Phoenix-area businessmen Stephen M. Kerr and Michael Quiel and former San Diego attorney Christopher M. Rusch were charged in Phoenix with alleged conspiracy to defraud the Internal Revenue Service (IRS) for concealing millions of dollars in assets in numerous Swiss bank accounts held at UBS and elsewhere, the Justice Department and Internal Revenue Service (IRS) announced. The charges are contained in an indictment returned by a federal grand jury on December 8, 2011, which was unsealed yesterday. Kerr and Quiel were each also charged with filing false individual income tax returns for tax years 2007 and 2008 and failing to file Reports of Foreign Bank and Financial Accounts (FBARs) for those same years. Rusch was arrested Sunday by U.S. law enforcement agents in Miami after being removed from Panama by Panamanian authorities at the request of the United States. Quiel was also arrested Sunday in the Phoenix area.

According to the indictment, Kerr and Quiel separately owned and operated a number of businesses, including two venture capital firms: CCN Worldwide Inc. and Legend Advisory Corporation, respectively. These companies provided financial capital to start-up companies and other services to businesses seeking to become publicly traded through mergers and acquisitions. Rusch was an attorney licensed and practicing in California. Rusch’s law practice focused on international business planning, criminal and civil tax defense, international tax, and creating and maintaining offshore structures.

None of the three individuals disclosed the existence of these offshore accounts, or any income earned through these offshore accounts, to the IRS for the years charged in the indictment. Reporting requirements of offshore accounts have been implemented for years; however, as of early 2011, FBAR regulations were amended because the federal government sought to increase scrutiny on these types of accounts. The Financial Crimes Enforcement Network, or FinCEN, was at the forefront of these amendments. It was thought that many U.S. taxpayers, particularly the wealthy, were not disclosing information regarding their offshore bank accounts, thus avoiding taxes and concealing the amount of these funds.

For years, the Swiss bank accounts have been a safe haven for offshore bank accounts. The Swiss believe in neutrality, but with the increasing concerns regarding globalization and the intertwining of the global economy, regulations have been implemented in order to monitor such accounts. The U.S. is one of the leading countries to follow this trend.

The conspiracy and FBAR charges each carry a maximum potential penalty of five years in prison and a $250,000 fine. The false return charges each carry a maximum potential penalty of three years in prison and a $250,000 fine.

The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.

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