Here in America, we’re used to people running to court every time life throws a curve ball. Spill hot coffee in your lap? Sue McDonald’s! Get drunk, drive your car into a bay, and drown because you can’t open your seat belt underwater? Mom and Dad can still sue Honda and win $65 million! Electrocute yourself trying to rob a bar? There’s a lawyer for that!

Earlier this month, though, we saw some satisfying comeuppance in one of those cases that makes us roll our eyes in amazement.

First, a little history. UBS is Switzerland’s biggest bank – and, like most Swiss banks, it used strict Swiss secrecy laws to attract depositors. They solicited Americans to open accounts, knowing full well that many of them were using those accounts to cheat the IRS – and in some cases, even advising them how to do it. In 2007, a disgruntled employee blew the whistle (and earned a record $104 million reward in the process). Two years later, UBS paid $780 million and ratted out 4,700 clients to settle charges. The scandal scared 35,000 taxpayers into joining an IRS amnesty program, coughing up over $5 billion in back taxes to dodge criminal charges.

You would think that people ‘fessing up to a pretty serious felony would just slink back home with their tails between their legs. Right? Well, you would be wrong . . . at least here in America. What do we do here? We sue the bank for not stopping us from cheating!

The three plaintiffs in Thomas V. UBS each hid money with the bank, in amounts ranging from $500,000 to $2 million. They didn’t report the existence of the accounts on their tax returns, as the law requires. They didn’t report the interest they earned on their accounts. And of course, they didn’t pay tax on that interest. When the scandal broke, they scurried to the shelter of the amnesty program, paying taxes, interest, and a 20% penalty.

Then, what did they do? They hauled UBS into court to recover the penalties, interest, and other costs they incurred to come clean. Why? Because UBS profited from the fraud and other wrongful acts they committed when they induced depositors to bank with them in the first place!

Fortunately for those of us on the side of common sense, the case ended up before Appeals Court Judge Richard Posner. Posner is one of the judiciary’s most colorful characters, author of nearly 40 books, and not afraid call B.S. when he sees it. His comments dismissing the plaintiffs’ complaint are especially scornful – you can almost hear him literally laughing them out of court:

     “Our plaintiffs do not argue that they (or other members of the class) received tax advice from UBS. They argue rather that the bank should have prevented them from violating the law. This is like suing one’s parents to recover tax penalties one has paid, on the ground that the parents had failed to bring one up to be an honest person who would not evade taxes and so would not subject himself to penalties. There is in general no common law duty to prevent another person from violating the law.

     We needn’t discuss the plaintiffs’ remaining claims-of negligence and malpractice-as they are frivolous squared. This lawsuit, including the appeal, is a travesty. We are surprised that UBS hasn’t asked for the imposition of sanctions on the plaintiffs and class counsel.”

The irony here is that none of the plaintiffs who sent their money on alpine vacations had to cheat to pay less tax. They just needed a plan to take advantage of perfectly legal concepts and strategies. We give you that plan to pay less tax, legally. So now you can spend time in Switzerland visiting chocolate factories and cuckoo clocks – not your hidden bank accounts!

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