Bloomberg News

HSBC India Client Pleads Not Guilty to False Tax Returns

July 14, 2011

(Updates with lawyer’s comments in fourth paragraph.)

July 14 (Bloomberg) -- A Wisconsin neurosurgeon pleaded not guilty to U.S. charges accusing him of filing false tax returns that failed to declare an HSBC Holdings Plc account in India once valued at $8.7 million.

Arvind Ahuja appeared today in federal court in Milwaukee, where he was indicted June 28 as part of a U.S. crackdown on offshore tax evasion. U.S. Magistrate Judge Nancy Joseph released him on a $5,000 cash bond, saying he needs court permission to travel in the U.S. outside of eastern Wisconsin.

Ahuja is accused of filing false tax returns from 2006 to 2009 and of failing to file Reports of Foreign Bank and Financial Accounts, or FBARs, for the same period. Prosecutors said he failed to report more than $1.2 million in interest income and pay taxes on those earnings.

The case is based on a “tenuous factual basis,” Dan K. Webb, Ahuja’s attorney, said in an interview after the hearing. He said HSBC didn’t give his client 1099 forms about his interest income. Ahuja has one of the most prosperous neurosurgery practices in the Midwest and made full payments to the Internal Revenue Service when he learned of his mistake, Webb said.

If convicted, Ahuja, who lives in Greendale, Wisconsin, faces as long as 10 years in prison on the FBAR charges and three years on the false tax return charges.

Aspen Home

Assistant U.S. Attorney Tracy Johnson argued that Ahuja, a native of India and a naturalized U.S. citizen, has the means and the motive to flee with his family. She also said his suburban Milwaukee home is valued at $1.2 million and his summer home in Aspen, Colorado, is worth $8.5 million.

“There is not a lot known about the defendant’s financial status,” Johnson said. “He could have tens of millions in accounts abroad.”

Webb told the judge, “There is no more chance that he will return to India than he would go to the moon.”

The U.S. filed a civil action in April against London-based HSBC, the largest European bank by assets, seeking information about U.S. citizens who may have banked in India to hide accounts from the Internal Revenue Service.

In April, a New Jersey businessman pleaded guilty to conspiring with five HSBC bankers to hide his Indian accounts from the IRS.

Prosecutors also have charged at least two dozen clients of UBS AG, Switzerland’s largest bank, four UBS bankers, and five bankers at Credit Suisse Group AG, Switzerland’s second-largest bank.

The case is U.S. v. Ahuja, 11-cr-00135, U.S. District Court, Eastern District of Wisconsin (Milwaukee).

--Editors: Michael Hytha, Glenn Holdcraft

To contact the reporters on this story: David Voreacos in Newark, New Jersey, at dvoreacos@bloomberg.net; Marie Rohde in Milwaukee, Wisconsin at fmarierohde@gmail.com.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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