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UBS Faces DOJ and IRS Investigation

Offshore Account Update, UBS / HSBC

Posted on April 24, 2015 |

Investors who used offshore accounts to hide money from the IRS are facing increased risks as the federal government launches new investigations into UBS and other offshore banks.  When banks and bankers make deals with the Department of Justice and with the Internal Revenue Service, these deals often involve turning over client information to the federal authorities.

Once the IRS has information about your efforts to evade taxes, it may be too late for you to join voluntary disclosure programs or make other arrangements with the IRS to avoid prosecution and limit financial consequences of tax evasion.

The authorities have been aggressively going after banks that helped investors to hide offshore accounts. Now, the DOJ and IRS have launched a new investigation into whether bearer securities were illegally marketed and sold to investors in the U.S. 

This means that the feds are not just going after people who may have failed to report offshore accounts, but are also going after people who may have bought illegal investments in an effort to evade taxes. 

As the government continues its aggressive push to recover funds lost due to tax evasion, investors need to talk with a Boston tax attorney about what options they may have for making voluntary disclosures or otherwise taking steps to limit IRS penalties and prevent criminal prosecution.

UBS Under Investigation by the IRS

UBS AG has been targeted by the Department of Justice in the past.  In fact, in 2009, UBS settled allegations of assisting customers in tax evasion and paid penalties of $780 million.

Several UBS financial advisors and investment professionals have also been personally prosecuted, with one defendant making a plea deal to receive five years probation in exchange for giving up the names of other financial advisors who had also helped U.S. customers to evade taxes.

Now, the Department of Justice and IRS are looking at UBS to determine if the bank facilitated the illegal sale of bearer securities.

Bearer securities are unregistered securities, as opposed to most bonds and other securities that are registered and listed in a corporation’s books. There are not any forms associated with purchasing bearer bonds and there is no paperwork trail or records to show who purchased bonds or when they were bought or sold. The only proof of the ownership of the bearer securities is actually physically having the document, much like with paper money. 

Because there is no paper trail for the bearer securities, it becomes relatively easy to hide investments and investment profits from the IRS.  Bearer securities have been banned in the United States for decades because they are often used as a tool in tax evasion and securities fraud efforts.

If UBS AG was marketing bearer bonds and helping U.S. investors to buy them, the bank is going to potentially face additional prosecution and another possible large settlement fee.  Since the bank has given up its investors before, there is no reason to think they won’t again.

Investors should act now if you believe that any of your offshore investments may trigger IRS investigation. Call Kevin Thorn, a tax lawyer in Boston, for help.

For a consultation, contact Kevin E. Thorn, Managing Partner, at ket@thornlawgroup.com or (617) 692-2989

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