WASHINGTON (Legal Newsline) - Two Phoenix businessmen have been convicted by a jury on federal tax charges for failure to disclose secret offshore bank accounts in Switzerland.
The Justice Department and Internal Revenue Service announced April 12 that Stephen M. Kerr and Michael Quiel were charged with filing false income tax returns individually for 2007 and 2008.
Kerr also received two counts of failing to file a Report of Foreign Bank and Financial Accounts (FBAR).
Also involved was San Diego attorney Christopher M. Rusch who previously pleaded guilty to conspiracy to defraud the government and failing to file an FBAR on Feb. 6.
"This prosecution serves notice that the Department of Justice will not tolerate fraudulent activity designed to undermine the integrity of our income tax system," said U.S. Attorney for the District of Arizona John S. Leonardo.
According to trial evidence, Kerr, Quiel, Rusch and others established nominee foreign entities and corresponding bank accounts at UBS AG and Pictet & Cie to conceal their ownership and control of stock and income that were deposited into the accounts.
Rusch admitted and testified at trial that he and others caused the sale of the shares of stock through undeclared accounts.
Rusch's responsibility was to facilitate the domestic sale of 11.4 million shares of stock held in the name of a foreign entity controlled by Kerr. In order to conceal that the money was income to Kerr, Rusch would transfer the proceeds from the sale of stock to an undeclared foreign account at UBS AG.
Approximately $2 million was transferred by Rusch through his Interest on Lawyer's Trust Account (IOLTA) before dispersing the money for Kerr and Quiel. Thereafter Kerr purchased a golf course in Erie, Colo. Additionally, Quiel instructed Rusch to write checks payable to an Arizona bank account owned and controlled by Quiel after the transfer of approximately $955,000 from his undeclared foreign account to Rusch's IOLTA account.
Reportedly Kerr and Quiel filed false tax returns with the IRS that did not report the proceeds of stock sales, interest and dividend income earned through the secret accounts. Their accountants testified that neither Kerr nor Quiel disclosed their offshore accounts during the preparation of their tax returns.
Individually Kerr also failed to file FBARs in 2007 and 2008 that reported his offshore accounts to the IRS.
"Many investigations are underway and focusing upon an ever wider circle of banks worldwide, their clients and others who would help the clients try to hide income and assets offshore," said Assistant Attorney General for the Justice Department's Tax Division Kathryn Keneally. "The lesson of today's guilty verdicts is that no hiding place will prove safe enough."
Sentencing for Kerr and Quiel is scheduled for June 25. Sentencing for Rusch will take place July 17.