03/04/2011

News / Former UBS Client Sentenced for Hiding Millions in Offshore Bank Accounts

Paid $2.1 Million Penalty to IRS

SEATTLE – Arthur Joel Eisenberg of Seattle was sentenced today to three years probation by U.S. District Court Judge John Coughenour, the Justice Department and the Internal Revenue Service (IRS) announced today. Eisenberg pleaded guilty in December 2010 to willfully filing a false individual income tax return.



According to court documents filed in this case and statements made in court, Eisenberg admitted to filing a false tax return for 2004 in which he failed to report that he had an interest in or signature authority over financial accounts at UBS AG, one of Switzerland’s largest banks. He also admitted failing to report the income earned on his UBS financial accounts on his tax return. At the end of 2004, the total balance of Eisenberg’s various UBS financial accounts exceeded $3.1 million.



As part of his guilty plea, Eisenberg admitted that he opened a bank account at UBS in the Islands as early as 1983. The assets held in the account were later transferred to UBS AG in Zurich. In May of 2004, Eisenberg authorized and caused the formation of a Hong Kong corporation named East West Universal Limited and promptly transferred his assets from his existing UBS account to a new UBS account in the name of the corporation. However, Eisenberg continued to be the beneficial owner of the account and earned income from it through 2008. In 2008, Eisenberg instructed UBS to close the account and transfer the funds in the account to another large global Swiss bank headquartered in Zurich. The highest year-end balance of Eisenberg’s various accounts occurred in 2007 and exceeded $4.2 million.



Eisenberg paid a $2.1 million penalty for failing to file a Report of Foreign Bank or Financial Account (FBAR) form. An FBAR is a form separate from an income tax return that a taxpayer is required to file with the IRS every June to disclose additional information about foreign financial accounts over which the taxpayer has signature authority or other control over, and which had an aggregate value exceeding $10,000 at any time during the year.



Acting Deputy Assistant Attorney General for Offshore Matters Bruce Salad of the Justice Department’s Tax Division and Jenny A. Durkan, U.S. Attorney for the Western District of Washington, commended the investigative efforts of the IRS agents involved in this case, as well as trial attorney Stephanie M. Carowan of the Tax Division and Assistant U.S. Attorney Nicholas W. Brown who prosecuted the case.

http://www.justice.gov/opa/pr/2011/March/11-tax-279.html

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