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MIAMI — A New York businessman who last year was talked out of coming clean with the Internal Revenue Service pleaded guilty Tuesday to U.S. tax charges stemming from a wide-ranging investigation into secret accounts at Swiss bank UBS AG.
Jeffrey P. Chernick of Stanfordville, N.Y., owner of a company that represents Chinese and Hong Kong toy manufacturers, faces up to three years in prison after pleading guilty in federal court in Fort Lauderdale. U.S. District Judge James I. Cohn set sentencing for Oct. 30.
Chernick, the third American client of UBS to plead guilty to criminal charges, signed a statement of facts saying he sought in 2008 to reveal his UBS account to the IRS, file amended tax returns and pay back taxes. But Chernick was talked out of it by a lawyer named only as "Swiss Attorney" in the court documents.
This attorney told Chernick that a high-ranking Swiss government official had provided assurances that his name was not scheduled to be turned over to U.S. authorities investigating tax evasion by wealthy American clients. The attorney later told Chernick that this unidentified Swiss official had been paid $45,000 for the information, which Chernick then had withdrawn from his account.
But it was to no avail. Chernick's name was disclosed earlier this year on a list of about 300 UBS clients as part of a deferred prosecution agreement in which the bank also agreed to pay a $780 million penalty.
U.S. taxpayers who have secret offshore accounts face a Sept. 23 deadline to voluntarily come forward to the IRS under an amnesty program that promises reduced penalties, said John DiCicco, acting assistant attorney general for the U.S. Justice Department's tax division.
"Failure to come forward and to disclose offshore assets exposes these Americans to increased penalties and possible criminal prosecution," DiCicco said.
Chernick's plea comes amid intense negotiations between the Justice Department, UBS and the Swiss government over a broad U.S. attempt to force the bank to disclose some 52,000 names of suspected American tax cheats with secret accounts. A hearing is scheduled before a Miami judge Wednesday on the status of a possible settlement.
UBS and the Swiss say Switzerland's long-standing bank secrecy laws would make it a crime to turn over all the names. U.S. prosecutors say that is not the case.
Court documents show that Chernick admitted filing a false 2007 income tax return and had a UBS account in the name of a Hong Kong corporation called Simba International Ltd. In total, Chernick had about $8 million in UBS offshore assets in the name of Simba and other entities, prosecutors said.
Chernick met frequently with UBS advisers and executives, who "would dress as tourists to avoid detection," according to the factual statement. One unnamed UBS executive falsely claimed to customs agents that he was coming to the U.S. to visit his brother, court documents show. UBS officials also physically cut Chernick's name and account number from bank statements so they could not be linked to him.
Chernick used credit cards to access his secret accounts and set up a sham $700,000 loan designed to provide him with money to buy land next to his New York home.
