A French court recently pounded Swiss financial giant UBS Group with a record high fine and penalty after finding the entity sought and then helped clients stash their unreported cash in Swiss accounts to avoid paying French taxes.
Tax fraud is known by many names. In the case of a French court and UBS, it is called tax evasion and money laundering. Commenting afterward, the Chief French judge in the matter, Christine Mee, stated, “The court can only conclude that (UBS) consistently put its own financial interests over the sovereign rights of the French state.”
As could be anticipated, the response from UBS legal counsel was equally clear. Remarked tax attorney Markus Diethelm, “This decision is incomprehensible, we will appeal. We have seen no facts and no evidence.”
So exactly what happened?
Investigation by French authorities into UBS practices was originally based on a report from a whistleblower.
As the seven-year investigation moved forward, UBS was required to obtain a bond against future penalties that might be imposed in the case. Eventually, the multinational company engaged in several rounds of settlement talks with authorities. When the talks bore no fruit, the matter moved into litigation.
Prosecutors accused UBS of using its agents to solicit business in France, particularly investment services. French clientele were encouraged to use the UBS investment group to hide unreported funds and assets in secretive foreign bank accounts. Yet, UBS was not legally authorized to serve French clients. Between 2004 and 2012, UBS illegally laundered client funds into offshore tax accounts.
In the event of court-imposed penalties, risk and litigation managers at UBS are reported to have set aside $640 million. The $5.1 billion penalty came as a surprise, but was in line with requests by prosecutors in the case.
Tax fraud and money laundering are serious crimes in Europe. We recently discussed the conviction in-absentia of a former Swiss banker for UBS group. The banker, who relocated to Germany, is out of reach to Swiss authorities. The gentleman was convicted of selling UBS bank data to German authorities in order to catch German tax evaders who were laundering their money through the Swiss UBS investment group.
UBS may well wish for less turbulent times ahead. In the meantime, the $5 billion fine will not be paid, pending appeal.
Speak with an experienced criminal tax defense attorney in ClevelandIf you are challenged by a criminal tax matter or civil tax audit, contact Robert J. Fedor, Esq., LLC for a confidential consultation. From offices in Cleveland, Ohio, and Chicago, Illinois, we provide local, national, and international legal representation to resolve your issues. Contact us or call 800.579.0997 today.