UBS-Swiss Bank Tax Cheats: Man Admits Hiding $1 Million Overseas

The names of American UBS AG clients who've hidden money overseas to avoid paying millions taxes has begun to trickle in. But the details of just how far UBS went to encourage its clients to hide income in foreign bank accounts are also emerging.

As the Wall Street Journal reports, UBS pushed its clients to use Hong Kong's lax regulatory environment to set up shell companies in order to skip out on millions in tax liabilities. Here's the Journal:

"Hong Kong, of course, can be used as a legitimate tax-planning jurisdiction and gateway to mainland China. But tax lawyers say the former British colony's corporate legal system allows structures to be assembled with ease, mirroring in many ways how corporations are formed in the U.S. or Europe. These lawyers say the IRS might also face challenges investigating corporations set up in Hong Kong, which has come under fire in the past for not sharing tax information with other jurisdictions."

Yesterday, news surfaced that John McCarthy of Malibu, California, the fourth person charged in the UBS investigation, plead guilty to shifting more than $1 million from his Los Angeles company into an account in Hong Kong. From there, McCarthy moved the funds into a Swiss UBS account.

Bloomberg reports that, according to McCarthy's plea agreement, while banking with UBS in the Cayman Islands, UBS bankers told him: "a lot of United States' clients don't report their income and just take it off the top."

UBS has cooperated with the U.S. Department of Justice, and has said that some 250 names of U.S. clients will be released in coming weeks. McCarthy's tax evasion began in 2003, but he had some serious help and encouragement from UBS employees, who reportedly pushed him to set up fake foundations in far-flung locales. Here's Bloomberg's report:

"McCarthy...met with UBS bankers and his Swiss lawyers over the next five years [From 2003 on] to discuss UBS accounts, the agreement said. His Swiss lawyer advised him to set up a Liechtenstein foundation or a Panamanian or Hong Kong corporation to "create an extra layer of privacy" and help hide his identity, according to the plea agreement. "

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Comments

[spinns17]

we need to shut the fed reserve down now.

[basementfrog]

Yea, who wants to pay taxes to support this country?

It may be that everyone decides we don't want to pay taxes. If this is the case, then:

Lets start by shutting down the military, first, since it wastes money and provides us with little (if any) value. As we see from Arizona headlines today, we can all carry guns and protect ourselves anyway (thank you, Judge Roberts and the NRA for supporting assination and murder and mob rule.)

Next, shut down the public schools, which at this point are so cut back that our children are really just going to school to get drugs and laid. We are obviously producing the dumbest people on earth.

Next, close medicare, etc., and social security. Take care of your own tail, baby. CYA, you rugged, self-sufficient, independent individuals. Yippie I oh, buckaroo. When you get old and sick, call you kids. They love you. You don't need govenment aid or insurance for that matter. And when things get too painful for your ill carcus, have your son pull out his attack rifle and use you for target practice, Save us all some money.

Finally, the politicians can all go home. Postitive point being we don't have to listen to how much good they are doing us when the truth is they are simply enriching themselves and their wives and friends with our tax dollars and lobbyist bribes.

[take10]

I love your sarcasm! But, it's true that some people would prefer universal chaos to universal health care. Sad, but true!

[basementfrog]

Offshore bank accounts allow the top 5 percent (mostly) of our population to hide income from the IRS. This costs US Treasury $350 billion per year in lost tax revenue and the other 95 percent of us must make this up via higher taxes, whether we pay higher sales taxes or income taxes or use taxes. Look at your phone bill details if you need to know how the tax burden is shifted into a variety of small taxes on everything.

This same 5 percent owns $42 trillion of the total $44 trillion of U.S. assets.

The lying, cheating methods are so numerous you actually have lawyers and accountants on late night TV (watch TV adds between 2am to 5am) asking you to call them for how to get out of paying your taxes; boasting endorsements from people who have cheated the IRS and gotten away with it.

[bankownedbyamerica]

The most pressing issue is why we, the American people, were fooled into thinking Obama would create more jobs.
hat tip to http://www.iamned.com .....

[zmjz01]

When I heard that actor/producer Michael Douglas (son of Kirk) lived in Bermuda, I immediately wondered about his tax status and possible avoidance. I know his wife is British, but then, I wondered anyway why he would make Bermuda his prime domicile (if if it). Is there anyone out there who knows Bermuda tax laws for US citizens?

[Shaas]

What a joke: the "poor man" was pushed by the bad bad bankers.

Only Americans could believe such a non-sense. Reminds me of the triggering lies of the Iraq war 2. Or of Kuwaitwar "Iraq war 1".

[bascombe]

and nothing will be done.

[BefuddledinTX]

This is just the tip of the iceberg. As the majority of Americans complain about high taxes, these are the people we have to thank. We are underwriting their portion of the cost of our government. Maybe if tehse mega-rich were paying their fair share of the tax burden, the tax rate might not need to be so high.

One more vicious cycle - the more they hide their money, the higher the tax rate; the higher the tax rate, the more incentive for them to hide their money.

[mdspatsy]

Peculiar and unethical things are happening in America.
Then,how will you expect country will go in right paths.
I am writing these few sentences with sadden mood.
Now,i firmly believed that many honest persons with honest dealings have to find a new place for their lives.
That may not be possible at this juncture.
Any how, Honest persons will have entry into heaven
Thats all i can say now.

[ListenAndLearn]

It took him five years of meetings with bankers and lawyers to set up a dummy foundation in Liechtenstein and dummy corporations in Hong Kong and/or Panama to save a measly $1 million in taxes? He probably paid twice that much in professional fees, travel, etc. What a jerk!

[Paul Peete - Huffpost Blogger]

It comes as no surprise that with Phil Gramm on the payroll, UBS would resort to this kind of illegal activity.

[DontFeedTheBeast]

like Barney Frank with Fannie/Freddie

[SueInCA]

Or paulson with Goldman Sachs or Cheeney with Halliburton or All the C street gop, or ensign paying off his mistress..........................And yes, Gramm is a total s c/u/m

[sonofsamphm1c]

You do realize you can never even begin to back this lunacy up.

[munki]

Have people pay tax... give them Amnesty...

People will do what is right first... give them a chance to pay...

[SueInCA]

They have a very short window that is open now, but once the names come out, they are virtually up the pro/verbial c/r/e/e/k

[TalkingOutLoud]

Huh, they had the chance when they started. They choose this path, sure, they received encouragement; but, I'm doubting the USB banker happened to be driving pass their company, just dropping in for tea and biscuits when the subject of a successful TAX EVASION plan just popped up as the biscuit crumbs fell from the bankers lips.

They need to pay what they owe just like the person owing $1000 would be hounded to hell by the IRS if they didn't pay. These people benefited from the infrastructure that you and I are paying for at threat of loss of everything if we rub the IRS the wrong way.

Why should they get a break; hell, give me a break from paying taxes for a year, I've been a good boy. But you're saying they should be given a break "amnesty" because they chose to steal from all of us by not paying what they owe and then trying to conceal it and costing us more trying to track them down!

No, I'm sorry, I don't understand your point....how is justice served?

[TXfemmom]

Why haven't the people at UBS who assisted in these crimes been tried?

[sonofsamphm1c]

One of them is on the run. He's running around his Swiss chalet.

[raven119]

Tax dodges in Switzerland through the Cayman Islands and Hong Kong? Nothing new here...except investigation and prosecution. Get enough back taxes and maybe we will be able to pay for health care after all. Now, how many government contractors, major U.S. corporations and influential politicians have used this dodge? That would make for very interesting reading, indeed.

[SueInCA]

We will see when the names come out...........................they already released the guy in this article so no sense in holding back now.

[sonofsamphm1c]

I am curious. What does he do for a living?

[jbrantow]

Tax cheating even with their Bush Tax cuts.......greedy selfish and pathetic.

[canuck99]

Don't be disappointed if the list includes Democrats. Actually the underlying crisis of wealth disparity between the rich and poor in the US is more insidious than the hot button issue of health care. Greed does not have any political allegiance.

[SueInCA]

on that one you are right. Greed is evident in the wall street deb/acle and health care crisi/s

[chedet]

I'm never upset if it involves democrats. Money has always been the common denominator. Judging by how the politicians talked you can tell that their true religion is actually money.