Jack Barouh entered a guilty plea to filing a false tax return for 2007, in which he failed to report that he had an interest in or a signature authority over financial accounts at UBS. He also failed to report income earned on his UBS Swiss bank accounts.

The accounts in question had been opened under the names of Domilou, a nominee Panamanian corporation, and Similen Investments, a nominee British Virgin Islands corporation. The tax loss associated with these accounts between 2002 and 2007 amounted to some $736,000, the DoJ said.

In addition to these accounts Mr Barouh also owned and controlled several additional offshore bank accounts at banks other than UBS, including accounts in Switzerland and Hong Kong, the statement continued. Court documents recorded that since 1976 Mr Barouh had been skimming funds from his watch businesses and depositing the proceeds into his undeclared UBS bank accounts. He was also found to have deposited unreported sales commissions into the accounts.

According to court documents dating from 2007, Mr Barouh had tried to repatriate funds from Switzerland back to the US, but was persuaded by a Swiss attorney to transfer the money to a newly-created Hong Kong bank account in the name of a nominee Hong Kong corporation. The attorney then advised Mr Barouh to pay himself an annual “consulting fee” until all of the funds were repatriated to the US – all the while knowing that no consulting work would take place – the DoJ said.

Mr Barouh’s plea agreement will see him pay a 50 per cent penalty for the one year with the highest balance in his offshore accounts, this being around $10 million. He must also pay any additional taxes, interest and penalties he may owe. 

Mr Barouh, who is currently free on $1 million bail pending his sentencing on 16 April, faces a maximum jail term of three years.

“Today’s guilty plea is the latest success in our crackdown on illegal offshore tax evasion. The Justice Department and US Attorneys’ Offices will continue our investigations and prosecutions of individuals who utilize offshore accounts in Switzerland and elsewhere,” said John DiCicco, acting assistant attorney general of the Justice Department’s Tax Division.

This case is the latest twist in a tax evasion row between the US authorities and UBS that has rumbled on for over a year now. The US, like many other nations, has taken an increasingly strong stance on tax evasion, putting immense pressure on the banking secrecy practices of international financial centers. In recent European developments, this week Germany came out to say that it would be willing to buy stolen data on alleged tax evaders using Swiss bank accounts – an indication of just how far governments will go to root out those dodging their tax obligations.