Bank customers sometimes hide their assets offshore in nominee bank accounts located in high-risk geographical locations like Switzerland. One such bank customer was ex-watch manufacturer Jack Barouh of Golden Beach, Florida. As a February 4, 2010 press release basically explained, Mr. Barouh was accused of hiding undeclared revenue from the IRS during an abusive offshore tax avoidance scheme at UBS AG and other foreign banks.
Mr. Barouh’s scheme could have stared in 1976 when he first transferred skimmed monies from his U.S. watch businesses to foreign accounts at UBS of Switzerland. He reportedly carried out his scheme with the help of two Swiss money managers and a Swiss attorney. One of these Swiss money managers had even supposedly misappropriated some of Mr. Barouh’s undeclared revenue, although Mr. Barouh may have eventually recovered this revenue via a settlement.
The Swiss attorney and money managers are believed to have opened Mr. Barouh’s nominee bank accounts and / or had been directors of Mr. Barouh’s foreign companies. These foreign companies were formed in Panama, the British Virgin Islands and Hong Kong and had reportedly been used to open Mr. Barouh’s nominee bank accounts in Switzerland or Hong Kong. Despite all of the foregoing, the IRS was able to detect Mr. Barouh’s undeclared revenue in his nominee bank accounts.
Mr. Barouh’s scheme was susceptible to IRS detection because he had executed UBS declarations of beneficial ownership (commonly referred to as “Form A’s”) which UBS apparently disclosed to the IRS. As mentioned at p. 2 of the “Statement of Facts” filed in U.S.A. v. Barouh, 10-cr-20034, Mr. Barouh had executed UBS “Form A’s” on September 1 & 6, 2004:
(Click On The Statement Of Facts To Read It)
Consistent with the Swiss banking practices described at “Customer Identification At UBS AG And Some Other Banks“, Mr. Barouh had presumably executed the UBS “Form A’s” at the time he opened his Swiss bank accounts. His “Form A’s” seem to have been disclosed to the IRS as a result of the tax information exchange agreements expressly mentioned by the settlement in The “John Doe” Summons Case.
Under these tax information exchange agreements, (available at my August 23, 2009 post), UBS supplied the IRS with account information belonging to 4,450 bank customers who were suspected U.S. tax cheats. My comments about this particular UBS disclosure were published atMoneyLaundering.com’s article “Nearly a Year into Bank Secrecy Crack Down, Little Progress Seen“.+
+”Nearly a Year into Bank Secrecy Crack Down, Little Progress Seen”, Copyright 2010 Alert Global Media, reprinted with permission.
Copyright 2010 Fred L. Abrams