American Pleads Guilty to Hiding Money in Swiss Bank, Moving Money to Israeli Bank after UBS Scandal

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On August 19, 2014, Bernard Kramer pleaded guilty in the Southern District of New York to conspiracy to defraud the United States and filing a false income tax return relating to his concealment of “at least $1.1 million” in bank accounts in Switzerland and Israel. The criminal information did not identify the banks. For 23 years, Kramer had an undeclared account at a Swiss private bank and repatriated some of the money to the United States in the form of checks drawn for just under $10,000 each. In 2010, after the U.S. government’s investigation of UBS was well known, Kramer moved his money out of the Swiss private bank and into a bank in Israel.

“The alleged acts here likely drew the government’s ire for three reasons,” said Jim Mastracchio, co-chair of BakerHostetler’s Tax Controversy practice and chair of the firm’s Criminal Tax Defense team. “The defendant allegedly concealed a Swiss bank account, became a so-called ‘leaver’ when he moved his money out of Switzerland, and attempted to structure his financial transactions by keeping them under $10,000 to avoid the bank issuing Currency Transaction Reports (CTR’s) to the U.S. Treasury.” “The odd thing about the allegedly structured transactions is that they accomplished nothing,” added Jay Nanavati, a member of the firm’s Criminal Tax Defense team and a former prosecutor at the Department of Justice Tax Division. “Banks only issue CTR’s for transactions that involve actual currency, and checks are not currency.”

Kramer agreed to cooperate with the government and to pay a civil penalty of $588,042. He faces a maximum of eight years in prison when he is sentenced on February 6, 2015.

Topics:  Foreign Banks, Fraud, Income Taxes, Offshore Funds, Tax Evasion

Published In: Criminal Law Updates, Finance & Banking Updates, International Trade Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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