Woodlands man receives house arrest in tax scam
HOUSTON
Paul Zabczuk, 55, became the seventh former UBS client to avoid
jail out of 10 prosecutions in a crackdown on offshore accounts to
hide wealth. Dozens more prosecutions are expected in the coming
months, especially with UBS's agreement to disclose the identities
of 4,450 suspected American tax dodgers.
Zabczuk, an oil industry supplier from Woodland Hills, Texas,
used four secret accounts set up by UBS in the Bahamas and
Switzerland to hide assets from 1999 until 2009, according to court
records. One method he used to access money was to transfer funds
to China for the purchase of antiques, which were then shipped to
him in Texas for his own use or to be sold.
In October 2009, Zabzcuk attempted to voluntarily disclose his
illegal accounts to the Internal Revenue Service under a program
that would allow him to avoid prosecution -- something about 15,000
other offshore account holders did. But he was rejected because the
IRS had already obtained Zabzcuk's name from UBS, leading to his
agreement to plead guilty to filing a false tax return and
disclosure of Swiss bankers who had advised him.
"Mr. Zabczuk has done everything the government has asked,"
said his attorney, Scott Frewing.
Frewing added that Zabczuk has already begun paying the
government $832,000 in back taxes, penalties and interest, which
will require that he sell his Texas home. Zabczuk, in tearful
remarks to U.S. District Judge William Dimitrouleas, said he was
sorry for his actions.
"This is the first time that I've broken the law and I will
never break it again," Zabczuk said. "I showed bad judgment."
Prosecutors had sought prison time of 18 months, even with
credit for Zabczuk's cooperation.
UBS in 2009 paid a $780 million fine under a deferred
prosecution agreement with the U.S., which also led to disclosure
of an initial batch of between 250 and 300 American clients. UBS
later agreed under pressure to reveal an additional 4,450 names and
said Tuesday it expects the tax dispute with the U.S. to be
resolved by October.