FLORIDA, United States, Tuesday May 21, 2013 – The United States Department of Justice (DOJ) says a federal grand jury has indicted a married couple for federal tax crimes in the Caribbean.
The DOJ said that David Leon Fredrick and his wife Patricia Lynn Hough were indicted for conspiring to defraud the Internal Revenue Service (IRS) by concealing millions of dollars in assets and income in offshore bank accounts at UBS and other foreign banks.
According to the indictment, the married doctors served on the Board of Directors of two Caribbean-based medical schools, located on Saba in the Netherlands Antilles, and in Nevis.
The indictment claims that Fredrick had an ownership interest in the medical school on Nevis until 2007, when both medical schools were sold.
The indictment alleges that Fredrick and Hough conspired with each other and with Beda Singenberger, a citizen and resident of Switzerland who is under indictment in the Southern District of New York, and a UBS banker to defraud the IRS.
“They carried out the conspiracy by creating and using nominee entities and undeclared bank accounts in their names and the names of the nominee entities at UBS and other foreign banks to conceal assets and income from the IRS, including the sale of real estate associated with the medical school on Saba and shares they owned in the medical school on Nevis,” the indictment alleges.
“The real estate was sold for more than US$33 million, all of which was deposited into one of their undeclared accounts in the name of a nominee entity,” it adds.
The indictment further alleges that Fredrick and Hough used emails, telephone and in-person meetings to instruct Swiss bankers and asset managers to make investments and transfer funds from their undeclared accounts at UBS.
According to the indictment, Fredrick and Hough “caused funds from the medical schools’ undeclared accounts to be transferred to undeclared accounts in their individual names or in the names of nominee entities.
“Fredrick and Hough then used the funds in their undeclared accounts to purchase an airplane, two homes in North Carolina and a condominium in Sarasota, Florida,” it alleges, adding that Fredrick also transferred more than one million dollars to his relatives.
Fredrick and Hough were also charged with four counts of filing false tax returns for 2005, 2006, 2007 and 2008.
The indictment alleges that Fredrick and Hough filed false tax returns which substantially understated their total income and failed, on Schedule B, Parts I and III, to report that they had an interest in or signature or other authority over bank, securities or other financial accounts located in foreign countries.
The DOJ said US citizens, resident aliens and legal permanent residents of the United States have an obligation to report all income earned from foreign bank accounts on their tax returns.
It said the conspiracy charge carries a maximum potential penalty of five years in prison and a US$250,000 fine.
It also said the false return charges each carry a maximum potential penalty of three years in prison and a US$250,000 fine.(CMC).