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US steps up tax evasion cases against rich

Washington, September 27, 2009

The US government is stepping up prosecutions of wealthy individuals dodging taxes through offshore accounts, with new cases expected to be made public "every couple of weeks," a top government attorney said.

US officials have been sifting through about 250 client names obtained through a February settlement of a criminal probe against Swiss banking giant UBS AG. The government had alleged the bank illegally helped US taxpayers hide funds offshore.

That effort, along with an amnesty program encouraging tax evaders to turn themselves in, is speeding prosecutions, one of the top lawyers working on the cases at the US Justice Department said.

"You can expect a few every couple of weeks," Kevin Downing, a senior attorney in the tax division of the Department of Justice told an American Bar Association tax conference.

On the sidelines of the conference, Downing told Reuters that US banks that helped US clients hide money offshore were a target.

"The folks in the United States that we get information on are obviously the easiest ones for us to pursue," he said.

"So anybody in the US ... the US banks helping U.S.
clients set these offshore accounts up, we are doing the same thing" in going after them, he said.

In August, UBS AG agreed to disclose the names of 4,450 American holders of secret accounts at the bank, ending a related lawsuit that has begun to show cracks in Switzerland's prized banking secrecy.

"The UBS case has been a great success for the government," Downing said. "It is not an anomaly. It is the beginning of what is now a resource-intensive," process of going after other banks and countries.

The government has secured six guilty pleas so far in its effort, including one on Friday, where a New Jersey man pleaded guilty for failing to report about $6.1 million he had held in a UBS AG Swiss bank account.

Downing also said the government had "made a lot of headway" in dealing with foreign banks. "Let your clients know if they think it's just UBS, they are mistaken," he told the group of tax lawyers.

"If we just stayed in Switzerland, that wouldn't be fair," Downing said, citing a recent indictment of a person with an account set up in the name of a Hong Kong corporation, and Singapore as examples of possible jurisdictions.

Another government lawyer active in the UBS cases said the publicity had engaged juries, which were becoming more sympathetic, "especially in these tough economic times."    

"In today's environment when we are seeing criminal tax cases and prosecutions on the front pages of the newspapers almost daily ... the message is getting out,"  said Jeffrey Neiman, an assistant US attorney for the Southern District of Florida where much of the UBS cases are playing out.

After "fits and starts" by the US government in going after international tax evaders, such as a bid to get client names from credit card companies Visa Inc and American Express Co in the 1990s, the effort is gaining steam, a former deputy chief of Internal Revenue Service's criminal investigation said.

"I think the government really has their teeth into something here," said Mark Matthews, now in private practice at Morgan, Lewis & Bockius in Washington.

On a parallel track to the UBS case, the IRS last Monday extended a temporary amnesty program by three weeks to Oct. 15, to encourage wealthy Americans with undeclared assets abroad to come forward.

Those taking part in the amnesty, or voluntary disclosure, program pay reduced penalties and generally avoid criminal prosecution.

Several lawyers working on amnesty deals said the vast majority of their clients had sympathetic cases, including those that emigrated to the United States with money in an account they may not have touched in years.

"I think the IRS thought they'd get 80 percent bad guys and 20 percent


Tags: US | swiss | tax evasion |

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