Legal News

The UBS Matter May Be Settled, But the DOJ Keeps On Plugging

By Ashby Jones

Until now, the U.S./Switzerland tax-evasion faceoff has mostly centered around Swiss bank UBS. But with that situation largely in hand, at least from the U.S. government’s perspective, the Justice Department is now freed up to go after more minor players, it seems.

Exhibit A: a new indictment filed in federal court on Thursday. The indictment named Hansruedi Schumacher, a former UBS banker who moved to another Swiss bank in 2002, and Matthias Rickenbach, a Swiss tax lawyer. It’s among the first court documents to describe the alleged role outside consultants played in setting up structures that used UBS accounts. Click here for the WSJ story; here for the NYT story; here for the indictment.

The indictment describes how the two men allegedly helped New York businessman Jeffrey P. Chernick and California businessman John McCarthy set up structures in Hong Kong to hide U.S. income and financial transactions. The indictment also alleges Schumacher and Rickenbach aided an unnamed UBS client living in White Plains, N.Y. And it alleges that Rickenbach helped an unnamed UBS client living in Boca Raton, Fla. The indictment doesn’t name the clients but identifies them as unindicted co-conspirators.

"These conspiracy charges show that Justice is widening the net beyond UBS to include other banks, and that it is also going beyond individual account holders to the professionals who assist them," said Lee Sheppard, a tax lawyer in New York, to the NYT.

Messrs. Schumacher and Rickenbach weren’t available for comment. Schumacher worked at UBS as a regional manager from the late 1990s to mid-2002, when he left to work at Zurich private bank Neue Zürcher Bank. Mr. Rickenbach works at Rickenbach & Partner in Zurich.

Last Friday, McCarthy agreed to plead guilty to failing to file a notice of a foreign account. In July, Chernick pleaded guilty to filing a false tax return. Court documents in those cases generally described the help they received but didn’t detail the role of Schumacher and Rickenbach.

In addition to the tax-related charges, the new indictment also makes bribery allegations. The U.S. maintains that Chernick authorized that $45,000 be withdrawn from a bank account to provide funds for a Swiss official who had agreed to disclose whether Chernick’s account information was being turned over to U.S. authorities. The new indictment said Chernick authorized the withdrawal based on the “representation” of Rickenbach and Schumacher.

Full post as published by Law Blog - WSJ.com on August 21, 2009 (boomark / email).