U.S. Justice Department may settle UBS tax evasion case
Filed under: Company News
The Justice Department may drop its dispute with UBS (UBS) some time before the next court hearing on July 13, according to a report in The New York Times today. The suit involved the release of 52,000 names of wealthy Americans suspected of holding offshore accounts for the purpose of tax evasion. If the U.S. drops the case it would halt its efforts to force Switzerland to lift its veil of banking secrecy. Both the Swiss government and UBS have mounted a fierce lobbying campaign to persuade the U.S. to drop the case. UBS argues that it would be forced to violate Swiss financial secrecy laws and open its executives and bankers to prosecution in Switzerland.
The case started in February, just a day after UBS agreed to pay $780 million to settle accusations that it had defrauded the Internal Revenue Service by allowing wealthy Americans to hide billions of dollars using secret offshore bank accounts. The case is due to be heard in U.S. District Court in Miami on July 13 by Judge Alan S. Gold.
The rumors about the case being dropped came after Switzerland agreed to a new double taxation treaty with the United States last week, which is aimed at fighting tax evasion. "[I]t now seems as if a compromise could also be found for this case. This would be highly positive news for UBS," Kepler Capital Markets analyst Dirk Becker told Reuters.
The new tax treaty between the U.S. and Switzerland comes just before a summit in Berlin today where ministers are expected to renew pressure on nations like Switzerland to weaken bank secrecy and increase tax cooperation. Reuters also reports that Matt Spick, a Deutsche Bank analyst wrote in a client note on Monday that "This means that a settlement is likely to take place close to the July 13 court hearing date. Furthermore, an unfavorable ruling is still possible, which presents a key risk to the UBS franchise and share price."
The U.S. doesn't even need to win the case to have met many of the goals it sought in filing the case. Many wealthy clients worried about being prosecuted declared their accounts in recent months. Prosecutors want to focus on several thousand ultrawealthy Americans with offshore accounts containing tens to hundreds of millions of dollars. About 30,000 of the 52,000 UBS clients in the U.S. are smaller, cash-only accounts and many of these smaller account holders have already repatriated the money into U.S. banks.
Prosecutors may learn the identity of some of the largest account holders because as part of the new tax treaty signed Friday to fight tax evasion Switzerland agreed to enhanced information sharing. Federal prosecutors will also learn the identities of UBS clients who filed legal papers in Swiss courts contesting the U.S. Justice Department's names summons.
Lita Epstein has written more than 25 books including Reading Financial Reports for Dummies.
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Reader Comments (Page 1 of 1)
6-23-2009 @ 8:57AM
garri5550b said...
52,000 names of wealthy Americans. You won't see these names. To many CEO's, CFO's ,Wall Street , Goverment Poloticians on the list.
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6-23-2009 @ 9:01AM
Davey Crocket said...
Looks like Phil Gahm is worth every penny UBS is paying him! Let's see, 1999 he convinced congress to pass his bill to remove the post depression FDR legistation to keep the bankers, insurance companies, and the investment bankers appart so they can leverage themselves to let's see...30 to 1 and now the tax payer has to pay. In 2000, he passes the "Enron Loophole" to allow speculators to trade on oil futures with only a 5% equity stake and now he is going to let all those crooks keep their money in Swiss accounts (that is only fair right?). The double standard will never die!
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7-24-2009 @ 10:38AM
mturner406 said...
Davey - you're exactly right. Phil's every rich guy's buddy, and it would probably shake up the entire federal and many state governments if all those names came out. This guy will never be brought to justice, because he has too much dirt on the rest of the world. Furthermore, an astounding number of republicans love him for fighting for the 'free market capitalistic ideals'. All he's fighting for is to enrich himself and Wendy with everybody else's money. 90% of America is far more concerned with Michael Jackson (don't get me wrong, I was a fan also) and Jon and Kate than what's happening with their money, so I don't expect anything to happen to good ole Phil.
6-23-2009 @ 9:41AM
FOXYLYNX said...
WHERE'S THE "TRANSPARENCY" - IT IS FADING ALONG WITH OBAMA'S POPULARITY. ALL BARK AND NO BITE.
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6-23-2009 @ 9:58AM
rayyz1 said...
Do not drop the case make these clowns pay there fair share of taxes
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6-23-2009 @ 10:19AM
Aaron said...
This is absolutly ridiculous. I think the USA government doesnt want to show its people that everyone politicians name is on that list. These are the same people that already hide the max 15% in their 401k, the same people who have every tax loop hole covered, and thats still not enough. They still need more. Greed greed greed. Replace the illegal immigrants in the jails with the tax evaders. And then make them pay for the jailing costs instead of the TAX PAYERS. Dont hide the fact that our government is crooked. Exploit them all and demand change. Dont ask for it. TAKE IT.
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6-23-2009 @ 10:37AM
kidcat24 said...
Just more snakes getting away with more crap. Darn it.
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6-23-2009 @ 10:47AM
Vinny said...
Typical of Obama's adminstration. Since when did the average Joe get a break from the IRS ?. Obama is a two faced LIAR and I'm a Democrat.
He will NOT be re-elected next time because he has done absolutely NOTHING for the average American and busts his ass when it comes to giving OUR money away to the large corporations.
As far as I'm concerned, he's a FAILURE and a LIAR.
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