California man latest to plead guilty in federal probe of Swiss banking giant UBS

Calif. man pleads guilty in Swiss bank case

LOS ANGELES — A California man on Tuesday formally pleaded guilty to failing to report more than $1 million he transferred to a Swiss bank account.

John McCarthy of Malibu was the first person to be named publicly after the Swiss and U.S. governments reached a deal in August to settle American demands for the identities of suspected tax dodgers.

McCarthy’s attorneys signaled his intention to plead guilty in previous filings. A plea agreement unsealed in court Tuesday showed that McCarthy pleaded guilty to one count of failing to file a Foreign Bank and Financial Accounts report. He faces up to five years in prison and fines totaling $250,000 when he is sentenced Jan. 28.

His attorney, Steven Toscher, said McCarthy accepted responsibility for his conduct.

“He made a serious mistake regarding the use of foreign bank accounts and will be making every effort to right the wrong he committed,” Toscher said.

Prosecutors said McCarthy funneled the money to a UBS account with the help of a Swiss lawyer and bank officials between 2003 and 2008.

The attorney, who wasn’t identified in court documents, told McCarthy he would create two entities that “would allow for an extra layer of privacy and help to conceal defendant’s liability.”

By transferring more than $1 million to the Swiss bank account, McCarthy failed to pay at least $200,000 in federal income taxes, prosecutors said.

McCarthy has agreed to cooperate with the U.S. attorney’s office, the plea agreement said.

In February, the IRS asked a federal judge in Miami to force Zurich-based UBS AG to turn over names of some 52,000 American clients believed to be hiding nearly $15 billion in assets in secret accounts. UBS and the Swiss government resisted, arguing it violated Swiss banking confidentiality laws that date back centuries.

But UBS paid a $780 million penalty earlier this year and also agreed to disclose to the U.S. the names of 4,450 wealthy Americans.

Three bank customers whose names were divulged under the prior agreement also have pleaded guilty to tax charges in federal court. Three Swiss bankers and a Swiss lawyer are facing U.S. criminal charges as well.

The IRS also started a six-month amnesty program that sweetened the offer with reduced penalties for people with undeclared assets. The response was unprecedented, but it wasn’t known how many people have applied.

Swiss banks hold an estimated $2 trillion of foreign money, and financial services add about 12 percent of GDP to the national economy.