Former
UBS AG client Federico Hernandez, who pleaded guilty to hiding Swiss accounts once valued at $8.8 million from U.S. tax authorities, was sentenced to a year in prison followed by six months of home confinement.
Hernandez, 44, pleaded guilty on April 15 as part of a U.S. crackdown on tax evasion by clients of foreign banks. Prosecutors had asked U.S. District Judge Denny Chin in New York to impose a prison sentence of between 18 and 24 months. The nine
UBS clients previously sentenced had received terms of probation to 10 months.
Hernandez, a financial adviser, sought three months in prison followed by home confinement and community service, according to a court filing by Assistant U.S. Attorney David Massey. Massey had urged the judge to deter others as the U.S. pursues “the rampant problem of unreported foreign bank accounts held by U.S. taxpayers.”
“Hernandez's sentence is unusually important because it is the first genuinely contested sentencing in any of the
UBS customer cases around the country, at a time when the government's investigation of offshore banking is ongoing,” Massey wrote in a Sept. 10 filing.
Hernandez is a Caracas native who worked from 1990 to 1998 as an investment portfolio manager and trader for companies in New York. In 1998, he set up 2020 Emerging Inc., which advised wealthy clients on investments, corporate taxes and offshore trusts, according to his guilty plea.
He opened a
UBS account in 2001 in the name of a British Virgin Islands corporation, and set up a second
UBS account in 2006 in the name of a Panamanian corporation, he admitted. Hernandez, who became a lawful permanent resident of the U.S. in 1998 and a citizen in 2008, said he hid both accounts from the
Internal Revenue Service on his tax returns.
Hernandez got caught after
UBS, Switzerland's biggest bank, avoided U.S. prosecution February 2009 by paying $780 million, turning over the names of about 250 U.S. account holders and admitting it helped Americans evade taxes.
UBS later agreed to disclose data on 4,450 accounts, and 15,000 Americans sought to avoid prosecution last year by disclosing their offshore accounts to the IRS. Since February 2009, the U.S. Justice Department has filed criminal tax charges against 17
UBS clients in the U.S., two
UBS bankers and three others accused of aiding tax evasion.
