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October 14, 2019Cart

Business

by Westchester County Business Journal
by WCBJ

Feds sue Monsey homebuilder for unpaid penalties on Swiss bank accounts

The federal government is suing a Monsey homebuilder for not paying penalties that were assessed when he pleaded guilty two years ago to concealing Swiss bank accounts.

Acting U.S. Attorney Joon H. Kim claims that Walter Berkovic, 62, still owes the government $202,793.

Berkovic pleaded guilty in 2015 to failure to report foreign bank accounts. He was assessed $356,957, and he agreed to pay half before sentencing and the other half within a year.

A year after the final payment was due, the government said, he still owed the money, plus interest and accrued penalties.

Berkovic had developed a successful construction business, according to court records, building houses in Orange, Rockland and Ulster counties. His business collapsed in the 2008 financial crisis when banks stopped lending to contractors, mortgages were unavailable and the housing market froze.

The criminal case concerns an account that Berkovic opened in 1991 with Union Bank of Switzerland. In 2007, he formed a Panama sham corporation, Brightlight Management S.A., opened another UBS account, and transferred assets into the new account.

The UBS accounts held $713,918.

Berkovic argued in 2015 that it was not his money in the Swiss bank accounts, but rather European funds deposited by his mother-in-law from her husband’s earnings in the Antwerp diamond business. The funds were meant to be used for the benefit of her children and grandchildren, and Berkovic was merely a trustee.

Berkovic and his wife are descendants of Holocaust survivors. Among Jews whose families lost everything to the Nazis, Berkovic argued in a sentencing memorandum, Swiss bank accounts were seen as a safe haven from confiscation.

Growing up in the Hasidic Jewish enclave of Williamsburg, Brooklyn, Berkovic “was also a product of the fear of governments and the fear of repression of Jews.”

UBS accounts were put under a spotlight around 2008 when a former bank employee alerted U.S. regulators that the North American sales force had been directed to recruit U.S. taxpayers by offering ways to hide assets and evade taxes.

Berkovic tried to divulge his accounts in 2009, when the IRS announced a voluntary disclosure program. He was denied amnesty, his lawyer argued, because the government had already selected him for investigation.

The government argued in 2015 that Berkovic had structured UBS accounts and a Panama “sham entity” to conceal his role and to avoid reporting taxes on significant securities trading through the bank accounts.

He was sentenced to probation for four years.

The government noted in the new case that Berkovic’s attorney said that a $100,000 payment was made recently, but it had not yet been posted.

That would leave about $103,000 due to close the matter.