NEW YORK (Legal Newsline) - The U.S. Attorney for the Southern District of New York announced Wednesday that a New Jersey man was sentenced to eight months in a community confinement center for failing to report to the Internal Revenue Service Swiss bank accounts he maintained and controlled.
Between 2000 and 2010, Michael Reiss, 61, a Princeton area doctor, professor and medical researcher, willfully failed to file Reports of Foreign Bank and Financial Accounts, or FBARS, with the IRS relating to accounts he maintained in Switzerland.
According to information and other documents filed in Manhattan federal court and statements made in connection with the guilty plea and sentencing:
From 2000 until 2010, Reiss was required to file an FBAR annually with the IRS for various accounts he held at Swiss banks. He was required to identify the financial institution in which his account was held, the type of account, the account number, and the maximum value of the account during the calendar year for which the FBAR was being filed. He failed to do so for the Swiss bank accounts that he held.
More specifically, in 2000, Reiss held an account at UBS AG in Switzerland, or UBS. He transferred the assets in the account in 2002 to the Swiss branch of another European bank.
Later, in September 2003, Reiss transferred the assets to an undeclared account at yet another Swiss bank, i.e. Swiss Bank No. 1.
Reiss had opened the undeclared account with the alleged assistance of Beda Singenberger, a Swiss financial adviser who was charged in an indictment returned in the Southern District of New York on July 21, 2011.
The announcement said the undeclared account was opened in the name of the Floranova Foundation, a sham foundation which had allegedly been formed by Singenberger under the laws of Liechtenstein. Reiss was the sole beneficiary of the foundation.
By opening the account at Swiss Bank No. 1 in the name of the Floranova Foundation, Reiss shielded his ownership of the assets in the account from the IRS.
As of March 31, 2008, Reiss' account at Swiss Bank No. 1 in the name of the Floranova Foundation account held assets valued at about $2.588 million.
For each of the calendar years from 2000 through 2007, Reiss failed to disclose on FBAR's financial accounts at UBS and Swiss Bank No. 1, as well as an account at the Swiss branch of another bank that he held.
For the calendar years 2008 and 2009, he did not file an FBAR with the IRS disclosing his signatory or other authority over his account at Swiss Bank No. 1. Reiss' tax returns for the years 2000 through 2009 were similarly false in omitting the information about his Swiss bank accounts.
Reiss was sentenced to one day in prison and agreed to pay back taxes of at least $400,000 and a civil penalty of more than $1.2 million.
He was also sentenced to three years of supervised release and ordered to perform 30 hours of community service a week for the duration of the period of supervised release.