California man to plead guilty in bank secrets case

LOS ANGELES -- A man accused of trying to avoid paying taxes has agreed to plead guilty to failing to report more than $1 million he transferred to a Swiss bank account, according to court documents filed Friday.

John McCarthy will plead guilty to one count of failing to file a Foreign Bank and Financial Accounts report. He is expected to appear in court Sept. 14 and faces up to five years in prison and fines totaling $250,000.

McCarthy, who resides in Malibu, Calif., is the first person to be named publicly after the Swiss and U.S. governments reached a deal Wednesday to settle American demands for the identities of suspected tax dodgers. The Internal Revenue Service is seeking more than 52,000 names from Zurich-based UBS, but both governments wouldn't say how many names will be revealed.

McCarthy funneled the money to a UBS account with the help of a Swiss lawyer and bank officials between 2003 and 2008, court documents said.

"The defendant was advised by UBS representatives that a lot of United States clients don't report their income and just take it off the top," according to court documents.

The attorney, who wasn't identified in court documents, told McCarthy he would create two entities that "would allow for an extra layer of privacy and help to conceal defendant's liability."

By transferring more than $1 million to the Swiss bank account, prosecutors said McCarthy failed to pay at least $200,000 in federal income taxes.

McCarthy's lawyer Steven Toscher did not immediately return a phone message seeking comment Friday.

The IRS in February asked a federal judge in Miami to force UBS to turn over names of some 52,000 American clients believed to be hiding nearly $15 billion in assets in secret accounts. UBS and the Swiss government had resisted, arguing it violates Swiss banking confidentiality laws that date back centuries.

UBS paid a $780 million penalty earlier this year and turned over names of about 300 American clients in a deferred prosecution agreement with the Justice Department. In that case, UBS admitted helping U.S. citizens evade taxes, which experts say is not a violation of Swiss bank secrecy laws.