University of Rochester Professor Penalized, Forced to Pay $100 Million for Hiding Swiss Bank Accounts

Dan Horsky, a 71-year-old emeritus professor of business administration at University of Rochester, N.Y., is being made to pay a $100 million tax penalty for hiding wealth within Swiss bank accounts from the U.S. government. Horsky pleaded guilty to a conspiracy charge, according to the Justice Department.

Horsky accumulated $200 million by investing in start-up companies, then placed that money into Zurich-based accounts. He didn’t disclose these accounts or pay required taxes on them, which triggered penalties. If found out, Taxpayers can owe up to 50 percent of an offshore account’s balance due to willful violations. To avoid a penalty, individuals banking offshore must file a form known as FBAR. It’s said that Horsky’s penalty is the largest FBAR penalty to date.

“Horsky went to great lengths to hide assets in secret accounts overseas in order to avoid paying his share of taxes to the IRS,” said Dana Boente, the U.S. attorney in the eastern district of Virginia, which prosecuted the case. “Today’s plea shows that we will continue to prosecute those who engage in this criminal activity.”

The Justice Department stated Horsky is a citizen of the U.S., the U.K., and Israel. Also, they shared that bank employees were aware of his U.S. residence and an unknown accomplice had nominal control over his accounts, allowing for them to file false expatriation statements, which permitted that person to claim that they were outside of the U.S. tax net.

The professor’s attorneys have said, “Mr. Horsky deeply regrets what he did and accepts full responsibility for his actions.” The sentencing in the criminal case is scheduled for February. He faces a prison sentence and additional monetary penalties. The statement issued by the Justice Department doesn’t name Horsky’s accomplice, the bank, the bank’s employees, or the companies Horsky invested in.

For more than a decade, the U.S. has been attempting to combat offshore tax evasion perpetrated by wealthy individuals. The government has urged the public toward voluntary disclosure, using legislation, enforcement, and incentives to facilitate this.

Within the past decade, UBS Group AG paid $780 million after entering into a deferred prosecution agreement. Also, the Credit Suisse Group AG paid $2.6 billion and they plead guilty when prosecuted, admitting that they helped Americans file false tax returns.

The U.S. government has tightened laws on offshore tax avoidance, requiring that foreign banks disclose information about their U.S. clients. In October, the IRS announced that voluntary disclosure programs have collected $10 billion, drawing in about 100,000 newly compliant taxpayers.