Howard Bloomberg is both a certified fraud examiner (CFE) and a forensic accountant. Today he adds another title to his resume, convicted felon. The U.S. Attorney in Atlanta, Georgia announced that Howard Bloomberg pleaded guilty to failure to file an FBAR form and report a Swiss bank account.
For almost a decade, Bloomberg had an account at UBS, one of he largest banks in Switzerland. Owning a foreign account is legal, of course, but federal law requires owners and signers on foreign accounts to report the account each year. Reporting is done on an FBAR form (Report of Foreign Bank and Financial Accounts) and on Schedule B of one’s income tax return. Willful failure to file an FBAR can result in huge civil penalties. As Mr. Bloomberg found out, it can also land you in prison.
Prosecutors say that at one point, his account was worth approximately $930,000. In 2008, he wired $540,000 back into the United States. 2008 is the year the IRS and Justice Department sought to indict UBS in a highly publicized case. Unfortunately, Bloomberg failed to file FBAR forms even after moving his money.
Most taxpayers who fail to report foreign accounts are not criminally prosecuted. They do receive huge penalties, however. Willful violations carry penalties up to the greater of $100,000 or 50% of the highest balance of the account. In Bloomberg’s case, the penalties could be almost $500,000. These penalties are in addition to any criminal fines and prison time he may receive.
In announcing the conviction, U.S. Attorney Sally Quillian Yates said, “The era of hiding money in secret Swiss bank accounts is over. Citizens should understand that failing to abide by their banking disclosure obligations to the U.S. Treasury Department could mean criminal prosecution.”
Bloomberg will be sentenced this December. He faces 5 years in prison and a $250,000 fine. The fines are in addition to the IRS penalties. He remains free on bond while awaiting his sentencing but was forced to surrender his passport.
The lesson here? Moving money to the U.S. after the IRS begins an investigation doesn’t work. In fact, prosecutors are likely to view that as criminal knowledge and intent. The second lesson is that lawyers, accountants and bankers are especially vulnerable to criminal prosecution.
If you have an unreported offshore account and are delinquent in FBAR filings, seek representation immediately. The IRS generally operates on a first contact policy. If they find you or learn about your accounts first, all bets are off.
Need help with FBARs, FATCA or other foreign reporting issues? Speak with one of our experienced IRS tax lawyers today. Every day you delay could cost you down the road. For more information, contact attorney Bethany Canfield at or by telephone at (414) 223-0464. All inquiries are protected by the attorney client privilege.