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California Couple Receives Prison Sentence in Offshore Account Tax Evasion Case

On Behalf of | Aug 10, 2012 | FTB, Tax Controversy, Tax Crimes |

Sean and Nadia Roberts of Tehachapi, California, pled guilty before the Eastern District of California to a criminal information charging them with filing a false tax return under Internal Revenue Code § 7206(1). The charge is related to an undisclosed Swiss bank account that they maintained at Union Bank of Switzerland (UBS), as well as other offshore bank accounts, the Justice Department and the Internal Revenue Service (IRS) announced today.

From 2004 to 2008, the couple failed to report interest income from millions held in offshore accounts, falsely deducted bank transfers and under-reported income, prosecutors said. The tax returns in question covered both individual income and the couple’s income from two corporations they ran, a pilot-testing school and an aircraft-maintenance company. The Justice Department said that while the tax loss amounted to $709,675.00, Mr. and Mrs. Roberts were ultimately ordered to pay $3.2 million in restitution and fines.

Over a period of four years, the couple transferred more than $1.2 million from a U.S. corporate account to a UBS account, and caused the transfers to be falsely deducted as interest payments on corporate income tax returns as a sham aircraft loan. Court records also established that, in or about May 2008, the couple closed their UBS account and transferred over $4.8 million to an account in another name at a Swiss branch of a Liechtenstein bank. This transaction was completed after Mr. and Mrs. Roberts learned that UBS was under investigation by U.S. authorities and that they should leave UBS to ensure the continued secrecy of their account.

Subsequently, in 2008, the couple transferred more than $1.4 million from the US to the Excalibur account at the Liechtenstein bank and again, caused the transfers to be falsely deducted on a corporate income tax return. Also in May 2008, they opened a bank account in the name of Modest Winner, a nominee Hong Kong entity, at the Liechtenstein bank. In 2008 and 2009, the couple transferred funds from another of their entities to that Modest Winner account. In 2009, Mr. and Mrs. Roberts transferred that account to a bank in Hong Kong. They also maintained numerous undeclared foreign bank accounts in New Zealand and South Africa held in their own names. Many of the financial transactions were done with the assistance of the same operator of the Swiss wealth management and tax advisory business.

It’s therefore not surprising that Mr. and Mrs. Roberts agreed that their offense involved sophisticated means and pursuant to § 2T1.1(b)(2) of the Federal Sentencing Guidelines, increased the base line offense by two levels. Both Mr. and Mrs. Roberts, ages 77 and 64 respectively, were sentenced to one year and one day in prison by Judge Anthony W. Ishi of the Eastern District of California.

Prosecutors had asked the court to impose a two-year prison sentence because, according to court papers, the couple took steps to keep their offshore holdings secret after the investigation into UBS became publicly known.

According to an IRS maintained list of UBS cases, only one other former UBS client, Richard Werdiger, has received a prison term that long. Other former UBS clients have received a combination of probation, home confinement and fines.

You can read Mr. and Mrs. Robert’s charging documents and plea agreements here, here and here.


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