Another UBS client pleads guilty to tax evasion charges in USA
— -- A New York businessman whose Swiss banker assured him that his offshore bank accounts would not be disclosed to the IRS Tuesday became the third American to plead guilty to tax charges related to an investigation of secret accounts at Swiss banking giant UBS.
Jeffrey Chernick, 70, the Stanfordville, N.Y. owner of a firm that represents China and Hong Kong toy manufacturers, pleaded guilty in a Fort Lauderdale federal court to filing a false tax return that failed to disclose $8 million in offshore assets, prosecutors said.
He faces up to three years in prison and a maximum $250,000 fine. But prosecutors wrote in a plea agreement they may recommend leniency based on his cooperation. Defense attorney Douglas Tween could not be reached for comment.
Chernick's guilty plea stems from a broader court battle in which the U.S. Justice Department has demanded names of the American owners of roughly 52,000 secret UBS accounts. UBS and the Swiss government have refused, arguing that compliance would violate their country's renowned banking secrecy laws.
A court conference to assess the status of settlement talks in that case is scheduled for Wednesday.
Chernick signed a court-filed statement of facts in which he acknowledged that he established a Hong Kong corporation in 1981 and opened offshore accounts in the firm's name to conceal commissions paid by Chinese and Hong Kong firms for toy sales in the U.S.
He established other secret offshore accounts over time, including one at a UBS banking location in the Cayman Islands, Chernick acknowledged.
His admissions follow similar recent guilty pleas to tax charges by two other UBS clients: Stephen Michael Rubinstein, a Boca Raton accountant, and Robert Moran, a Fort Lauderdale yacht broker.
Chernick's admissions could increase settlement pressure on UBS in the broader federal case. The bank in February agreed to pay $780,000 in a settlement that deferred criminal prosecution of charges that its bankers made repeated secret trips to the U.S. and illegally helped wealthy American clients evade federal taxes.
According to the statement of facts, an unidentified Swiss banker assured Chernick that a $45,000 secret payment to an unidentified Swiss government official produced an assurance that details of Chernick's offshore accounts "were not designated to be turned over to United States authorities."
Chernick also acknowledged that a Swiss attorney not identified by name in the statement talked him out of disclosing his offshore holdings to the IRS last year.
Additionally, Chernick confirmed that bankers from UBS and a smaller, unidentified Swiss bank met with him repeatedly at various U.S. locations to discus his offshore assets. According to the statement, an unnamed Swiss bank executive and a Swiss attorney "would dress as tourists" for the meetings "to avoid detection" by U.S. authorities.
The guilty plea may also increase pressure on Americans with secret offshore accounts to voluntarily contact the IRS under a program that offers reduced penalties. Failure to come forward by the program's Sept. 23 deadline "exposes these Americans to increased penalties and possible criminal prosecution," said John DiCicco, Acting Assistant Attorney General for the Justice Department's tax division.