A 79-year-old former UBS account holder and US citizen, Mary Estelle Curran, has been hit with a massive $21m fine after she pled guilty to two counts of tax perjury and Report of foreign bank and financial accounts (FBAR) violation in a Florida Court.
According to the Justice Department and Internal Revenue Service, Curran agreed to waive indictment and plead guilty to two counts of tax fraud.
According to court documents, the US District Court for the Southern District of Florida ruled Curran had failed to report $667,716 over the period 2001-2008 on her undeclared offshore accounts with UBS which exceeded $43m in 2007.
Curran agreed to pay a FBAR penalty of $21,666,929, which represents 50% of the year-end balances of the undeclared accounts for the year 2007.
US authorities tax loss of $667,716
Curran’s first sentencing comes after UBS was fined $780m in February 2009 and forced to hand over the names of 4,450 suspected US tax dodgers who held up to $18bn undeclared financial accounts at UBS.
If compared to the fee the bank Wegelin & Co was ordered to pay ($57.8m) Curran’s individual penalty represents nearly 40% of the fee a New York Court ordered the oldest Swiss private bank to pay on 3 January, after it pleaded guilty of helping US citizens evade tax.
Facing six year prison sentence
In media reports, one of Curran’s lawyers Nathan Hochman said she accepted full responsibility for her actions, but there are a significant number of mitigating circumstances in the case.
Curran faces a potential maximum prison term of six years, with advisory Federal Sentencing Guidelines and Policy Statements (or case law) indicating guidelines ranging from 30 to 37 months.
A sentencing date has not been set.
2001-2007: Swiss and Lichtenstein accounts at UBS AG
In 2000, Curran (who lives in a $9.6m property in Palm Beach), inherited her late husband’s undeclared foreign financial account at UBS AG in the name of Flognet Foundation, a nominee Lichtenstein foundation that her husband had created.
The Floridian, who is a neighbour of Ruth Madoff, Bernard Madoff’s wife, also became the beneficial owner of another UBS account in 2007, in the name of Norega Investment, a nominee Panamanian corporation which was created the same year, according to court documents.
In June 2008, the fiduciaries managing Curran’s account at UBS closed those accounts and transferred the assets to a new account opened in the name of Norega Investment in an unnamed Lichtenstein bank, according to court documents.
Income tax filed, but not for Swiss accounts
Having foreign financial accounts required Curran to file a US Individual Income Tax Return (IITR) to report her worldwide income. She was also supposed to declare any foreign based financial accounts at UBS in Switzerland in which she had a financial interest or signature authority over that contained assets in excess of $10,000.
According to documents relating to the guilty plea, Curran had filed US IITR through 2001 to 2007, but "wilfully failed to report on those tax returns any income earned on the accounts that she held at UBS in Switzerland.
She also failed to "disclose that she had an interest in or signature or other authority over a financial account in a foreign country."
Curran is made an example of
According to Assistant Attorney General Kathryn Keneally, Curran was being made an example of.
She said, "U.S. taxpayers who fail to come forward in the voluntary disclosure program risk prosecution and substantial fines, as this case demonstrates."
"The Justice Department continues to pursue those who hide income and assets from the IRS through the use of nominee businesses and offshore bank accounts," Keneally added.