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UPDATE 1-IRS:new UBS-style foreign bank prosecution "shortly"
March 15, 2010 / 10:05 PM / 8 years ago

UPDATE 1-IRS:new UBS-style foreign bank prosecution "shortly"

* Agent says involves “same behavior” as Swiss bank UBS

* Could be “within month,” IRS special agent says

* U.S. tax offenders still coming forward to disclose

* Swiss court “threw cold water” on UBS-US agreement (Adds comment from counsel of U.S. Senate subcommittee)

By Pascal Fletcher

HOLLYWOOD, Fla., March 15 (Reuters) - U.S. tax authorities are expected to “very shortly” launch another prosecution against a foreign bank similar to the tax evasion case they pressed against Switzerland’s UBS AG UBSN.VX, an Internal Revenue Service (IRS) agent said on Monday.

Linda J. Osuna, IRS Special Agent in Charge of the Tampa Field Office, told Reuters the expected U.S. case against the foreign bank, which she declined to name, would be for “the same behavior that got UBS in trouble.”

“Look very shortly, you’re going to see it...I would say within the month,” she said after addressing a money laundering conference in Florida.

Last year, Switzerland’s UBS, facing accusations that some of its bankers encouraged and helped U.S. citizens to try to conceal from the IRS assets held in overseas accounts with the Swiss bank, settled two U.S. government lawsuits against it.

UBS did so by paying $780 million in one case and also later agreeing to turn over 4,450 accounts to U.S. authorities, although this last deal was blocked after a Swiss court ruled in favor of a UBS client, saying her actions did not constitute tax fraud.

Last month, a U.S. client of London-based HSBC (HSBA.L) pleaded guilty to conspiracy over assets stashed abroad to evade taxes, the first plea in recent U.S. government tax prosecutions to involve a foreign bank other than UBS.

HSBC, Europe’s biggest bank, said last week that data on up to 24,000 Swiss client accounts had been stolen by a former employee and ended up in the hands of authorities in France, where the ex-worker fled. The accounts were from a swath of international clients.

Lawyers said U.S. authorities were likely negotiating with the French through a treaty request to get the names of any U.S. HSBC clients involved.

Osuna said further tax evasion cases were likely to result from information brought to light by a voluntary disclosure program, which originally led to 14,700 individuals coming forward before an Oct. 15 deadline to own up to holding previously undisclosed accounts overseas.

“Even after the October 15 date, we’ve had at least 2,000 more, they come in every day,” she said. “Now, they won’t get out of the penalties and interest, but they are hopeful to get back into compliance,” Osuna added.


She said that tax evasion prosecutions sometimes took time, but “I suspect you will see them coming, probably in waves, in the next six to eight months.”

Osuna declined to give specific details, but said the information brought to light by the tax amnesty program was “going to be a source of cases for years for us.”

The Swiss government plans to ask its parliament to approve the information handover deal it struck with Washington over the UBS case, so that the deal is binding and plugs the legal loophole it says is stopping it from honoring the agreement.

The ruling by a Swiss court in January that such a transfer of accounts data would breach existing Swiss law had “thrown cold water” on the U.S.-UBS settlement, said Laura Stuber, counsel for the U.S. Senate Parmanent Subcommittee on Investigations.

“It could result in the U.S. having to go back to court to get all 50,000 of the (UBS) account names,” Stuber told the Hollywood conference, adding that more than $18 billion was estimated to have been hidden from the IRS in the UBS accounts involved.

The permanent subcommittee, which is chaired by Michigan Democrat Senator Carl Levin, has estimated that offshore tax abuse costs the U.S. Treasury $100 billion a year in lost revenue and it is pressing for tougher legislation against tax havens, tax evasion, money laundering and financial fraud.

“We have the means to end offshore tax abuse if we have the political will to act,” Stuber said. (Reporting by Pascal Fletcher; Editing by Bernard Orr)

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