FORMER UBS CLIENT PLEADS GUILTY COURT TO HIDING OVER $26.4 MILLION IN SWISS BANK ACCOUNTS

United States Attorney
Southern District of New York

JUNE 27, 2011 ELLEN DAVIS, JERIKA RICHARDSON,

Taxpayer Is Sixth In This District To Plead Guilty In Scheme –
Agrees To Pay Over $9.8 Million Civil Penalty
PREET BHARARA, the United States Attorney for the
Southern District of New York, announced that KENNETH HELLER, a
former client of Swiss banks UBS AG (“UBS”)and Wegelin & Co.,
pled guilty today in Manhattan federal court to personal income
tax evasion for hiding more than $26.4 million at the bank. In
connection with his guilty plea, HELLER agreed to pay a civil
penalty of over $9.8 million arising from his failure to comply
with certain IRS requirements. The charges against him arose out
of the ongoing investigation into U.S. taxpayer clients of UBS
and other overseas banks who conspired to hide such accounts from
the IRS. HELLER is one of seven defendants charged in the
Southern District of New York in April 2010 with similar conduct
and is the sixth to plead guilty. HELLER, 81, of New York, New
York, entered his guilty plea before United States District Judge
P. KEVIN CASTEL.
Manhattan U.S. Attorney PREET BHARARA said: “Kenneth
Heller is the latest in a long line of tax cheats who believed
his foreign bank account was ‘out of sight and out of mind’ for
federal investigators, but he was wrong. Today’s guilty plea
should send a clear message to individuals who think they can
hide their income overseas to avoid paying taxes like everyone
else that they are wrong.”
According to the Superseding Indictment filed in
Manhattan federal court, other court documents, and statements
made in connection with the guilty plea:
Under Federal law, when filing Individual Income Tax
Returns, Form 1040, U.S. taxpayers are obligated to report their
worldwide income. Additionally, taxpayers who have a financial
interest in, or other authority over, a financial account in a
foreign country with an aggregate value of more than $10,000 at
any time during a particular year are required to file a Report
of Foreign Bank and Financial Accounts (“FBAR”) with the IRS.
For many years, UBS provided private banking services
to U.S. taxpayers as part of its U.S. cross-border banking
business, employing approximately 60 people in Switzerland. From
at least 2000 to 2008, these employees helped U.S. taxpayers
conceal their Swiss-based assets, and the income earned on those
assets, from the IRS by listing sham offshore companies as the
account holders. In February 2009, UBS entered into a deferred
prosecution agreement with the United States, pursuant to which
UBS admitted it helped taxpayers hide accounts from the IRS. As
part of this agreement, UBS provided the U.S. Government with the
identities of, and account information for, certain customers of
UBS’s U.S. cross-border banking business.
HELLER is a disbarred Manhattan maritime attorney who
opened a UBS account in the name of a sham offshore corporation
in December 2005. On January 3, 2006, he wired approximately
$26,420,822.43 from the United States and deposited the money
into the UBS account. Though he controlled the trading in the
account, HELLER did not appear as the account holder on UBS
account documents.
On June 6, 2008, HELLER read a media report raising the
possibility that UBS might disclose information about its Swissbased
account holders to the U.S. Government. Shortly
thereafter, HELLER moved his funds to Wegelin & Co., a smaller
private bank in Switzerland that did not have offices in the
United States.
* * *
HELLER will be sentenced by Judge CASTEL on September
27, 2011, at 11:00 a.m. He faces a total maximum penalty of 15
years in prison on three counts of tax evasion.
As part of this investigation, six other defendants
have already pled guilty in the Southern District of New York,
three of whom have been sentenced. They are:
SYBIL NANCY UPHAM pled guilty in November 2010 to
conspiring to defraud the IRS, by, among other things, smuggling
large quantities of cash into the United States from Europe, and
to three counts of subscribing to false federal income tax
returns;
RICHARD WERDIGER pled guilty in March 2011 to
conspiracy to defraud the IRS and five counts of filing false tax
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returns in order to hide over $7.1 million from the IRS. He is
scheduled to be sentenced on August 3, 2011, at 2:00 p.m.;
FEDERICO HERNANDEZ pled guilty and was sentenced in
September 2010, to twelve months in prison and six months of home
confinement for hiding $8.8 million from the IRS by using sham
companies to conceal his ownership of secret Swiss bank accounts
held at UBS;
JULES ROBBINS pled guilty and was sentenced in
September 2010, to twelve months of probation for filing false
tax returns to hide from the IRS a UBS account holding as much as
$42 million; and
ERNEST VOGLIANO pled guilty and was sentenced in April
2011, to 24 months of probation for filing false tax returns and
conspiring to defraud the IRS by hiding $4.9 million at UBS in
Switzerland.
Other defendants in this investigation include:
SAMUEL PHINEAS UPHAM, who was charged with aiding and
abetting the preparation of false federal income tax returns that
failed to disclose the existence of, and the income earned in, a
UBS account that held over $11 million, and conspiring to defraud
the IRS, by, among other things smuggling $450,000 in cash from
UBS’s offices in Zurich to the United States; and
SHMUEL STERNFELD, who was charged with opening a UBS
account in the name of a sham Hong Kong corporation, and holding
$2.9 million at UBS.
The charges against Upham and Sternfeld remain pending
and, they are merely accusations. The defendants are presumed
innocent unless and until proven guilty.
Mr. BHARARA praised the work of the IRS, which
conducted the investigation. He also thanked the U.S. Department
of Justice’s Tax Division and the New York County District
Attorney’s Office for their assistance.
This case is being handled by the Office’s Complex
Frauds Unit. Assistant U.S. Attorney DAVID B. MASSEY is in
charge of the prosecution.
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