Kenneth Rubinstein was interviewed on CNBC Europe on March 13, 2009 regarding what happens next in the Madoff case, including the Trustee’s clawback powers. For more on clawbacks and how to protect assets from clawbacks, click here.
Asher Rubinstein was interviewed on CNBC Europe on March 12, 2009
Asher Rubinstein was interviewed on CNBC Europe on March 12, 2009 regarding what happens next in the Madoff case, including the Trustee’s clawback powers. For more on clawbacks and how to protect assets from clawbacks, click here.
Author of Antigua Asset Protection Laws Clarifies Antigua's Offshore Position
Kenneth Rubinstein, author of Antigua’s Asset Protection Laws, was interviewed by the Antigua Sun and explains that Antigua is still a strong Asset Protection jurisdiction.
Offshore Financial Sector At Risk As Anti-Tax Haven Laws Get Drafted
Tuesday March 10 2009
by Aarati Jagdeo, Antigua Sun
New York Attorney, Kenneth Rubinstein, stated that Antigua and Barbuda must aggressively pursue ways to repair its image before “the coming storm of anti-tax haven abuse legislation.”
Rubinstein’s firm, Rubinstein & Rubinstein LLP, drafted the Antigua International Trust Act, International Foundations Act and International LLC Act, which became law as of 17 Jan., 2009.
Rubinstein was flown down last week, as an invited expert, for a meeting with members of the Antiguan financial services group, heads of Antigua’s international banks, attorneys, accountants, trust companies, investment managers and advisors.
Speaking exclusively with the Antigua Sun, Rubinstein said the purpose of the meeting was to discuss how best to counteract the negative publicity the country has been subjected to since the onslaught of the US Securities and Exchange Commission’s (SEC)’s investigation into Antigua’s largest private investor and Chairman of Stanford International Bank Ltd., Sir R. Allen Stanford.
According to Rubinstein, all is not lost for Antigua and Barbuda’s position as a viable and credible offshore financial services centre.
Rubinstein listed his three proposed methods of damage control to the SUN.
“There are three important issues that I believe the financial services sector and the government have to deal with. 1) Counter-acting the damage to Antigua’s image as an offshore centre caused by the Stanford matter, 2) Educating the world with regard to Antigua’s new legislative advantages as an offshore centre and 3) Clarifying Antigua’s position in light of the US and European anti-tax haven initiatives that are taking place.”
In terms of anti-tax haven initiatives, US Senator, Carl Levin, along with other senators, has already drafted the “Stop Tax Haven Abuse Act”, which seeks to “stop tax cheats, who drain our treasury of funds needed to pay for our recovery.
The bill’s target is offshore tax abuses that rob the US Treasury of an estimated US$100 billion each year, reward tax dodgers using offshore secrecy laws to hide money from Uncle Sam and offload the tax burden onto the backs of middle income families who play by the rules.”
Rubinstein stated that with future legislation of this sort expected to come out of the UK, Europe and the Organisation for Economic Co-operation and Development (OECD), it is important for Antigua and Barbuda to position itself as a legitimate and respectable jurisdiction.
To combat the potential negative repercussions of anti-tax haven legislation, Rubinstein indicated that Antigua and Barduba needs to highlight its existing laws which were drafted to ensure that the offshore financial industry operated on a tax-compliant basis.
“The Swiss confidentiality act and the Antigua confidentiality act are both designed to protect the privacy and confidence of individuals’ assets from private persons or entities, not from those individuals’ governments,” Rubinstein stated.
He further pointed out that Antigua has a Mutual Legal Assistance Treaty (MLAT) with the US and a Tax Information Exchange Agreement, both of which pre-empt and take precedence over the domestic confidentiality laws in Antigua and Barbuda.
Antigua and Barbuda is not some “rogue island,” Rubinstein stated, and according to him, it would be a mistake for anyone to think otherwise.
“We are not a country to hide assets illegally, we are a country that will let you protect your assets from civil disputes, private people, companies etc., that may have claims against you, we’re not a country that is going to welcome you to come hide your assets because those assets are somehow related to criminal activity in your home country, including criminal tax fraud in your home country.”
Rubinstein stated to the SUN that offshore banking was “not going to go away.” When asked how he could be so sure, Rubinstein stated, “People will always need a safe place to put their money, to put their assets, that is removed from the jurisdiction of their home country in civil controversies.”
He continued, “In addition, there will always be a certain number of people who feel that it is good financial planning to take a certain amount of assets and keep them in a different country with a different economy.”
Rubinstein cited the increasing troubles in the US, which have caused a giant decrease in consumer confidence in the stability of US markets.
“I know many people today, who are taking assets out of the US not because of any fear of lawsuits but because of their fears of the collapse of the US economic system, collapse of the banking system and they want to have a nest-egg someplace else that is safe.
“Europe is just as bad, Asia is getting there. But you know what? An island with a stable economy that is not exposed to the sub-prime mortgage catastrophe or the credit default swap catastrophe, might be a very good place to put your money,” he continued.
In this connection, Rubinstein noted, “When clients call me and ask ‘Are Antigua banks safe today?’ my response is generally, ‘A helluva lot safer than the banks in New York.’”
New York Attorney Kenneth Rubinstein To Address Antigua Financial Services and International Banking Industry as Invited Expert
New York Attorney Kenneth Rubinstein To Address Antigua Financial Services and International Banking Industry as Invited Expert
NEW YORK, NY – (March 4, 2009) – Kenneth Rubinstein of the New York law firm Rubinstein & Rubinstein, LLP will address the Antigua Financial Services group on March 5, 2009 to discuss the country’s recent financial news reports and future business development goals. Expected attendees at his talk include the heads of all of Antigua’s international banks as well as the country’s financial service providers, including attorneys, accountants, trust companies, corporate service providers, investment managers and advisors.
“Interest in Antigua continues as the country demonstrates its ability to provide safety, stability and legitimacy of Antigua as an international financial center and promotes its banks and service providers as safe depositories and custodians of offshore funds and assets,” said Rubinstein, who wrote Antigua’s trust and financial service regulation laws in 2006.
Other key considerations that Rubinstein will address in his talk relate to the fact that investors seek government reassurance regarding the stability of the economy, banking system, tax situation and exchange treaties. “Statements of reassurance are needed with respect to the safety and security of Antigua’s international and domestic banking systems, regulation of international and domestic banks, the fact that there have been no bank failures, and that all depositors have immediate access to their funds,” he said.
For additional information regarding Rubinstein & Rubinstein, LLP, visit the website at www.assetlawyer.com or call 212.888.6600.
Email: julie@hedgeco.net
With Trial Looming, Fate of UBS Looks Grim
Kenneth Rubinstein was interviewed by HedgeCo regarding non-compliant offshore accounts at UBS, Swiss banking secrecy, and the IRS initiative against formerly secret Swiss bank accounts.
With Trial Looming, Fate of UBS Looks Grim
March 3, 2009 : Permalink
New York (HedgeCo.Net) – UBS may have until July 13 to “vigorously contest” the demands of the Internal Revenue Service to disclose the names associated with 52,000 offshore bank accounts, but the vice that the troubled Swiss bank is finding themselves in is getting tighter by the day. Tales of tax evasion, secrecy, greed, and diamonds smuggled in toothpaste tubes have garnered international interest, casting a blinding light of transparency on a bank that has helped thousands of wealthy Americans hide almost $15 billion from the U.S. government in recent years.
The wrath of the U.S. justice system doesn’t just stop at the bank. The wealthy individuals behind those targeted accounts are in danger of facing penalties, back taxes, even prison terms for their role in shielding their assets. And the UBS employees who catered to their client’s demands while showing them step by step how to hide their money and evade U.S. taxes? They will no doubt face prosecution, a fate that UBS is well aware of. And while UBS may uphold that their employees were acting in good faith, plenty of facts show otherwise.
“In my opinion, [the UBS employees] not only knew what they were doing was wrong, they were participating in the kind of international activities that you would only see in James Bond movies,” says Ken Rubinstein, Partner at New York City law firm Rubinstein & Rubinstein.
According to a complaint filed by the SEC, these UBS employees often traveled to the United States with encrypted laptops after having received training on how to avoid detection by U.S. authorities. These advisors then whisked their clients away to exclusive events such as art shows, yacht outings and sporting events, all funded by UBS.
Helping to kick-start the investigation was former UBS employee Bradley Birkenfeld, who pled guilty last year to charges of conspiracy and admitted to helping hide $200 million worth of client assets with the goal of avoiding taxes. Birkenfeld even disclosed he purchased diamonds for an American client – and smuggled them out of the country via a toothpaste tube.
The Defense
While the U.S. asserts they are entitled to these coveted names, UBS knows that the disclosure would no doubt end in their demise.
“Swiss law strictly prohibits UBS and its employees from disclosing to the IRS the account information located in Switzerland that the IRS seeks,” UBS lawyers have said recently.
However, this “Swiss law” defense that UBS is spouting will not hold up in court, says Rubinstein, referring to the Mutual Legal Assistance Treaty that has been in place with Switzerland since 1977.
The Mutual Legal Assistance Treaty is an agreement that the United States has with countries all over the world, which enables the U.S. government to obtain information in foreign countries should there be any suspicions of tax fraud or shady activity.
These treaties give the United States power to summon witnesses, obtain documents and other real evidence, issue search warrants and to serve process. A treaty will trump any internal laws of a specific country, therefore making the bank’s claim to Swiss secrecy rights obsolete.
The U.S. has also asserted that Switzerland was fully aware that what they were doing was illegal, despite any references to Swiss law, another fact that Rubinstein agrees with.
“UBS made a conscious decision that they could make more money by being international investment bankers, primarily focused in the US, than they could by being the traditional Swiss private bank to wealthy individuals,” he explains. “They understood that the minute they held that presence in the U.S., they would be compromising the secrecy that a Swiss private bank normally has.”
What’s at Stake
“Secrecy laws are not designed to protect criminals and allow them to hide their money,” Rubinstein explains. “They are designed to provide the individual privacy and protection from other individuals and companies, not from the government.”
It is because of this fact that secrecy laws will continue to be upheld in foreign countries, though not for the purpose of avoiding taxes. The treaties were enacted so the U.S. could easily probe into any suspicions regarding possible fraud.
To this date, there are only a handful of countries that do not have a treaty with the United States; mainly Cuba and Monaco.
UBS knows that if they’re forced to disclose those names, they can say goodbye to their U.S. clientele. If a judge rules against them, and they refuse to give up the information, they can be held in contempt of court, with the possibility that all of their U.S. assets would be frozen; a scenario that would essentially bankrupt the company.
UBS has already conceded to pay $780 million to the U.S. government in connection with criminal charges and has agreed to exit the cross-border business. Shares of UBS closed yesterday at $8.34, after hitting an all-time low last month of $8.08, down 76 percent from last year’s peak.
Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net
UBS Clients Prepare For The Worst
Kenneth Rubinstein was interviewed by Forbes regarding strategies to address non-compliant offshore accounts at UBS: convert to a tax-compliant offshore strategy, or preemptively disclose the account to the IRS.
UBS Clients Prepare For The Worst
Vidya Ram , 02.27.09, 2:00 PM ET
LONDON –
UBS has pledged to fight against the Internal Revenue Service’s demand that it spill details of 52,000 clients suspected of having secret Swiss bank accounts. But its clients are preparing for the worst.
Some clients are already beginning to approach the IRS under its voluntary disclosure program. “We have been going to the IRS without giving names and explaining we represent the clients, to get assurances from the IRS that if they come forward and declare those assets they will not be prosecuted criminally,” says lawyer Ken Rubinstein, of New York-based Rubinstein & Rubinstein. “Unless they already have the client’s name, the IRS is agreeing to treat it as a civil matter.” Several other clients are converting their foreign accounts that aren’t compliant with U.S. law.
UBS pledged to dig its heels in and not hand over the details of the clients, a day after it reached a settlement to pay a $780.0 million fine to U.S. authorities and release details of clients suspected of tax
fraud — estimated to be around 250, according to Swiss press reports. (See “52,000 Had Secret UBS Accounts.”)
That settlement has already put UBS in hot water: On Wednesday, a criminal case was filed against the company, Chairman Peter Kurer and the Swiss regulator for violating the country’s banking secrecy laws – a charge that the bank deems “without merit.”
The Swiss President Pascal Couchepin had defended the decision to hand over the details of those 250 clients, warning that UBS’ existence would have been threatened had it been indicted. For Switzerland, the fate of that bank matters enormously: UBS and Credit Suisse’s balance sheets total around seven times Switzerland’s gross domestic product, while their revenues amount to just under 9.0% of GDP.
Rubenstein, who has been advising clients either to convert their accounts or pre-emptively disclose to the IRS, believes that that economic threat will force UBS and the Swiss authorities to comply with U.S. demands. “My prediction is that the details of the 52,000 will be handed over for pragmatic reasons,” he said. “They will have to capitulate.”
Swiss Banking Secrecy is Fading; Americans with Non-Compliant Offshore Accounts Must Take Immediate Defensive Action
Swiss Banking Secrecy is Fading; Americans with Non-Compliant Offshore Accounts Must Take Immediate Defensive Action
by Asher Rubinstein, Esq.1
Faced with a criminal tax prosecution by the U.S. government, a civil lawsuit by the I.R.S., and criminal indictments against some of its top managers for promoting tax fraud, UBS capitulated on February 18, 2009. In agreeing to a “deferred prosecution”, UBS will pay $780 million to the U.S. and disclose the names of Americans with undisclosed foreign accounts. If UBS fully complies, the U.S. will drop the criminal charges in 18 months. Contemporaneous with the February 18 settlement, UBS disclosed to US authorities the identities of some 250 American account holders. Thousands of additional Americans with undisclosed foreign accounts are still at risk of their identities being revealed by UBS in the civil lawsuit, which was not settled by the deferred prosecution. Various reports estimate that between 17,000 and 52,000 additional non-compliant accounts were created at, or by, UBS, containing both cash and securities.
In a further initiative to access those accounts and determine the identities of their U.S. owners, the day after agreeing to the deferred prosecution of the criminal case, the IRS sued UBS in the parallel civil proceeding for disclosure of account information. In addition, the Senate Permanent Subcommittee on Investigations is conducting hearings regarding the U.S. government’s efforts to uncover the identities of Americans with non-compliant offshore accounts. The Senate Subcommittee hearings will address other foreign tax havens and non-compliant foreign accounts, in addition to the specific initiative against UBS.
The intensity of the multi-pronged U.S. offensive against UBS is further demonstrated by three additional remarkable facts. First, the Swiss Financial Market Supervisory Authority apparently allowed UBS to disclose the American account holders, thereby ignoring long-standing Swiss bank secrecy law and tradition. Second, U.S. prosecutors were given the account information without going through the normal procedure whereby the request for account information is submitted to a Swiss court of law, which then adjudicates whether or not the information should be released. Third, the account holders were not notified before the banking data was released, a further procedure that was ignored. In overcoming these once formidable legal and customary hurdles, the U.S. demonstrated its resolve and ability to discover the identities of Americans with non-compliant offshore accounts.
Credit Suisse and HSBC are also under investigation for promoting U.S. tax fraud, and will likely follow UBS in revealing U.S. client banking information, as will other banks, as the U.S. investigation widens.
UBS’ surrender is the latest event in a continuing, and strengthening, campaign to eliminate bank secrecy and crack down on non-compliant offshore accounts owned by Americans. In 2007, Senator Levin, together with then-Senator Obama, introduced a bill in the Senate to prevent tax shelter abuses and increase disclosure requirements for assets held in offshore jurisdictions. Stop Tax Haven Abuse Act, S-681. President Obama is expected to introduce a law to further crack down on non-compliant offshore accounts. The law will likely include additional measures to reveal the U.S. owners of “secret” offshore accounts. After revealing the American owners of the offshore accounts, the next step is to prosecute them for criminal tax fraud. The failure to timely and properly disclose an interest in an offshore account can lead to large fines and penalties. If the lack of disclosure is deemed intentional, criminal prosecution for tax fraud and jail time is a frightening possibility.
Beneficial owners of undisclosed foreign accounts (including accounts held in the name of nominees) must evaluate their options and take immediate steps to minimize the risk of I.R.S. criminal prosecution for tax fraud.
Option A: Convert to a Tax-Compliant Structure
Our firm has long counseled proper tax disclosure with respect to foreign accounts and the use of tax-compliant strategies to minimize U.S. taxation on foreign assets. We also advise clients on the legitimization of non-compliant offshore assets. We counsel clients with regard to the proper steps to transform a non-compliant offshore account into one that complies with current U.S. law. Although we cannot erase a non-compliant past, we can ensure full compliance going forward. Such steps may significantly reduce the chance of discovery and prosecution for previous violations.
Option B: Pre-emptive, Anonymous Negotiation and Disclosure
Additionally, if you currently have an interest in a non-compliant offshore account, you may consider voluntary disclosure of that interest before the I.R.S. discovers it. Such a pre-emptive disclosure is best made by qualified legal counsel, experienced in offshore compliance and in I.R.S. negotiations. We can approach the I.R.S. on a hypothetical “no-name” basis, demonstrate proper current compliance and negotiate on your behalf to avoid criminal prosecution and reduce fines and penalties for past non-compliance. Although fines and penalties may be significant, they pale before the consequences of an I.R.S. criminal prosecution. We have a very successful track record with the I.R.S.
If you are one of the thousands of American taxpayers with a foreign account that you thought was secret, you have very little time to bring it into compliance. Given that UBS has caved in and already revealed the identities of some U.S. account holders, we can expect that UBS, Credit Suisse, HSBC and other banks will provide a complete list of U.S. account holders in the near future.
Regardless of which strategy you pursue, failing to remedy a non-compliant offshore account puts you at serious risk of harsh penalties, including I.R.S. criminal prosecution, in the event of discovery. As recent events have proven, discovery is very likely. The window of opportunity is closing fast.
Kenneth Rubinstein will be interviewed on Bloomberg on Friday, February 20
Kenneth Rubinstein will be interviewed on Bloomberg on Friday, February 20, between 5 and 6pm Eastern Time, regarding asset protection and offshore developments. Please contact us for how to view the interview on television, radio and streaming over the Internet.
Foreign Trust Survives Creditor Challenge – Offshore Asset Protection Sound, Legal And Effective
FOREIGN TRUST SURVIVES CREDITOR CHALLENGE – – OFFSHORE ASSET PROTECTION SOUND, LEGAL AND EFFECTIVE
Two recent news stories have led to hasty and unfounded pronouncements of the “death of offshore asset protection”. The first was the theft of confidential banking information from a foreign bank and its sale to German tax authorities. The second was the subsequent exposure of banking giant UBS as a promoter of U.S. tax fraud. Both stories have at their core tax fraud involving strategies based on “hiding assets”. We have long counseled that non-reporting of foreign assets to the IRS and relying on supposed offshore “secrecy” in order to avoid taxation is unlawful, unwise and would negate effective asset protection. The following actual case study proves that offshore asset protection, when done properly and lawfully, is completely legal and 100% effective.
In 2004, one of our clients established an irrevocable asset protection trust in Liechtenstein with funds totaling $1.2 million. The client filed all required IRS forms relating to the funding of the trust and paid U.S. tax annually on all trust income.
In 2006, a U.S. creditor obtained a New York state judgment of more than $1 million against the client. Shortly thereafter, the judgment creditor served a restraining notice against the client’s U.S. assets. However, the client had minimal attachable assets in the U.S.
Frustrated with the lack of attachable U.S. assets, in 2008 the creditor commenced a legal action in Liechtenstein, hoping to get to the assets in the trust. The creditor argued that because the client had established the trust, and because the client was a beneficiary of the trust, our client had a right to trust assets which was attachable by the U.S. creditor.
A lower Liechtenstein court temporarily restrained the trustee from transferring trust assets while that court considered the U.S. creditor’s claim. However, an appellate-level Liechtenstein court quickly determined that our client had no “right” to trust assets that was attachable because the trust was a discretionary trust. Therefore the Liechtenstein courts lacked jurisdiction over our client. The appellate court cancelled the restraint on trust assets. Thus, the trust assets were protected from the creditor’s U.S. judgment. Incidentally, the U.S. creditor was required to deposit $100,000 with the Liechtenstein court to cover our client’s legal costs.
The Supreme Court of Liechtenstein affirmed the decision of the appellate court, effectively dismissing the creditor’s challenge against the trust. Our client’s assets remain safe and secure in Liechtenstein. In addition, the creditor was ordered to pay the legal fees of the trust and our client.
This case is instructive in a number of ways. First, the ultimate lesson here is that despite the legal challenge by a U.S. creditor, the Liechtenstein trust assets remain safe and protected. The U.S. creditor was forced to commence a new action in a foreign jurisdiction, pay legal fees in advance (contingency fees are not allowed in good offshore jurisdictions), and overcome short statutes of limitations and prohibitive burdens of proof. With the odds so strongly stacked against him, the U.S. creditor lost and also paid our client’s legal fees.
Second, the trust was impenetrable because distributions to the U.S. client were completely discretionary by the Liechtenstein trustee. This was the basis for the appellate court’s ruling that the U.S. client had no claim to trust assets. This demonstrates that for effective offshore asset protection, the U.S. client must part with legal control of the assets. However, the trust assets will still be protected and guarded by licensed, bonded, qualified and reputable trustees who will, in fact, be sympathetic to the client’s needs and wishes.
Third, clients who protect their assets offshore must still disclose those assets, and all gains thereon, to the IRS. Clients cannot expect their assets to be “hidden” – neither from their creditors nor from the IRS. The assets will be protected offshore, but taxes are still due and reporting requirements must be met in order for the asset protection to be effective.
Finally, this case demonstrates that offshore asset protection is very much alive and 100% effective, provided that it is done properly and tax compliantly. “Hiding” assets does not work; “protecting” assets does.