Apr 28th 2010
A former watchmaker was sentenced to 10 months in prison for hiding $10 million in offshore accounts.
Jack Barouh, 65, of Golden Beach, FL, had been hiding money since 1976 and stashed $6 million of his money with Zurich-based UBS AG, the Jewish Times reported. Barouh, who sold his luxury watch company to Fossil Inc. for $50 million in 2004, is the son of Holocaust survivors, a fact his lawyer used at his sentencing hearing April 23.
The lawyer said Barouh's parents, who fled from Austria to Colombia during the Holocaust, taught Barouh to "hide and hoard." He said his client had a compulsion "to establish a secret nest egg," the newspaper reported. Barouh reportedly received psychiatric help for his compulsion.
The American Gathering of Holocaust Survivors and their Descendants rejected Barouh's defense, telling Reuters, "Holocaust survivors and their families reject the demeaning assertion that 'survival behavior' learned from the Holocaust could justify illegal evasion of taxes."
Although prosecutors asked that Barouh serve 15 months in prison, U.S. District Judge Adalberto Jordan gave him 10 months, saying Barouh cooperated with prosecutors. Barouh pleaded guilty in February to filing a false tax return.
Court documents say Barouh set up accounts through Hong Kong, British Virgin Islands, and Panamanian companies. He also had accounts at banks other than UBS, and failed to pay about $736,000 in taxes between 2002 and 2007, the South Florida Business Journal reported.
In his plea deal, Barouh agreed to pay a 50 percent penalty for the one year with the highest balance in his offshore accounts, about $10 million. He also agreed to pay additional taxes, interest and penalties.
"I am ashamed and embarrassed by my conduct," Barouh told the judge.
UBS, one of Switzerland's biggest banks, admitted early last year to helping Americans evade taxes, leading 11 UBS bank customers to plead guilty to tax evasion. Six other clients have been sentenced, Bloomberg News reported. Four got probation or home detention, one got two months in prison, and another received a one-month sentence. The bank paid $780 million in fines.