U.S. tax guilty plea involves unspecified major UK bank, Zurich banker

By Reuters Staff
February 16, 2010

By Kim Dixon

ALEXANDRIA, Va., Feb 16 (Reuters) – A U.S. client of a big global bank based in England pleaded guilty to conspiracy in connection with assets stashed abroad to evade taxes, part of a widening crackdown on foreign banks and their customers.

The plea is the first among the government’s recent tax prosecutions that involves a major bank other than Swiss banking giant UBS AG. UBS last year admitted that it actively helped U.S. clients to hide money abroad.

Andrew Silva, of Sterling, Virginia, a doctor, pleaded guilty in U.S. District Court for the Eastern District of Virginia to conspiracy to defraud the U.S. government by hiding about $250,000 in a Swiss account of that British bank.

Dressed in a black suit and accompanied by a weeping woman, Silva also pleaded guilty to lying to U.S. customs authorities, who questioned him as he traveled into the United States with some of the money.

U.S. District Judge Liam O’Grady set May 7 for a sentencing hearing. Silva faces a maximum sentence of ten years in prison and a maximum fine of $500,000.

The name of the bank was not disclosed but described in court documents as “one of the largest international banks in the world” … “headquartered in England.”

Among the biggest England-based global banks are HSBC, Lloyds and Barclays.

The court filings, which listed the defendant’s banker as an unindicted co-conspirator, say the bank conducted business around the world, including in Virginia, and in Geneva and Zurich, Switzerland.

Silva was notified by the bank in August of 2009 that it would stop holding his account. He then attempted to send the money back through the mail in increments of less than $10,000 to evade reporting rules, according to the court documents.

It was in August of last year that the United States, the Swiss and UBS agreed to end a civil dispute over thousands of UBS accounts the U.S. government is still seeking.

UBS and its U.S. clients have been the target of the U.S. government’s stepped-up effort to catch tax cheats using offshore accounts.

UBS settled criminal and civil charges against it last year, paying $780 million and agreeing to disclose about 4,450 client names, although that deal is now muddled because of a recent Swiss court ruling in favor of a UBS client.

U.S. authorities also gained nearly 15,000 new account names in a voluntary amnesty program last year and have said they will use the information gleaned to go after other individuals and financial institutions.

 

BRICKS OF CASH

When asked whether the unidentified bank could be the next targeted after UBS, a government attorney declined to directly answer. However, he pointed to the help Silva got from the Zurich-based banker, the unindicted co-conspirator.

“We’re definitely not going to tolerate that type of behavior,” Justice Department attorney Kevin Downing said. “We follow the evidence.”

Court documents said a Zurich attorney and the Swiss banker warned Silva he could not use wire transfers to get his money out of Switzerland, for fear of leaving a paper trail. He was to deal only in cash and was given individually wrapped “bricks” to send the money back in chunks of $100 bills.

When asked if he was going to file corrected tax returns for 2003 to 2008, Silva told the court: “I really want to correct the things that I’ve done wrong.”

While it is not illegal to keep money overseas, accounts with an aggregate value of more than $10,000 must be declared to the U.S. Treasury.

Additionally, the movement of over $10,000 into or out the United States must also be reported to U.S. authorities. Structured mailings of less than $10,000 to evade this requirement are prohibited.

The case is United States of America v. Andrew B. Silva, 10-00044. (Reporting by Kim Dixon; Additional reporting by Jeremy Pelofsky and Rachelle Younglai in Washington; Editing by Tim Dobbyn)

((kim.dixon@reuters.com; +1 202 354-5864; Reuters Messaging: kim.dixon.reuters.com@reuters.net)

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