CALIFORNIA MAN SENTENCED FOR FAILING TO REPORT FOREIGN BANK ACCOUNTS

FROM:  U.S. JUSTICE DEPARTMENT 
Thursday, February 27, 2014
Portola Valley, Calif., Man Sentenced to Prison for Failure to Report Foreign Bank Accounts Held at UBS

Christopher B. Berg of Portola Valley, Calif., was sentenced yesterday to one year and one day in prison to be followed by three years supervised release, announced Assistant Attorney General for the Tax Division Kathryn Keneally and U.S. Attorney Melinda Haag for the Northern District of California.   Prior to sentencing, Berg paid restitution to the Internal Revenue Service (IRS) of more than $250,000 as well as a penalty of $287,896 for failure to properly report his foreign account.   Berg previously pleaded guilty to willfully failing to file the required report of foreign bank account for an account he controlled in 2005 at UBS in Switzerland that had a balance over $10,000.  
                                                                                                         
According to court documents, Berg began working as a consultant in 1999.   In 2000, Berg met with Beda Singenberger, a Swiss financial consultant, and a vice president of banking at UBS in San Francisco regarding setting up a bank account at UBS in Switzerland to shelter a portion of his consulting income from taxation.   Beginning in 2001 and continuing through 2005, Berg used wire transfers to deposit $642,070 in earned income into UBS accounts.   Berg used money in these Swiss UBS accounts to purchase a vehicle, to obtain cash while in Europe and to pay the balance on a Eurocard he used while traveling in Europe.   Berg did not disclose the existence of his accounts at UBS in Switzerland to his certified public accountant, and also failed to disclose the income earned by these accounts or the consulting income deposited to the accounts.   The tax harm associated with Berg’s conduct exceeded $250,000.

The case was investigated by IRS-Criminal Investigation and prosecuted by Assistant Chiefs Elizabeth C. Hadden and Margaret Leigh Kessler of the Tax Division.

$100 MILLION IN PENALTIES IMPOSED IN "STARS" TAX SHELTER FRAUD CASE

FROM:  U.S. JUSTICE DEPARTMENT 
Friday, September 20, 2013
Justice Department Prevails in “Stars” Tax Shelter Case, Court Imposes Over $100 Million in Penalties

BB&T Corporation Engaged in an Abusive Tax Shelter Designed by Barclays Bank and KPMG to Generate Nearly Half a Billion Dollars in Foreign Tax Credits.
On Friday, the Court of Federal Claims in Washington, D.C., ruled that a subsidiary of the BB&T Corporation was not entitled to $660 million in tax benefits that BB&T claimed based on its participation in an abusive tax shelter known as Structured Trust Advantaged Repackaged Securities (STARS).  Judge Thomas C. Wheeler, who delivered the opinion of the Court, imposed $112 million in penalties.

Barclays Bank PLC and KPMG LLP jointly developed and marketed the STARS transaction to subvert the foreign tax credit rules and generate illicit tax benefits to be shared among the transaction’s participants.  BB&T additionally employed Sidley & Austin LLP to provide  tax advice supporting the transaction.  After hearing evidence during a month-long trial in March, Judge Wheeler ruled for the United States “on all grounds,” determining that BB&T, Barclays, KPMG and Sidley Austin’s conduct with regard to STARS was “nothing short of reprehensible,” and that the considerable effort put into the transaction was a “waste of human potential.”

“It is an affront to all taxpayers who work hard and do the right thing when our largest corporations rely on abusive schemes to avoid paying their fair share of taxes,” said Assistant Attorney General Kathryn Keneally of the Justice Department's Tax Division, hailing the Court of Federal Claims’ opinion.  “Today’s ruling sends a strong message that no matter how sophisticated the scheme, these sham tax shelters will not stand.”

Assistant Attorney General Keneally thanked the agents and attorneys at the Internal Revenue Service who assisted the Justice Department, as well as Tax Division Senior Litigation Counsel Dennis Donohue, Trial Attorneys John Schoenecker, Kari Larson, Raagnee Beri, William Farrior, and Special Attorney Allen Kline.