An 83-year-old Florida man pleaded guilty Tuesday to hiding at least $1.1 million from the IRS in secret Switzerland and Israel bank accounts for more than a quarter century.
Delray Beach resident Bernard Kramer, held the secret accounts from 1987 to about 2012. He used the code phrase "Hot Lips" to refer to them in communications with Swiss bankers in Zurich, where he opened the first account, according to a criminal filing in Manhattan federal court.
Kramer pleaded guilty to conspiracy and agreed to cooperate with government investigators and pay a civil penalty of $588,042 along with past due taxes. He potentially faces a maximum eight-year prison term at a Manhattan federal court sentencing set for Feb. 6.
"Today Mr. Kramer acknowledged responsibility for his conduct. He looks forward to putting the matter behind him," said defense attorney Brian Ketcham, of Kostelanetz & Fink in New York City.
Kramer is the latest of dozens of wealthy Americans prosecuted for allegedly ducking taxes on income held in accounts overseas. They have been charged as part of a continuing, multi-year crackdown on suspected offshore tax evasion by Department of Justice prosecutors and IRS investigators.
The Manhattan court filing shows Kramer secretly received periodic disbursements from the unidentified Swiss bank by requesting checks for amounts less than $10,000 — the threshold that requires banks to report transactions to government regulators.
Kramer initially maintained the secret Swiss account after it became publicly known in 2008 that Swiss banking giant UBS was being investigated by U.S. authorities for allegedly helping American account owners evade federal taxes.
The following year, UBS agreed to a $780 million deferred-prosecution deal with federal prosecutors to settle criminal charges that it sent bankers posing as tourists into the U.S. to help clients evade taxes. In the first major crack in historic Swiss bank secrecy, UBS also agreed to turn over financial data for nearly 4,500 U.S. clients whose accounts once held an estimated $18 billion.
Kramer, assisted by Swiss bankers, opened a new secret account for his funds at an Israeli bank headquartered in Ramat Gan. The Israeli bank similarly was not identified in court filings.
U.S. law requires citizens and residents to file annual IRS reports disclosing domestic and foreign income. A separate requirement mandates disclosure of any foreign account with an aggregate value of more than $10,000 in any calendar year.
Kramer filed false tax returns with the IRS from approximately 1987 through 2012, court filings show.