Legal News

First American Client Charged in UBS Tax-Shelter Probe

By Ashby Jones

Will Steven Michael Rubenstein become known as the Patient Zero of the UBS tax prosecutions? It’s possible — on Thursday he became the first American recipient of criminal charges filed in the wide-ranging tax-evasion inquiry involving the Swiss bank.

Rubinstein, of Boca Raton, Fla., on Thursday was charged in Florida Southern Federal District Court with filing a false income-tax return and detained in Fort Lauderdale, Fla., pending an April 7 bond hearing.

“We expect that this prosecution is just the first of the prosecutions that will be brought, as we continue to review the information we have received from all sources,” said John A. DiCicco, acting assistant attorney general in the Justice Department’s tax division. Click here for the WSJ story; here for the NYT’s account.

The U.S. government alleges that from 2001 through 2008, Rubinstein communicated with UBS bankers regarding an account held in the British Virgin Islands, directing the purchase and sale of securities valued at 4.5 million Swiss francs, or about $4 million at current exchange rates. According to the government’s filing, Rubinstein didn’t disclose the existence of the UBS account, as required by law, on his 2007 income tax return, nor did he report income from the account on the return, the Justice Department said.

Neither Rubinstein nor his lawyer, Robert Panoff, could be reached for comment.

UBS 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. In February, 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.

Rubinstein's name was among 285 that UBS turned over in February as part of its settlement. It is unclear how UBS chose the names, and the bank is under legal pressure to disclose up to 52,000 American names.

Full post as published by Law Blog - WSJ.com on April 03, 2009 (boomark / email).