UBS Client Pleads Guilty in Largest Tax Case Since 2008

A former UBS AG client pleaded guilty to using Swiss bank accounts to hide more than $43 million from the Internal Revenue Service in the largest individual offshore tax evasion case since a U.S. crackdown began in 2008.

Mary Estelle Curran, 79, admitted yesterday in federal court in West Palm Beach, Florida, to two counts of filing false tax returns. Curran failed to report her offshore accounts on returns from 2001 to 2007 and willfully failed to report income on them, prosecutors said in court papers.

“Mrs. Curran pleaded guilty today and accepted full responsibility for her actions, but there are a significant number of mitigating circumstances in this case,” one of her attorneys, Nathan Hochman, said yesterday.

U.S. prosecutors have charged more than 50 U.S. clients of offshore banks and more than two dozen bankers, lawyers and advisers in the crackdown. Before Curran, the previous largest individual case involved $42 million.

Curran, who lives in Palm Beach, faces 30 to 37 months in prison under her plea agreement. She also agreed to pay a civil penalty of $21.7 million for failing to file reports required for foreign accounts. Another one of her attorneys, Roy Black, declined to comment after the hearing.

Zurich-based UBS, the largest Swiss bank, was charged with conspiracy in February 2009 and avoided prosecution by admitting it aided tax evasion, paying $780 million and handing over account data on 250 clients. It later disclosed information on about 4,450 more accounts.

Husband’s Account

Curran, who had a high school education, inherited an undeclared UBS account in 2000 after the death of her husband of more than 40 years, Mortimer, a money manager, Hochman said. The account was in the name of a Liechtenstein foundation he created, prosecutors said yesterday in a statement of facts.

“Her husband was in complete control of their finances until he died,” said Hochman, a former assistant attorney general who oversaw the Justice Department’s tax division. “This was a woman without any financial background at all, none. When her husband passed away, she had no idea how much money there was at UBS.”

Since March 2009, 38,000 U.S. taxpayers with offshore accounts have avoided prosecution by entering a limited amnesty program, paying back taxes and identifying those who helped them hide their accounts from authorities.

Voluntary Disclosure

Hundreds of taxpayers in the program gave prosecutors information that has helped build criminal cases against bankers and advisers. To be eligible for the voluntary disclosure program, taxpayers had to approach the IRS before the tax agency or the Justice Department learned about their offshore accounts.

“Mrs. Curran tried to enter the voluntary disclosure program, even before it was opened on March 23, 2009,” Hochman said. “But she was prevented from entering it by the Department of Justice because they had secretly received her account information from UBS just prior to her efforts to enter the program.”

Curran also became the beneficial owner of a UBS account opened in June 2007 in the name of Norega Investment, a Panamanian corporation, according to the Justice Department’s statement of facts filed yesterday.

The people managing her accounts transferred her assets in June 2008 to one in the name of Norega at a bank in Liechtenstein, according to the statement. The highest closing balance of her undeclared accounts was $43 million in 2007.

False Returns

Curran admitted that from 2001 to 2008 she failed to file Reports of Foreign Bank and Financial Accounts, or FBARs. As a penalty, she must pay half of the highest annual balance. She also acknowledged that she filed false tax returns for 2006 and 2007 and that she failed to tell her accountant about her offshore accounts.

Curran, who was initially charged on Nov. 7, owes taxes of $667,716, as well as penalties and interest, according to court papers.

The case is U.S. v. Curran, 12-cr-80206, U.S. District Court, Southern District of Florida (West Palm Beach).

Before it's here, it's on the Bloomberg Terminal.