Who’s on the List?
Courtesy of John Rubino at Dollar Collapse
Yesterday’s Wall Street Journal ran an article on Washington’s ongoing attempt to discover where its citizens keep their money. Here’s a quote that illustrates the complexity of the cat-and-mouse game:
“At one point, the Swiss lawyer recommended to Mr. McCarthy that he set up a Liechtenstein foundation that would serve as an umbrella over a Panamanian or Hong Kong corporation. That ‘would allow for an extra layer of privacy and help to conceal’ Mr. McCarthy’s identity, said the statement of facts.”
And three observations:
1) The deal between the IRS and UBS apparently requires the latter to hand over thousands of names of U.S. citizens. It’s a safe bet that hundreds of those are major donors to the campaigns of the politicians currently running the country — and a few dozen are the politicians themselves — which creates some amusing moral dilemmas for the enforcement folks and the media.
2) In the wake of the UBS fiasco, it’s going to be even harder for U.S. citizens to get foreign bank accounts, which is exactly what Washington wants.
3) China might be a little harder to push around than Switzerland.
| UBS Tax Crackdown Widens to Hong Kong
By CARRICK MOLLENKAMP
The U.S. crackdown on clients of UBS AG is widening into a global hunt, with the government detailing in court documents how the Swiss bank and outside advisers helped Americans hide money using enterprises set up in Hong Kong.
For the first time in the government’s long-running bid to ferret out the names of U.S. tax-evaders from the Swiss bank’s client list, plea agreements entered in the case are providing a clearer picture of UBS’s sophisticated efforts to help Americans hide income or the existence of foreign bank accounts.
On Friday, John McCarthy, a UBS client in California, agreed to plead guilty to one count of failing to file an annual report to the Treasury Department. A document filed with the plea shows the tax scheme relied in part on channeling funds to a Swiss UBS account held in the name of a Hong Kong entity, the second time accounts in the Asian financial hub have figured in these cases.
The Hong Kong link is important because the Justice Department and Internal Revenue Service are apparently using that as a clue of wrongdoing as they plow through some 250 names that UBS turned over to the U.S. government, say people familiar with the Justice Department probe. The bank handed over the names as part of a criminal settlement it agreed to in February.
Separately, the U.S. has been pursuing a civil case against UBS. Last week, the two sides reached a settlement that is expected to lead to the Swiss bank handing over the names of thousands of U.S. account holders. Lawyers representing UBS clients believe the bank will turn over names associated with 5,000 to 10,000 accounts. Details on the settlement are expected this week.
UBS declined to comment on Mr. McCarthy’s case, as it has with other individual cases.
Documents filed on Friday in the U.S. District Court for the Central District of California in Los Angeles underscore Swiss advisers’ role in helping clients sidestep U.S. financial regulators. As part of his agreement to plead guilty, Mr. McCarthy and the Justice Department agreed to a statement of facts that details the UBS tax structure…
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And here’s a video update from Bloomberg:
