UBS Facing Potential Liability for Tax Advice on Offshore Bank Accounts
On May 8 the case of Olenicoff et al v. UBS AG et al is set to go to trial. This case, brought by a California Real Estate developer, will test potential liability for UBS and all multinational banks which provide offshore banking for American citizens and residents. According to the complaint, UBS employees made numerous statements and promises to Olenicoff that his accounts were fully compliant with all applicable U.S. laws and IRS regulations. This was not actually true.
The IRS had already required UBS, along with all other foreign banks doing business in the United States, to agree to report the accounts of everyone that the bank either knew or believed to be a U.S. citizen or resident. According to the complaint, UBS chose to attempt to hide behind Swiss banking laws, even though they had contractually agreed to disclose those accounts. Even so, because of that agreement with the IRS, UBS knew that clients like Olenicoff needed to file a special form with the IRS disclosing the assets in these accounts and the income that they had earned.
Olenicoff, like so many customers like him, relied upon the statements by UBS and did not report anything regarding these accounts to the IRS. Since UBS did not do the withholding that it was supposed to do either, Olenicoff was charged with tax evasion. He pled guilty and paid $52 million in back taxes. This lawsuit is an attempt to recoup those and other various damages as a result.
This lawsuit is unfolding at the same time that U.S. authorities are investigating many Swiss banks, Swiss bankers, and Americans with Swiss bank accounts. Numerous bankers and Americans with Swiss bank accounts have been indicted with tax evasion. One Swiss bank, Wegelin, has been charged as a whole.
If Olenicoff or one of the other similar suits pending is successful in holding a bank responsible for the losses of the customer, it opens the doors for many more investors to suffered losses by relying upon their foreign bank’s knowledge of U.S. tax law to attempt to recover their losses. If you believe you have suffered losses as a consequence of tax advice given to you from your banker or broker, please contact our stockbroker fraud law firm. We represent both institutional and individual investors that have sustained losses because of inadequate supervision, misrepresentations and omissions, overconcentration, unsuitability, failure to execute trades, churning, breach of contract, breach of promise, negligence, breach of fiduciary duty, margin account abuse, unauthorized trading, registration violations and other types of adviser/broker misconduct.