The Tax Times: Swiss Bank's Leavers List Results in Former US Citizen Pleading Guilty to Tax Fraud

We previously posted DOJ Swiss Bank Program is Over After Netting $1.36 Billion! where we discussed that thee Department of Justice
announced on January 27, 2016 that it reached its final non-prosecution agreement under Category 2 of the Swiss Bank Program, with HSZH Verwaltungs AG (HSZH). The department has executed agreements with 94 banks. Under the program, the swiss banks are required to:

Make a complete disclosure of their cross-border activities;
Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest;
Cooperate in treaty requests for account information;
Provide detailed information as to other banks that transferred funds into secret accounts (Leaver List) or that accepted funds when secret accounts were closed;
Agree to close accounts of account holders who fail to come into compliance with U.S. reporting obligations; and
Pay appropriate penalties.

This Leavers List caused Albert Cambata, a former U.S. citizen residing in Switzerland , to pleaded guilty today February 3, 2016 to one count of Filing a False Income Tax Return, according to the DoJ.

“U.S. taxpayers have been given ample opportunity to come forward, disclose their secret foreign accounts, and come into compliance,” said Acting Assistant Attorney General Ciraolo.

“Those individuals and entities who rolled the dice in the hope of remaining anonymous are facing the consequences ... and as today’s guilty plea indicates, clearly the department’s reach
is well beyond Switzerland.”

According to court documents, in 2006, Albert Cambata, 61, established Dragonflyer Ltd., a Hong Kong corporate entity, with the assistance of a Swiss banker and a Swiss attorney. Days later, he opened a financial account at Swiss Bank 1 in the name of Dragonflyer. Although he was not listed on the opening documents as a director or an authorized signatory, Cambata was identified on another bank document as the beneficial owner of the Dragonflyer account. That same year, Cambata received $12 million from Hummingbird Holdings Ltd., a Belizean company. The $12 million originated from a Panamanian aviation management company called Cambata Aviation S.A. and was deposited to the Dragonflyer bank account at Swiss Bank 1 in November 2006.

On his 2007 and 2008 federal income tax returns, Cambata failed to report interest income earned on his Swiss financial account in the amounts of $77,298 and $206,408, respectively.
In April 2008, Cambata caused the Swiss attorney to request that Swiss Bank 1 send five million Euros from the Swiss financial account to an account Cambata controlled at the Monaco branch of Swiss Bank 3.
In June 2008, Cambata closed his financial account with Swiss Bank 1 in the name of Dragonflyer and moved the funds to an account he controlled at the Singapore branch of Swiss Bank 2. (Now on Swiss Leaver List which certain Swiss Banks are obligated to turn over to the IRS)
In 2012, Cambata, who has lived in Switzerland since 2007, went to the U.S. Embassy in Bratislava, Slovakia, to renounce his U.S. citizenship and informed the U.S. Department of State that he had acquired the nationality of St. Kitts and Nevis by virtue of naturalization.

“IRS Criminal Investigation will continue to pursue those who do not pay the taxes they owe to the United States,”

“Today’s plea is a reminder that we are committed to following the money trail across the globe and will not be deterred by the use of sophisticated international financial transactions that hide the real ownership of income taxable by the United States,” said Special Agent Thomas Jankowski of the IRS-Criminal Investigation, Washington, D.C. Field Office.

U.S. District Judge Claude Hilton of the Eastern District of Virginia set sentencing for April 15. Cambata faces a statutory maximum sentence of 3 years in prison and a fine of up to $250,000. As part of his plea agreement, Cambata agreed to pay $84,849 in restitution to the Internal Revenue Service (IRS).

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Swiss Bank?