The Justice Department has dismissed its landmark case against Swiss banking giant UBS AG, announcing that the bank has successfully complied with the terms of its Deferred Prosecution Agreement entered into in February 2009. Under the terms of that agreement, UBS avoided criminal prosecution by admitting it helped U.S. citizens hide money in secret Swiss accounts, agreeing to pay $780 million in penalties, and providing the IRS with the names of more than 250 of its U.S. customers who were suspected of committing tax fraud. The day after that agreement was signed, the Justice Department filed suit against UBS in federal court to enforce a “John Doe” summons seeking to force the bank to turn over the names of the approximately 52,000 U.S. citizens holding bank accounts at UBS. Following much diplomatic wrangling, the U.S. and Switzerland eventually reached an agreement that UBS would turn over account information on 4,450 U.S. clients of UBS through a specified treaty process.

Read the full article here. http://www.blankrome.com/index.cfm?contentID=37&itemID=2368#page=1

Offshore Banking: Two Charged with Hiding Funds in UBS Accounts

The Government’s position re criminal charges against UBS (See Extradition and Cross Border Criminal Defense News October 27, 2010), criminal cases against individuals continue.

The Boston Globe October 28, 2010 reports that two individuals are being charged with hiding funds or income from the IRS in offshore UBS Accounts.

“According to the government’s charges, filed in federal court yesterday, Schober, with UBS’s help, in 2000 established Small Guard Foundation, a Panamanian corporation with no operations. In 2002, he opened a UBS account in the shell company’s name, and over the next five years hid more than $1 million in the account from the US government. Rudolph, the government alleged in a separate court filing, put $1.5 million into an account in his own name with UBS. But to conceal income he might earn on his investments made with the money, UBS helped Rudolph create a shell firm called Lucky Overseas Ventures. He also created another shell company, registered in Hong Kong, the government alleged, and used the funds in both accounts for his own benefit and for his family.”

Source: Extradition and Cross Border Criminal Defense News



This DOJ release says, “…will receive substantially all of the account of interest”.  However, “UBS has agreed to hand over details of only 4,450 US account holders. The US Justice Department originally sought the details of 52,000 account holders.”

FOR IMMEDIATE RELEASE
WEDNESDAY, AUGUST 19, 2009
WWW.USDOJ.GOV

WASHINGTON – The Justice Department and the Internal Revenue Service (IRS) today announced that the agreement with the Swiss government has been finalized. As a result of the agreement, the United States will receive substantially all of the accounts of interest when it initiated the John Doe summons against UBS on June 30, 2008.

Under the agreement, the IRS will submit a treaty request to the Swiss government describing the specific accounts for which it is requesting information. The Swiss government will then initiate procedures which could result in the turning over of thousands of accounts to the IRS. The IRS will receive information on accounts of various amounts and types, including bank-only accounts, custody accounts in which securities or other investment assets were held and offshore company nominee accounts through which an individual indirectly held beneficial ownership in the accounts.

Also, the agreement retains the U.S. Government’s right, if the results are significantly lower than expected and other measures fail, to seek appropriate judicial remedies, including resuming actions to enforce the John Doe summons.

The agreement involves a number of simultaneous legal actions:

• The judicial enforcement of the John Doe summons will be dismissed. While this enforcement motion will be withdrawn, the underlying John Doe summons remains in effect.

• Upon receiving the treaty request, the Swiss government will direct UBS to notify account holders that their information is included in the IRS treaty request. It is expected that these notices will be sent on a rolling basis with some being sent over the coming weeks and others over the coming months. Receipt of this notice will not by itself preclude the account holder from coming into the IRS under the Voluntary Disclosure Program, which is due to end on Sept. 23, 2009.

In addition, the Swiss Government has agreed to review and process additional requests for information from other banks regarding their account holders to the extent that such a request is based on a pattern of facts and circumstances equivalent to those of the UBS case.

Information provided to the IRS through this process will be thoroughly examined for allpotential civil and criminal tax violations. The IRS will assess any additional tax, interest and a number of applicable penalties. This includes the penalty for the willful failure to file a Report of Foreign Bank and Financial Accounts (FBAR). This penalty can be up to 50 percent of the value of the account for each year an FBAR was not filed. Under the Voluntary Disclosure Program, the account holders must pay 20% of the amount of tax that was underpaid for the past six years and 20% of the highest value of the account over the past six years, in addition to all their unpaid taxes and interest due on those taxes.

The IRS will also recommend criminal prosecution in those cases where the facts warrant such an action. To date, the Justice Department and the IRS have successfully prosecuted four U.S. customers of UBS whose information was provided to the IRS by the Swiss bank as part of the Deferred Prosecution Agreement.

Individuals whose information is obtained by the IRS through this process will, by longstanding policy, not be eligible for the voluntary disclosure program.

The Isle of Man, a popular offshore banking jurisdiction for expatriates, is to start automatically exchanging information on bank accounts with the tax authorities in the owners’ country of residence, as part of the EU Savings Tax Directive.

This is the first time that an Offshore Financial Centre (OFC) has agreed to allow free information exchange between countries’ but it could just be the start of a more universal approach.    The move was announced on 24th June by Isle of Man Treasury Minister, Allan Bell, when addressing the annual Organisation of Economic Co-operation and Development (OECD) Forum in Paris. Some years ago this significant announcement would have made bigger headlines than it has today.  The fact that it is has not done so reflects the fact that OFCs capitulating to pressure to improve tax transparency is becoming quite commonplace.  Nonetheless this change in the rules could have implications for thousands of offshore bank clients. Under the terms of the Savings Tax Directive, the Isle of Man currently offers clients a choice between having tax deducted at source and automatic exchange of information (where interest is paid gross).  Now, with effect from 1st July 2011, if you are an EU resident and bank in the Isle of Man you will no longer have this choice.  The withholding tax option will be withdrawn and your tax authority will always have access to your bank account.    Information on every bank account will be exchanged at least once a year and automatically – it is not only those suspected of tax evasion that will be reported on.

The minimum amount of information given to the tax authorities in the account holder’s country of residence is:
1. Identity and residence of account holder (‘beneficial owner’).
2. The name and address of bank or other financial institution (‘paying agent’).
3. Account number of beneficial owner.
4. Interest payment data including the amount of interest income earned.
5. Information regarding any proceeds from sale, redemption or refunds.

Of course there is nothing wrong with having an offshore bank account and in many cases it is a very practical solution for expatriates.  Many already opt for exchange of information and so the new rules will not affect them in any way.

Everyone living in Spain or the UK should, in theory, have chosen the information exchange option since they are legally obliged to declare and pay tax locally on their worldwide income.  The interest income should be declared even if withholding tax is deducted.    The problem will be for those people who for whatever reason have not been declaring their offshore account on their local tax return.  The taxman will obviously be very suspicious of any information it receives from the Isle of Man on bank accounts which had not ‘existed’ prior to the new information rules coming into play.

The Isle of Man choose to move towards complete tax transparency in an effort to break away from the ‘tax haven’ label and put itself at the forefront of international tax co-operation. It is also pre-empting tougher disclosure rules that are bound to be imposed in future years, as well as the issue of how many of its clients will be prepared to pay the 35% withholding tax rate scheduled to commence on 1st July 2011.

Treasury Minister Allan Bell told the OECD Forum:
‘The Isle of Man has always been at the forefront of tax co-operation and my announcement today is further testament to that.  The global financial crisis has delivered a demand to all countries large and small to engage further in international tax co-operation and align their policies with international benchmark standards.  Our decision today to move to automatic exchange of information under the EU Savings Directive is a clear sign that we intend to continue to lead the way in international tax co-operation and transparency.  This is a signal to our trading partners and investors alike that we can continue to be relied upon and that our name is associated with probity and foresight.’

He added: ‘Our work does not, and cannot, stop on these matters and we will be making further tax cooperation announcements throughout this year and beyond’.
The UK government praised the move, with UK Justice Minister, Lord Willy Bach, saying it was ‘a clear indication of their commitment to high standards of regulation and tax transparency and shows that they lead the way in how small jurisdictions with financial services centres should operate’. While the Isle of Man will want to defend itself against descriptions like ‘tax haven sitting in the Irish Sea’ (as UK Chancellor Alistair Darling famously said last year), it also needs to restore its reputation after the collapse of Kaupthing Isle of Man Bank last October followed by the slow and complicated process of returning clients’ funds to them (something which is not yet completed).

OFCs have been under growing pressure to conform to international standards of fiscal transparency as governments focus on the role of tax havens in the financial crisis and the need to increase tax revenue. There has been an amazingly fast progress towards tax transparency.

In March Switzerland and other countries with banking secrecy traditions agreed to relax their privacy rules.  Switzerland has indicated that it will achieve international standards on transparency by the end of the year.

All together over 30 tax exchange information agreements (TEIAs) have been signed since November as OFCs rush to avoid sanctions.  OECD general-secretary Angel Gurria noted that more progress had been made in the last eight months than in the last 10 years.  84 countries have now endorsed the standards and have agreed to implement them, of which more than half have already done so.

The Isle of Man currently has 15 TEIAs, including with the UK, Ireland, France, Germany, US and Australia.  Information, however, is currently only shared on request, while from 2011 information on every bank account held by an EU resident will automatically disclosed to the relevant EU country. While some people may be tempted to move their capital out of the Isle of Man and away from the clutches of the Savings Tax Directive altogether, this may mean moving it to a jurisdiction with low or no investor protection and also taking the risk that that jurisdiction too will be forced to open up its bank accounts to scrutiny.  As the worldwide move to increased tax transparency gathers pace, there will soon be nowhere left to run. It is much more sensible to sort out one’s tax affairs once and for all and then move forward using the legitimate tax mitigation structures available in your country of residence.  Such structures often result in you paying less tax than if you are currently paying the 20% withholding tax.  Speak to an experienced financial and tax advisory firm like Blevins Franks to find out what these are and how they would benefit you.    To keep in touch with the latest developments in the offshore world, check out the latest news on our website www.blevinsfranks.com

Source: http://www.tenerifenews.com…

Let’s clear up some more false rumors before we get into the court document details.

1. Contrary to earlier allegations, Mr. Fayed did not personally rent the vehicle; the vehicle was rented by the business on a month-to-month basis through a corporate credit account.

2. The government also alleged that Mrs. Fayed sought to cooperate with the government on or about June 24, 2008. District Court Judge Otis D. Wright II, however, struck that statement from the prosecutor’s pleadings as unfounded.

3. The government has also referred to over $20 Million in Ponzi scheme proceeds going through defendant’s accounts, however, there is no evidence that Goldfinger or Mr. Fayed were engaged in a so-called Ponzi scheme.

4. The large amount of gold and silver bullion reserves and bank accounts seized by federal law enforcement demonstrates that e-Bullion.com has sufficient reserves to cover its depositors.

The big question everyone was asking over the past few weeks was….What did the government seize?  Now we know.

EVERYTHING THEY COULD FIND for a total of $24 million.

The FBI and IRS seized bank accounts, business records, property, and precious metals holdings from Goldfinger’s vaults, including gold and silver bullion worth approximately $24 Million that is held for the benefit of thousands of e-Bullion.com depositors.”

Since e-bullion began the company has had just over 466,000 customer accounts.  That is total accounts, funded or not, since day one and you may compare that amount to e-gold’s over 5 million accounts, Webmoney with over 5 million, and finally GoldMoney comes in at over 40,000.

At the time of the original indictment in February of 2008, the prosecutor Mark Aveis made a dire prediction in court papers which has come true today.  In sworn documents, he predicted what would happen to e-bullion’s online business if that sealed indictment ever became public as it just has,

02/08 “Similarly, disclosure of this indictment would most certainly cause disruption, if not a complete shut-down, of the relevant Internet sites and would, accordingly, likely destroy any possibility of a proactive, ongoing investigation of very important targets.”

New court documents show his prediction has come to pass,

08/08 “…the FBI and IRS executed search warrants and seizure warrants that caused a complete shut-down of Goldfinger and e-Bullion.com, and all relevant Internet sites.”

If you had funds in an e-bullion account, there is NO reason to wait by your mailbox for the check to arrive. That is a long way off. It is likely you will be filing a claim and waiting until after the trail a receiver could be the one sending out checks for pennies on the dollar. Also be prepared to show a ‘source of funds’ for that money, the government is NOT in the habit of sending the proceeds of crime back to the crooks. That tugging you feel at your pocket…that’s the long arm of the law.

The hundreds of HYIP scams now in operation accepting e-bullion, you can just kiss those funds goodbye.

Cheaters justice. I really hate those scams.

Also, I’m now told by some people that the the FBI may even be legally scalping a percentage of the seized assets although I’m not sure exactly how that would work.

What is going on now?

The defense has requested some funds be released from the government seized loot.

“…an order to immediately release $300,000 in order to preserve exculpatory evidence contained within the Internet servers 2 and computer network system operated by defendants and the 3 business entity e-Bullion.com …Approximately $100,000 per month is needed to pay for server rack space, security software, bandwidth and personnel to maintain defendants’ Internet servers and computer network system.”

Jim’s lawyers are asking for the release of $300k to cover the continuing operation of the businesses. (to keep the servers alive)  They are telling the court that on these servers is evidence which the defense might use to prove Jim’s innocence and that information needs to be allowed to survive throughout his trail and persecution….sorry prosecution.

“…evidence is at a risk of loss due to the sudden and unjustified shutdown and seizure of defendants’ lawful business. The exculpatory evidence that will be lost when the Internet servers and computer network go down is the evidence needed by the defendants establish their innocence.”

Finally, there is the ever present reality that possible charges relating to the murder could be forthcoming from the State or Federal Government.

Is there a bright side of the story or silver lining to any of this?

In fact there could be, Goldfinger and Mr. Fayed may not even have been the actual targets of the longstanding FBI and IRS investigation.

On February 26, 2008, when the original sealed indictment was issued, the prosecutor, Assistant United States Attorney Mark Aveis, told the US District Court magistrate:

“…The indictment represents one of several steps in a long-term investigation by the FBI and IRS regarding fraud, money laundering, and terrorist financing…”

Despite the prosecutor calling e-bullion the ponzi, there is much evidence to suggest that the larger government case is focused on an old matter now being sorted out in the court. Can e-bullion be labeled a ponzi if it was just the company receiving funds on behalf of an account holder?

I think the ponzi and terror financing case they are all referring to is that of Abdul Tawala Ibn Ali Alishtari, a/k/a “Michael Mixon and “Flat Electronic Data Interchange” or F.E.D.I.  This appears to have been a ponzi scheme run by “Michael Mixon” and associates in which they used the e-bullion and Goldfinger accounts to receive their scam proceeds. Here is some background on that case, and some documents from the files that show these crooks may have only been using e-bullion to receive their ponzi funds.  There is NO evidence yet that e-bullion ever operated a ponzi.

Abdul Tawala Ibn Ali Alishtari, a/k/a “Michael Mixon and FEDI

From approximately 1998 through 2004, Alishtari committed a massive fraud in which he stole millions of dollars from his victims through the operation of a loan investment program he called the “Flat Electronic Data Interchange” (“FEDI”). FEDI was purportedly a high-yield investment scheme, in which Alishtari falsely promised his investors that, in exchange for their investment, they would receive high, guaranteed rates of return, according to the indictment.

NEW YORK—Michael J. Garcia, the U.S. Attorney for the Southern District of New York, Mark J. Mershon, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and Raymond W. Kelly, the New York City Police Commissioner, announced today the arrest of Abdul Tawala Ibn Ali Alishtari, a/k/a “Michael Mixon,” on attempt charges of terrorism financing, material support of terrorism, and international money laundering, as well as additional charges of conspiracy and wire fraud. According to the five-count Indictment, which was unsealed in Manhattan federal court earlier today. Alishtari, a 53-year-old resident of Ardsley, New York, facilitated the transfer of $152,000 with the intention that it be used in Afghanistan and Pakistan to help train terrorists. Specifically, in the latter half of 2006, Alishtari accepted payment to discreetly transfer these funds, believing that they were earmarked for Pakistan and Afghanistan. Alishtari believed that the funds were being sent abroad to support a terrorism training camp in Afghanistan by funding the purchase of equipment such as night vision goggles. One of these transfers, which is also the subject of the international money laundering charge in the Indictment, relates to Alishtari’s transfer of $25,000 from a bank account in New York to a bank account in Montreal, Canada, with the intent that the funds be used to provide material support to terrorists. *http://newyork.fbi.gov/dojpressrel/pressrel07/terroristfinancing021607.htm

http://www.osc.gov.on.ca/Enforcement/Proceedings/SOA/soa_20030611_anderson-et-al.pdf

If there was ever any question to whether e-bullion had previously cooperated with the authorities on legal subpoena’s Mr. Fayed’s attorney is desperately trying to dispel that myth. This new court document offers up over two dozen agents of the government that e-bullion worked with providing requested account information.

There is a huge amount of additional information, history and data to be discussed regarding e-bullion. We will be detailing more documents, data and updates in this month’s issue of DGCmagazine.com so please look out for the new monthly issue around the 27th of August or sooner.