UBS defrauding IRS (internal revenue service) case: First Arrest of a client made

[fineleg]

Federal authorities have arrested a wealthy American client of the Swiss bank UBS on charges of tax evasion. The client, Steven Michael Rubinstein, an accountant, was arrested in Boca Raton, Fla., and charged with one criminal count of filing a false and fraudulent tax return, according to court papers unsealed on Thursday. The arrest is the first of a major American client of UBS, which has been under criminal investigation for helping scores of wealthy Americans evade taxes through secret offshore accounts that went unreported to the Internal Revenue Service. It signals that federal authorities are making good on a promise to pursue American clients suspected of tax evasion, and in some cases to make indictments. UBS admitted in February to conspiracy to defraud the I.R.S. by helping scores of wealthy Americans hide nearly $20 billion overseas. The bank paid $780 million to settle the charges, but it remains under investigation, as do its American clients. The admission has helped to open the world of offshore banking and dealt a death blow to Swiss financial secrecy. The arrest came as a result of client documents and data on Mr. Rubinstein that UBS turned over to federal authorities as part of the deal. Mr. Rubinstein had an account with UBS worth at least $6 million, including stock and gold coins worth $2 million, according to court papers filed in Federal District Court in Fort Lauderdale. He holds both United States and South African passports. A federal magistrate judge set a bail bond hearing for Tuesday. Federal authorities had been prepared to offer Mr. Rubinstein the opportunity to post bond but changed their minds based on what the court papers, which were unsealed on Thursday, said were Mr. Rubinstein’s false statements to authorities over the last year. Mr. Rubinstein, the papers said, worked for an international company, most recently out of Coral Gables, Fla., that helped wealthy Americans buy, sell and build yachts. From 2001 to 2008, according to court documents, Mr. Rubinstein regularly met with private bankers for UBS, at the Art Basel Miami art fair — a popular recruiting ground for UBS bankers — at a shopping center in West Palm Beach, at restaurants across south Florida and at his residence. He planned to use a part of his UBS accounts to build a house in Boca Raton, Fla. He transferred money from his offshore UBS account to accounts at another bank in Monaco and in New York. The transfers moved through an entity called Hybridge International Limited that Mr. Rubinstein had set up in the British Virgin Islands, a Caribbean offshore tax haven, in 2001, the court filing said. Prosecutors accused Mr. Rubinstein of filing a false 2007 federal income tax return that omitted his offshore holdings. Robert Panoff, a lawyer for Mr. Rubinstein in Miami, could not be reached for comment.