Wolfgang Roessel of Ft. Lauderdale, Florida, pleaded guilty on Wednesday in the U.S. District Court in the Southern District of Florida to filing a false tax return for 2007, the Justice Department and Internal Revenue Service (IRS) announced.

According to the court documents, Roessel, a U.S. citizen, maintained bank accounts at UBS AG in Switzerland, which he failed to report on his 2002 through 2007 personal income tax returns. He also failed to file a Report of Foreign Bank and Financial Accounts (FBAR) for these same years. In 2002, Roessel opened a UBS numbered investment account in the nominee name of a foreign entity, Neptune Trust, with an opening balance of approximately $4 to $5 million. In around 2004, this account and subaccounts were transferred into the nominee name of another foreign entity, Cyan United, and traded in U.S. and foreign securities. Allegedly, Roessel met with a Swiss banker periodically to discuss the performance of his accounts.

The IRS requires U.S. persons to file an FBAR for every taxable year reporting their interests in foreign financial accounts, if the foreign account is in excess of $10,000 at any one time during the calendar year. According to the IRS, the reporting requirement has been implemented because foreign financial institutions do not follow the same regulations as U.S. banks. Of course, the obvious reason for such a reporting requirement is so that the IRS can tax the funds once they have been reported.

Court records also allege that, dating back to the 1980s and up through the late 2000s, Roessel held accounts at different times at Bank Wegelin and another Swiss bank (Bank A) into which he deposited foreign proceeds from his business, yet which he neither reported on his tax returns nor on the required FBARs. In the early 2000s, the foreign account at Bank A was put into the nominee name of Cyan United. A Swiss money manager made investments on Roessel’s behalf and met with him periodically to discuss the performance of the account. In 2008 and 2009, during which period Roessel was aware of the government’s grand jury investigation into his foreign UBS accounts, he disclosed only the existence of the UBS accounts on his tax returns for those years and did not report the other Swiss account.

In recent years, the IRS has spent more energy investigating and penalizing U.S. citizens that maintain offshore accounts in an effort to subject these accounts to U.S. tax and banking regulations. At one time, holding a large amount of assets in a foreign account, particularly Switzerland, was highly desirable due to the little or no tax that was assessed on the assets. However, as the case against Roessel demonstrates, the maintenance of an offshore account can have financially and criminally devastating consequences if U.S. reporting requirements are not met.

The plea agreement includes a tax loss of $312,802.95 for 2002 through 2007, and an FBAR penalty owing to the U.S. Treasury of $5,750,933.99, which is 50 percent of the 2007 unreported foreign bank accounts year-end balance of over $11 million. Roessel faces a potential maximum prison term of three years and a fine of up to $250,000. A sentencing date has not been set.

This plea comes only a few months after the DOJ’s indictment of Bank Wegelin for allegedly enabling U.S. citizens to avoid U.S. taxes, and a $16 million seizure from Wegelin’s correspondent bank, UBS AG. Roessel’s case may be the tip of the iceberg of the investigation into U.S. citizens with accounts at these banks.

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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