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Offshore account holder loses civil suit against UBS

In recent years, the U.S. government's pursuit of Swiss banks has garnered a great deal of attention from the press. Perhaps less visible to Florida residents and other people around the country are the investigations of individual taxpayers. But the Internal Revenue Service has been active in pursuing those it believes have been avoiding taxes by keeping funds in offshore accounts.

Interestingly, some of those taxpayers have chosen to fight back--against their Swiss banks. They have filed lawsuits, alleging that the banks breached their fiduciary duty to inform clients that they had to disclose the offshore accounts to the IRS. One lawsuit is still pending, but another ended this week when a judge ruled strongly in the bank's favor.

The plaintiff in the lawsuit had held $200 million in an offshore account with UBS when the IRS launched an investigation into his account. As a result of the investigation, he pleaded guilty in 2007 to tax evasion charges and failing to report his Swiss bank account on his tax returns. He ended up paying $52 million to the IRS. The following year he sued UBS and his personal banker for $1.7 billion.

But the judge in the case did not view the man's claims favorably. He granted UBS's motions to dismiss the case, appearing to base his decision on the fact that the plaintiff had already admitted guilt in his case with the IRS. In addition, the judge stated that UBS's prior admission of guilt in helping American taxpayers shelter assets failed to provide the plaintiff with grounds to sue the bank.

We will keep track of the other lawsuit as it moves forward, especially since the facts of the case are slightly different than those in the case decided this week.

Source: Orlando Sentinel, "UBS fends off lawsuit of billionaire tax evader," Lynnley Browning, April 10, 2012.

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