An 83-year-old Florida man pleaded guilty this week to hiding at least $1.1 million from the IRS in secret Swiss and Israeli bank accounts for over a quarter century.
Bernard Kramer held the secret accounts from 1987 to about 2012. He used the code phrase “Hot Lips” when referring to them in conversations with Swiss bankers in Zurich according to a criminal filing in Manhattan federal court.
Mr. Kramer pleaded guilty to one count of conspiracy and one count of tax perjury. As a condition of his plea agreement, Mr. Kramer agreed to cooperate with government investigators and to pay a civil penalty in the amount of $588,042 along with past due taxes. He potentially faces a maximum eight-year prison term — five years for conspiracy and three years for tax perjury — when he appears in court for sentencing on February 6, 2015.
“Today Mr. Kramer acknowledged responsibility for his conduct. He looks forward to putting the matter behind him,” said defense attorney Brian Ketcham, of Kostelanetz & Fink in New York City.
Mr. Kramer is the latest casualty in the U.S. government’s efforts to enforce compliance of the foreign asset reporting requirements among its citizens and residents. In doing so, the government has taken a heavy-handed approach – prosecuting those who have willfully hidden their offshore accounts in order to evade taxes. Charges against Mr. Kramer were brought as part of an ongoing, multi-year crackdown on suspected offshore tax evasion by the Department of Justice and the IRS.
According to the Manhattan court filing, Mr. Kramer secretly received disbursements from the unidentified Swiss bank by requesting checks for amounts less than $10,000 — the threshold amount that triggers banks to file a Currency Transaction Report, a FinCEN form that reports transactions to government regulators.
Mr. Kramer maintained the secret Swiss account after it became publicly known in 2008 that Swiss banking giant UBS was being investigated by U.S. authorities for allegedly helping American account owners evade federal taxes.
The following year, UBS agreed to a $780 million deferred-prosecution deal with federal prosecutors to settle criminal charges that it sent bankers posing as tourists into the U.S. to help clients evade taxes. In the first major crack in historic Swiss bank secrecy, UBS also agreed to turn over the financial information of nearly 4,500 U.S. clients whose accounts once held an estimated $18 billion.
With the assistance of Swiss bankers, Mr. Kramer opened a new secret account for his funds at an Israeli bank headquartered in Ramat Gan. The bank was not identified in court filings.
U.S. law requires citizens and residents to file annual IRS reports disclosing domestic and offshore income. A separate requirement mandates disclosure of any foreign account with an aggregate value of more than $10,000 in any calendar year.
According to court filings, Mr. Kramer filed false tax returns with the IRS from approximately 1987 through 2012.
Original Post By: Michael DeBlis