Swiss bank UBS sent a letter on September 10, 2009, to several of its US clients warning that their undisclosed income in Switzerland may be reported to the United States Internal Revenue Service. UBS told US clients to appoint a Swiss attorney to represent them or the Swiss government would appoint one for them.
As part of the recent settlement between the United States and UBS, UBS will reveal the identities of 4,450 US account holders that UBS believes have failed to pay US taxes by hiding assets in the Swiss banking system. The settlement resulted from a lawsuit filed by the United States seeking disclosure of all 52,000 account holders. The Swiss government became involved to protect its banking industry and assisted in negotiating the compromise. The international lawsuit against UBS is the second case this year involving undisclosed foreign assets. In February, UBS pled guilty to criminal tax evasion and disclosed 250 names. The two cases will only yield 4,700 US account holders out of 52,000, but those revealed are anticipated to be the largest UBS violators of the IRS tax laws.
Under the settlement agreement, the Swiss have 360 days to process the 4,450 accounts before the names will be released to the United States. UBS account holders who have been targeted for disclosure may appeal the disclosure decision to the Swiss Federal Administrative Court before the information is submitted to the United States. The Swiss govenment has appointed 5 temporary judges to handle approximately 500 anticipated appeals of the bank's disclosure decision. The decision of the Swiss Federal Administrative Court will be final.
In the meantime, record numbers of offshore account holders are taking advantage of a time limited IRS voluntary disclosure period, hoping to reduce their exposure to back taxes and a reduced fine with no criminal penalty. The IRS now averages an unprecedented 500 voluntary disclosures per week. The deadline for voluntary disclosure is September 23, 2009.
Sadly, there are still thousands and thousands of offshore account holders who will not be reported to the Internal Revenue Service, either voluntarily or through the UBS settlement. Those with information about tax evasion and/or tax underpayment can contact KEMY to learn if that information could qualify for a reward from the IRS.
Friday, September 18, 2009
Thursday, September 10, 2009
UBS Tax Evasion Cases To Get Special Scrutiny by Elite IRS Auditors
The IRS posted internal job listings recently for a newly created office within its Large and Mid-Size Business division. The Service is looking for auditors experienced in working with international tax treaties and complex cross-border corporate structures. The focus? Wealthy Americans who hid their assets in UBS accounts.
The Service is gearing up for an anticipated 10,000 new tax evasion cases that should result from the UBS settlement and the current off shore income tax amnesty program, set to end on September 23. Wealthy Americans with off shore holdings are scrambling for last minute tax advice, and hundreds are taking part in the IRS's amnesty program.
As part of a settlement, UBS, the United Bank of Switzerland, agreed on August 19, to turn over 4,450 names of its wealthiest US account holders who are the most likely to be engaging in tax evasion. UBS has 52,000 American account holders, and the agreement arose from litigation filed by the United States government to get access to the secret Swiss bank account information. UBS will give information about the 4,450 accounts to the Swiss government, which will screen the information and decide what should be forwarded to the United States.
The new IRS global high-wealth industry group will be one of six industry-specific sectors within the IRS's Large and Mid-Size Business division. IRS spokesman Frank Keith remarked that the establishment of the global high-wealth industry group was the first step in the IRS's long term enforcement strategy. Those selected will be the most experienced IRS auditors in dealing with global entities.
The Service is gearing up for an anticipated 10,000 new tax evasion cases that should result from the UBS settlement and the current off shore income tax amnesty program, set to end on September 23. Wealthy Americans with off shore holdings are scrambling for last minute tax advice, and hundreds are taking part in the IRS's amnesty program.
As part of a settlement, UBS, the United Bank of Switzerland, agreed on August 19, to turn over 4,450 names of its wealthiest US account holders who are the most likely to be engaging in tax evasion. UBS has 52,000 American account holders, and the agreement arose from litigation filed by the United States government to get access to the secret Swiss bank account information. UBS will give information about the 4,450 accounts to the Swiss government, which will screen the information and decide what should be forwarded to the United States.
The new IRS global high-wealth industry group will be one of six industry-specific sectors within the IRS's Large and Mid-Size Business division. IRS spokesman Frank Keith remarked that the establishment of the global high-wealth industry group was the first step in the IRS's long term enforcement strategy. Those selected will be the most experienced IRS auditors in dealing with global entities.
Friday, September 4, 2009
Record Pfizer Settlement for $2.3 Billion - Tip of the Iceberg?
The morning of the announcement of the $2.3 billion Pfizer settlement, a few hours before the seal was lifted, we received an emailed NY Times article about a pharmaceutical company's plans for off label marketing of a major anti depressant.
The seal was lifted, and the Department of Justice issued its press release at 10:30 AM. Congratulations poored in; reporters called; interviews were given. At about 4:00 PM, commentators began to point out that pharmaceutical manufacturers view settlements like Pfizer's as merely a "cost of doing business," and the financial penalty akin to "hitting a mule with a 2x4." KEMY agrees that the recoveries to date for off label marketing are probably the tip of the iceberg. Off label marketing of drugs is big business, and big pharma reaps immense profits from off label prescriptions.
KEMY is well aware that pharmaceutical manufacturers continue to engage in off label marketing of drugs, with serious ramifications. In addition to the misspent public dollars for Medicaid and Medicare reimbursements, off label prescriptions raise grave safety concerns. For example, sales reps targeted kids for prescriptions of Geodon, and many parents blindly followed their doctors' recommendations to put their children on the drug. Sadly, the situation is not unusual. We know of people who have died and kids who are suffering because they were the unfortunate victims of an off label marketing campaign.
The Pfizer settlement is particularly gratifying because it raises awareness about the often overlooked mental health population. The public continues to stigmatize those with mental health issues, and one of the by products of this stigmatization is poor health care. Pills are pushed on very vulnerable people who are often desperate to feel better. Many of these same folks receive Medicare or Medicaid, so public dollars and personal safety are at considerable risk. KEMY is very proud to have worked with the government to address this important aspect of health care.
The seal was lifted, and the Department of Justice issued its press release at 10:30 AM. Congratulations poored in; reporters called; interviews were given. At about 4:00 PM, commentators began to point out that pharmaceutical manufacturers view settlements like Pfizer's as merely a "cost of doing business," and the financial penalty akin to "hitting a mule with a 2x4." KEMY agrees that the recoveries to date for off label marketing are probably the tip of the iceberg. Off label marketing of drugs is big business, and big pharma reaps immense profits from off label prescriptions.
KEMY is well aware that pharmaceutical manufacturers continue to engage in off label marketing of drugs, with serious ramifications. In addition to the misspent public dollars for Medicaid and Medicare reimbursements, off label prescriptions raise grave safety concerns. For example, sales reps targeted kids for prescriptions of Geodon, and many parents blindly followed their doctors' recommendations to put their children on the drug. Sadly, the situation is not unusual. We know of people who have died and kids who are suffering because they were the unfortunate victims of an off label marketing campaign.
The Pfizer settlement is particularly gratifying because it raises awareness about the often overlooked mental health population. The public continues to stigmatize those with mental health issues, and one of the by products of this stigmatization is poor health care. Pills are pushed on very vulnerable people who are often desperate to feel better. Many of these same folks receive Medicare or Medicaid, so public dollars and personal safety are at considerable risk. KEMY is very proud to have worked with the government to address this important aspect of health care.
Wednesday, September 2, 2009
KEMY Represents Whistleblower in $2.3 Billion Settlement
Dr. Stefan Kruszewski, M.D., came to KEMY with grave concerns about off label marketing of Geodon, an anti-psychotic, targeting children. Geodon is approved to treat only patients ages 18-65 diagnosed with schizophrenia or acute manic or mixed episodes associated with bipolar disorder. The Harrisburg psychiatrist had noticed that Geodon was being systematically marketed for unapproved uses and to children. KEMY attorneys Brian Kenney and Tavy Deming agreed to work to correct the problem.
Today, as part of a record settlement involving Geodon and other drugs, Pfizer agreed to plead guilty to criminal conduct and to pay more than $2 billion in criminal and civil fines, penalties, and damages. To read KEMY's press release, click here.
Geodon is FDA-approved to treat only patients ages 18-65 diagnosed with schizophrenia or acute manic or mixed episodes associated with bipolar disorder. According to KEMY’s lead partner, Brian Kenney, “Pfizer targeted pediatrics and adolescents to expand off-label use and maintained on its payroll an army of more than 250 child psychiatrists nationwide.” Kenney continued, "The purpose and intent of paying so many child psychiatrists is clear – to gain a foothold within the fastest growing market for antipsychotics – children. The practice of expansive off-label use is dangerous, particularly in children because the drug has not been evaluated for its safety for the unique physiological make up of children."
KEMY’s whistleblower complaint led to a national investigation into Geodon. The federal investigation into Pfizer’s Geodon marketing practices was conducted by the U.S. Attorney’s Office for the Eastern District of Pennsylvania under the direction of U.S. Attorney Michael Levy, Assistant U.S. Attorney Marilyn May and Assistant U.S. Attorney Charlene Keller Fullmer. Massachusetts Assistant Attorney General Bob Patten led the investigation on behalf of the states and the National Association of Medicaid Fraud Control Units (“NAMFCU”).
According to Kenney, Pfizer’s switching campaign “endangered patients by ignoring or materially understating Geodon’s serious, and even life threatening, side effects.”
Sadly, industry watchers say that large settlements are seen by the drug companies as merely a cost of doing business. Off label marketing of anti-psychotics, anti depressants, anti convulsants, and stimulants to children continues to reap big financial rewards for pharmaceutical companies, despite the safety risks. Children today are being highly medicated with drugs that have only been tested on adults. These drugs have serious side effects and can harm children. If you know of off label marketing targeting children, call KEMY today.
Today, as part of a record settlement involving Geodon and other drugs, Pfizer agreed to plead guilty to criminal conduct and to pay more than $2 billion in criminal and civil fines, penalties, and damages. To read KEMY's press release, click here.
Geodon is FDA-approved to treat only patients ages 18-65 diagnosed with schizophrenia or acute manic or mixed episodes associated with bipolar disorder. According to KEMY’s lead partner, Brian Kenney, “Pfizer targeted pediatrics and adolescents to expand off-label use and maintained on its payroll an army of more than 250 child psychiatrists nationwide.” Kenney continued, "The purpose and intent of paying so many child psychiatrists is clear – to gain a foothold within the fastest growing market for antipsychotics – children. The practice of expansive off-label use is dangerous, particularly in children because the drug has not been evaluated for its safety for the unique physiological make up of children."
KEMY’s whistleblower complaint led to a national investigation into Geodon. The federal investigation into Pfizer’s Geodon marketing practices was conducted by the U.S. Attorney’s Office for the Eastern District of Pennsylvania under the direction of U.S. Attorney Michael Levy, Assistant U.S. Attorney Marilyn May and Assistant U.S. Attorney Charlene Keller Fullmer. Massachusetts Assistant Attorney General Bob Patten led the investigation on behalf of the states and the National Association of Medicaid Fraud Control Units (“NAMFCU”).
According to Kenney, Pfizer’s switching campaign “endangered patients by ignoring or materially understating Geodon’s serious, and even life threatening, side effects.”
Sadly, industry watchers say that large settlements are seen by the drug companies as merely a cost of doing business. Off label marketing of anti-psychotics, anti depressants, anti convulsants, and stimulants to children continues to reap big financial rewards for pharmaceutical companies, despite the safety risks. Children today are being highly medicated with drugs that have only been tested on adults. These drugs have serious side effects and can harm children. If you know of off label marketing targeting children, call KEMY today.
Thursday, August 27, 2009
Mortgage Fraud Trends
The Financial Crimes Enforcement Network (FinCEN) reports mortgage fraud trends based upon Suspicious Activity Reports (SARs) filed by money service businesses, like banks. Money Service Businesses must file a SAR when it knows or suspects that funds came from illegal activity, a particular transaction is structured in such a way to evade reporting requirements or appears to serve no lawful purpose, or the money service business is being used to facilitate criminal activity. FinCEN analyzes SARs data and uses it to identify vulnerabilities in financial systems, like the mortgage industry.
Currently, FinCEN targets the following trends in mortgage fraud:
1. Mortgage brokers initiating fraudulent loan practices.
2. Fraudulent appraisals being used as a basis for flipping.
3. Licensed appraiser identity theft.
4. Cashing out of refinance loans.
5. Fraudulent statements of income, including low or no document loans.
6. Home equity lines of credit.
The specific types of activities that "red flagged" and prompted the SAR filing included:
1. Misrepresentation of income/assets/debts.
2. Forged/fraudulent documents.
3. Occupancy fraud.
4. Appraisal fraud.
5. ID fraud.
6. Straw buyers.
7. ID theft.
8. Flipping.
Participants in the suspected fraud included appraisers, borrowers, builders, correspondent lenders, inside loan officers, investors, mortgage brokers, realtors, sellers, and those who provide settlement services, including attorneys and notaries.
While money service businesses file thousands of SARs a year, federal investigator follow up is minimal. One SARs filer reported that in all his years of filing SARs, he's only seen the government follow up on SARs five to ten times. He suggests that prosecutions resulting from SARs are minimal when compared to the large numbers of suspicious activities being reported every year.
The poor follow up on SARs filings demonstrates another reason why those with direct knowledge of fraud should report that information via a whistleblower claim. The government, even when it receives a report of suspicious activity, is unlikely to ensure the fraud is stopped.
Currently, FinCEN targets the following trends in mortgage fraud:
1. Mortgage brokers initiating fraudulent loan practices.
2. Fraudulent appraisals being used as a basis for flipping.
3. Licensed appraiser identity theft.
4. Cashing out of refinance loans.
5. Fraudulent statements of income, including low or no document loans.
6. Home equity lines of credit.
The specific types of activities that "red flagged" and prompted the SAR filing included:
1. Misrepresentation of income/assets/debts.
2. Forged/fraudulent documents.
3. Occupancy fraud.
4. Appraisal fraud.
5. ID fraud.
6. Straw buyers.
7. ID theft.
8. Flipping.
Participants in the suspected fraud included appraisers, borrowers, builders, correspondent lenders, inside loan officers, investors, mortgage brokers, realtors, sellers, and those who provide settlement services, including attorneys and notaries.
While money service businesses file thousands of SARs a year, federal investigator follow up is minimal. One SARs filer reported that in all his years of filing SARs, he's only seen the government follow up on SARs five to ten times. He suggests that prosecutions resulting from SARs are minimal when compared to the large numbers of suspicious activities being reported every year.
The poor follow up on SARs filings demonstrates another reason why those with direct knowledge of fraud should report that information via a whistleblower claim. The government, even when it receives a report of suspicious activity, is unlikely to ensure the fraud is stopped.
Thursday, August 20, 2009
IRS Will Get 4450 Names From UBS
Swiss newspapers report that the IRS will get up to 4,450 names of UBS clients as a result of the settlement of the legal battle between the United States, Switzerland, and UBS, the Swiss banking company. At stake were the secret identities of 52,000 US citizens who held deposits in UBS. Some commentators are pronouncing the deal as "the beginning of the end" of the famous Swiss secret accounting system.
Earlier this year, UBS faced criminal charges in the United States for assisting in tax evasion and disclosed 250 client identities as part of a settlement. The additional 4,450 names to be disclosed are linked to accounts in which Americans are believed to have hidden as much as $18 billion in income from the IRS. Swiss newspapers report that US clients face up to $3.7 billion in back taxes and penalties.
Switzerland today sold its investment in UBS and earned 1.2 billion Swiss francs for its citizenry. Switzerland said yesterday that UBS's recent gains and the US tax deal have helped stabilize the bank enough for the Swiss government to withdraw. Switzerland, like several other European nations, was forced to take partial ownership in the bank during Europe's recent financial crisis. The Swiss government reported it earned a return of 30% annually on the UBS investment.
More than 47,000 American citizens will remain undisclosed and could continue to hold deposits in UBS. Some predict that wealthy clients will move their Swiss accounts to new tax havens, like Singapore, because of the breach in the secret Swiss banking system.
Switzerland today sold its investment in UBS and earned 1.2 billion Swiss francs for its citizenry. Switzerland said yesterday that UBS's recent gains and the US tax deal have helped stabilize the bank enough for the Swiss government to withdraw. Switzerland, like several other European nations, was forced to take partial ownership in the bank during Europe's recent financial crisis. The Swiss government reported it earned a return of 30% annually on the UBS investment.
Monday, August 17, 2009
47,000 Potential Claims? Only 5000 UBS Names to be Released
Two Swiss newspapers are reporting that UBS has agreed to release 4500 to 5000 names of its US clients in the recent settlement agreement between the United States and the Swiss bank. The United States had gone to federal court seeking to force UBS to identify its 52,000 United States citizens, many of whom are thought to be committing tax fraud by hiding assets in secret accounts.
NZZ am Sonntag, one of the weekly newspapers, reports that the agreement was grounded on a 1996 US/Swiss tax agreement, allowing the Swiss cabinet to sign off on the deal without having to seek approval through the Swiss parliament. The 1996 agreement obliges Switzerland to provide the US with assistance in criminal prosecutions for tax evasion. NZZ says small accounts would not be reported, and account holders threatened with disclosure would have the right to challenge disclosure in Swiss courts.
Under another agreement earlier this year, UBS paid $780 million to settle criminal charges in the US, and it disclosed information on 250 United States clients. The fourth prosecution of a UBS client ended with a guilty plea on Friday, August 14. Malibu businessman John McCarthy admitted that he transferred at least one million dollars into secret UBS accounts over a five year period to avoid paying US taxes.
Earlier reports stated that the IRS would consider the UBS litigation a failure if UBS did not disclose at least 10,000 names; unofficially, now, all parties are describing the agreement as a success.
Approximately 47,000 United States citizens will continue to enjoy secret Swiss accounts. Whistleblowers should work to identify which of these account holders are hiding their assets to reduce their tax obligations. If you know of a United States citizen who is hiding assets in UBS, or elsewhere, call for a free tax fraud consultation today.
NZZ am Sonntag, one of the weekly newspapers, reports that the agreement was grounded on a 1996 US/Swiss tax agreement, allowing the Swiss cabinet to sign off on the deal without having to seek approval through the Swiss parliament. The 1996 agreement obliges Switzerland to provide the US with assistance in criminal prosecutions for tax evasion. NZZ says small accounts would not be reported, and account holders threatened with disclosure would have the right to challenge disclosure in Swiss courts.
Under another agreement earlier this year, UBS paid $780 million to settle criminal charges in the US, and it disclosed information on 250 United States clients. The fourth prosecution of a UBS client ended with a guilty plea on Friday, August 14. Malibu businessman John McCarthy admitted that he transferred at least one million dollars into secret UBS accounts over a five year period to avoid paying US taxes.
Earlier reports stated that the IRS would consider the UBS litigation a failure if UBS did not disclose at least 10,000 names; unofficially, now, all parties are describing the agreement as a success.
Approximately 47,000 United States citizens will continue to enjoy secret Swiss accounts. Whistleblowers should work to identify which of these account holders are hiding their assets to reduce their tax obligations. If you know of a United States citizen who is hiding assets in UBS, or elsewhere, call for a free tax fraud consultation today.
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