H. Jacob Lager

The dramatic tale of “A True FBAR Criminal”

In FBAR, Foreign taxes, IRS regulations, Tax Crime on July 27, 2012 at 8:02 am

One question I often hear when explaining FBAR liability is, “Are they really going to come after me?”

It’s not an unreasonable question.  Oftentimes, the penalties for FBAR non-compliance can seem very severe, especially when dealing with a foreign client who may have recently become a U.S. taxpayer and unknowingly retained reportable accounts abroad.

This week, the U.S. Attorney’s Office for the Southern District of Florida issued a press release that provides an example of just who “they” are truly “going after.”

The presser announced yesterday’s sentencing of Miami Beach resident Luis A. Quintero for willful failure to file his FBARs.  So what was the sentence?  Roddy, tell him what he won!

  • Four months in federal prison;
  • Three years of supervised release;
  • 250 hours of community service; and
  • A $20,000 criminal fine.

But wait!  There’s more!

Is that 27.5% OVDP penalty looking more attractive?

Before anyone panics, lets take a look at what Quintero actually did.  Court documents indicate that he formed two offshore corporations, which were then used to open certain Swiss UBS accounts, which housed (and hid) roughly $4 million.  Quintero then facilitated multiple transfers to and from the subject accounts.  Of course, none of that is necessarily illegal had he disclosed the accounts’ existence and their activities.

Which he didn’t.

The U.S. Attorney’s Office also noted that there was no question that Quintero knew that he was required to file an FBAR for the subject accounts.  In fact, Quintero had previously filed FBARs for other Mexican bank accounts to which he was attached.  That’s a bad fact if you’re trying to argue that your subsequent failure wasn’t “willful.”

The press release further indicates that the Quintero prosecution was a direct result of UBS’s 2009 agreement to cooperate with U.S. authorities in identifying suspected tax cheats.  If you have a U.S. client that is, or was, a Swiss UBS customer in the recent past, you may want to suggest a review of their reportable foreign accounts.

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  1. Looks like there are fewer and fewer places for tax criminals to hide. I wonder when/if the Cayman Islands will catch on…

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