Arizona Businessmen Convicted in Tax Fraud Case Involving Hidden Swiss Bank Accounts

May 14, 2013 — The Tax Relief and Health Care Act of 2006 established an IRS Whistleblower Office to make it easier for tipsters with information about tax fraud to notify the IRS and receive compensation. Under the Act, whistleblowers may receive anywhere from 15 to 30 percent of the amount collected by the IRS based on an informant’s information. To be eligible for a reward based on information about a private individual’s tax violations, the taxpayer’s gross income must be more than $200,000 for each taxable year concerned and the government’s recovery must exceed $2 million. For information about a corporation’s tax violations, no minimum recovery is necessary.

Phoenix Businessmen Hide Assets From IRS in Offshore Accounts, Jury Decides

A jury has convicted two prominent Arizona businessmen on federal tax charges, the Justice Department has announced. Stephen M. Kerr and Michael Quiel were convicted for failing to disclose offshore Swiss bank accounts on their individual 2007 and 2008 income tax returns. In addition, Kerr was convicted for failing to file a Report of Foreign Bank and Financial Accounts (FBAR) with the U.S. Treasury, reporting a foreign account with more than $10,000 in assets in which a financial interest or signatory power is held. Christopher M. Rusch, a San Diego attorney, had already pleaded guilty in connection with the matter.

The evidence at trial proved that Kerr and Quiel used Rusch and others to help the businessmen set up nominee foreign entities with bank accounts in the entities’ names at Pictet & Cie and UBS AG. Kerr and Quiel then used the accounts to hide their interest in the stock and income deposited into the Swiss accounts. For example, Rusch sold stock shares through the accounts and Kerr hired Rusch to transfer proceeds from the sale of 11.4 million U.S. shares of stock held by one of Kerr’s foreign entities to an undeclared UBS AG foreign account.

As part of the tax scam, Kerr and Quiel instructed Rusch, the lawyer, to transfer funds from the Swiss accounts back into the U.S. through the Interest on Lawyer’s Trust Account (IOLTA) that Rusch maintained as part of his law practice. Accordingly, Rusch deposited around $2,000,000 into his IOLTA account to disperse to Kerr so the businessman could buy a Colorado golf course. Rusch also deposited more than $950,000 from Quiel’s Swiss accounts into his IOLTA account, and then wrote checks from the account to one of Quiel’s Arizona bank accounts.

All the while, Kerr and Quiel failed to disclose the existence of the Swiss bank accounts to the IRS or to their tax accountants.

Inside Employees Notify IRS About Tax Fraud

When businessmen hide millions of dollars in assets in offshore accounts, it is likely that someone in their operations will eventually spot the tax fraud and notify the IRS. Before contacting the authorities about an employer’s tax scam, however, government collaborators need to know how the process works. The IRS tax fraud attorneys with Waters & Kraus provide insider informants with the legal counsel they deserve. Contact us by email or call our whistleblower lawyers at 855.784.0268 to discuss how we can protect your interests.

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