probably close these accounts, the agreement still requires it to provide evidence of the closing of each account.

UBS probably avoided an imminent indictment by entering the agreement. Prosecutors believe that UBS helped Americans to hide $20 billion, which resulted in tax evasion of $300 million annually.

For a further discussion of the settlement, please see The New York Times, "UBS Reaches Deal Over Offshore Services," February 19, 2009.

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