In May of 2004, Eisenberg authorized and caused the formation of a Hong Kong corporation named East West Universal Limited. He then transferred his assets from his personal UBS account to a new corporate UBS account in West Universal Ltd's name. However, Eisenberg received income from and remained the beneficial owner of the corporate account. By year's end, the deposits in Eisenberg's UBS accounts exceeded $3.1 million (by 2007 the balance climbed to over $4.2 million).
Around December 2005, Eisenberg caused a tax return to be prepared and filed. On the return, he willfully failed to disclose that he had an interest in or was the beneficial owner of financial accounts at UBS in Switzerland. Also, he failed to report the income he earned on his UBS Swiss bank accounts anywhere on his filed tax return.
SIDE BAR: If you own or have authority over a foreign financial account, including a bank account, brokerage account, mutual fund, unit trust, or other types of financial accounts, you may be required to report the account yearly to the Internal Revenue Service. Under the Bank Secrecy Act, each United States person must file a Report of Foreign Bank and Financial Accounts (FBAR), if
• The person has a financial interest in, or signature authority (or other authority that is comparable to signature authority) over one or more accounts in a foreign country and
• The aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year.
Every June, taxpayer are required to file the FBAR (which is a form separate from an income tax return ) with the IRS. The FBAR is necessary because foreign financial institutions may not be subject to the same reporting requirements as domestic financial institutions. The FBAR is a tool to help the United States government identify persons who may be using foreign financial accounts to circumvent United States law. Investigators use FBARs to help identify or trace funds used for illicit purposes or to identify unreported income maintained or generated abroad.
For additional information about the FBAR, visit this IRS link:
In 2008, Eisenberg instructed UBS to close the account and transfer the funds in the account to another large global Swiss bank headquartered in Zurich, Switzerland.
On December 17, 2010, Arthur Joel Eisenberg of Seattle pleaded guilty in federal court in Seattle, Washington to filing a false tax return related to Swiss bank accounts that he maintained at UBS in Switzerland. Eisenberg faced a maximum sentence of three years in prison. Eisenberg paid a $2.1 million penalty for failing to file a Report of Foreign Bank or Financial Account (FBAR) form.
On March 4, 2011, Arthur Joel Eisenberg of Seattle was sentenced to three years probation.
Help Solve This Puzzle
According to the Seattle Post Intelligencer: Pay-Per-Call Operator Agrees to Pay Fine (by Don Tewkesbury, April 29, 1993), then 58-year old Seattle businessman "Arthur Joel Eisenberg" was president of a multimillion-dollar, nationwide -pay-per-call phone network and agreed to pay a $20,000 civil penalty to settle charges he violated the Fair Debt Collection Practices Act.
Since the 1970s, this Eisenberg had been referenced in consumer-fraud cases involving allegations of pressuring consumers to pay contested phone charges. For example, the article tells of the problems of Megaquest Group, a Seattle-based operation purportedly run by Eisenberg, and which the IRS had alleged (some twenty years ago) had failed to report more than $126 million in taxable income over a four-year period ending in 1989. Allegedly, Megaquest controlled at least 82 different entities providing dial-a-porn and other pay-per-call information services throughout the United States and several foreign countries.
Finally, we read that this Eisenberg was the subject of Washington state fraud proceedings in the 1970s arising from his operation of an air travel club, Airclub International. In 1979, he was ordered to pay $200,000 to 3,000 Seattle-area residents who paid for pleasure flights that never occurred.
SIDE BAR: Are the Arthur Joel Eisenbergs of the UBS tax case,the phone case, and air travel case one and the same? Based upon the implications and inferences, it seems so, but there is insufficient information provided in the UBS tax case to clarify the issue. According to some readers, the two are one and the same.