A former client of the Swiss banks UBS AG and Wegelin & Co. has pleaded guilty to personal income tax evasion for hiding more than $26.4 million in secret bank accounts.
Kenneth Heller agreed to pay a civil penalty of over $9.8 million in his guilty plea. The charges against the 81-year-old former attorney arose out of the ongoing investigation into U.S. taxpayer clients of UBS and other overseas banks who conspired to hide their bank accounts from the IRS.
Heller is a disbarred Manhattan maritime attorney who opened a UBS account in the name of a sham offshore corporation in December 2005. On Jan. 3, 2006, he wired approximately $26,420,822.43 from the United States and deposited the money into the UBS account, according to prosecutors. While he controlled the trading in the account, Heller did not appear as the account holder on UBS account documents.
On June 6, 2008, Heller read a media report raising the possibility that UBS might disclose information about its Swiss-based account holders to the U.S. government. Shortly thereafter, Heller allegedly moved his funds to Wegelin & Co., a smaller private bank in Switzerland that did not have offices in the United States.
“Kenneth Heller is the latest in a long line of tax cheats who believed his foreign bank account was ‘out of sight and out of mind’ for federal investigators, but he was wrong,” said Manhattan U.S. Attorney Preet Bharara in a statement. “Today’s guilty plea should send a clear message to individuals who think they can hide their income overseas to avoid paying taxes like everyone else that they are wrong.”
Heller entered his guilty plea Monday before U.S. District Judge P. Kevin Castel. He is scheduled to be sentenced by Judge Castel on Sept. 27, 2011. He faces up to 15 years in prison on three counts of tax evasion.
Heller is one of seven defendants charged in the Southern District of New York in April 2010 with similar conduct and is the sixth to plead guilty (see DOJ and IRS Charge 7 UBS Clients).
For many years, UBS provided private banking services to U.S. taxpayers as part of its U.S. cross-border banking business, employing approximately 60 people in Switzerland. From at least 2000 to 2008, these employees helped U.S. taxpayers conceal their Swiss-based assets, and the income earned on those assets, from the IRS by listing sham offshore companies as the account holders.
In February 2009, UBS entered into a deferred prosecution agreement with the United States, pursuant to which UBS admitted it helped taxpayers hide accounts from the IRS. As part of this agreement, UBS provided the U.S. government with the identities of, and account information for, certain customers of UBS’s U.S. cross-border banking business.
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