January 31, 12

NEWS / UBS Clients and Tax Attorney Indicted in Phoenix for Hiding Assets in Secret Foreign Bank Accounts

Former San Diego Resident Arrested in Miami after Being Expelled From Panama

Phoenix-area businessmen Stephen M. Kerr and Michael Quiel and former San Diego attorney Christopher M. Rusch were charged in Phoenix with conspiracy to defraud the Internal Revenue Service (IRS) for concealing millions of dollars in assets in numerous secret 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 Dec. 8, 2011, which was unsealed today. 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 yesterday 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 yesterday 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.

Beginning in or before 2004, and continuing through at least December 2007, Kerr and Quiel obtained control of shares of stock of publicly traded domestic companies in a way that concealed their ownership of the stock. Kerr and Quiel then deposited the stock, or proceeds from the sale of the stock, to multiple undeclared bank accounts set up with the assistance of Rusch at UBS in Switzerland and at another Swiss bank. These accounts were all held in the names of nominee entities to further conceal Kerr’s and Quiel’s ownership. Kerr and Quiel also used the accounts to conceal income earned from the subsequent sale of this stock from the IRS. In 2007, the combined total net assets in Kerr’s accounts exceeded $5.6 million and Quiel’s accounts exceeded $2.6 million. Rusch maintained signature authority over the secret accounts and, with the assistance of a Swiss account manager and financial intermediary, facilitated transactions on behalf of Kerr and Quiel.

In addition, the indictment alleges that Rusch maintained his own separate secret offshore accounts, including accounts held in the names of nominee entities at UBS and a Panamanian bank. Among other things, Rusch utilized his nominee Panamanian entity to assist Kerr in concealing the purchase of a golf course in Colorado with funds transferred from Kerr’s secret Swiss accounts. In addition, Rusch utilized his client trust account to transfer funds to Kerr’s and Quiel’s undeclared Swiss accounts and to repatriate funds back to the United States for the benefit of Kerr and Quiel. None of the three defendants 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.

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.

This case is being prosecuted by Trial Attorneys Timothy Stockwell and Monica Edelstein of the Justice Department’s Tax Division and was investigated with the assistance of the IRS.

An indictment is only an allegation of criminal conduct and is not evidence of guilt. A person is presumed innocent until and unless proven guilty beyond a reasonable doubt in a court of law.

http://www.justice.gov/opa/pr/2012/January/12-tax-136.html

Tags: corporation, international business,