Former Hawthorne resident Heinz Gentges willfully violated the Bank Secrecy Act and must pay tax penalties for failure to disclose two Swiss bank accounts with nearly $2 million, a federal judge has ruled.
U.S. District Judge Kenneth M. Karas also ruled on March 31 that the IRS must recalculate the $904,000 penalty because the agency used the wrong assessment date on one of the accounts.
Gentges was born in Germany in 1939, moved to the U.S. in 1962, married Austrian immigrant Anna Schreiner in 1964, and became a U.S. citizen in 1968.
He worked in the U.S. as a tool and die maker, including 25 years with Feintool AG, at a White Plains parts plant that closed in 2007.
The Bank Secrecy Act requires U.S. citizens with more than $10,000 in foreign financial accounts to file an annual disclosure form.
Swiss banks have strict secrecy laws, but in 2007 a Union Bank of Switzerland banker tipped off U.S. authorities to practices that helped thousands and Americans evade taxes.
Union Bank of Switzerland eventually disclosed the names of about 4,500 U.S. account holders, and the IRS offered an amnesty program with less severe penalties to taxpayers who disclosed their foreign holdings.
In 2012, Gentges voluntarily revealed to the IRS that he had had more than $1.5 million in one Union Bank of Switzerland account and nearly $449,000 in another, at the end of 2007.
Then he opted out of the amnesty program, according to court record. The IRS assessed a $904,000 penalty in 2016, and the U.S. Attorney”™s Office sued to collect the penalties in 2018.
When Gentges opened the Swiss accounts in 2001, he instructed the bank to conceal his identity from the IRS. He told the bank to retain his mail, rather than send it to the Hawthorne home, and to destroy any mail he didn”™t take with him on trips to Switzerland.
He withdrew hundreds of thousands of dollars from the Swiss account from 2001 to 2008, according to court documents, but did not declare the transactions when he brought funds to the U.S.
When Union Bank of Switzerland enacted tougher disclosure rules, Gentges moved his accounts to another Swiss bank, and when that bank got tougher he moved money to a third Swiss bank.
Gentges says in a 2010 affidavit and a 2020 declaration that the Swiss accounts were funded with inheritances from his mother and father.
“I believed that since the accounts were European accounts funded with money from Europe and used for European purposes only, they were not reportable or taxable accounts in the United States,” he attested in 2010.
“I always viewed my Swiss funds as a nest egg and as a rainy day fund.”
In the 2020 declaration, he said he used Swiss funds when he and his wife traveled to Europe. He also helped his son, Michael, who had moved to Switzerland and became a Swiss citizen, and he intended to bequeath the funds to him.
He claimed that he knew nothing about the Bank Secrecy Act reporting requirements and he relied on his U.S. accountant to prepare his tax returns correctly.
Karas cited numerous indications of willful conduct. Gentges’ 2007 federal tax return stated that he had no foreign accounts. He failed to consult with his accountant about disclosure requirements. He prevented Union Bank of Switzerland from disclosing his identity to the IRS. He repeatedly moved accounts as Swiss banks stopped dealing with U.S. citizens. And withdrawals of more than $100,000 are largely unexplained.
Gentges “has shown reckless disregard toward, and thus has willfully violated, the ”¦ reporting obligation,” Karas ruled.
Invoking his belief that his European heritage had no relevance to U.S. taxes, Karas said, “does not negate a finding of recklessness or willful blindness.”
It is unclear from court documents how the government will collect the penalties. Gentges and his wife, Anna, have sold their Hawthorne home and moved to Austria.
Assistant federal prosecutor Samuel H. Dolinger represented the government. Manhattan attorney Michael J. Pisko and Newark attorney Richard Sapinski represented Gentges.
