Frazer Ryan Goldberg & Arnold, LLP, a leading Arizona-based law firm, announced that on January 12, 2024, senior partner Brandon Keim and attorneys Trisha Farrow and Ida Araya prevailed in the United States District Court in a jury trial, obtaining a total victory for their client, Michael Quiel, by defending against the United States’ claim that he owed $2.2 million in penalties for failing to report foreign bank accounts on an FBAR form (FinCEN Form 114) for 2007 and 2008.
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In 2007, Michael Quiel sought to expand his business and retained Christopher Rusch, an attorney, to assist him in acquiring international investors. Rusch represented himself as an expert in structuring international corporations to be compliant with United States tax laws. Based upon Rusch’s assurances that he was an international tax expert and he could assist in creating and operating a foreign bank which would allow foreign investors to invest in Quiel’s United States based projects, Quiel retained Rusch to assist him in raising capital from the international market. Rusch repeatedly assured Quiel that the transactions would be completely legal and tax compliant under both the United States and Swiss tax laws. Quiel understood that he owned a four percent interest in Rusch’s Swiss investment bank.
During the time that Quiel believed Rusch was creating a foreign bank for himself and acting to ensure that Quiel satisfied all of the United States and Swiss tax laws, Rusch requested Quiel e-mail a copy of his passport to him. As Quiel had no reason to distrust Rusch, he forwarded a copy of his passport to Rusch. Unbeknownst to Quiel, Rusch used Quiel’s personal information to open accounts at the Swiss banks UBS and Pictet & Cie listing Quiel as the beneficial owner.
In 2011, Quiel was indicted for Conspiracy, Willful Subscription to False Individual Income Tax Returns, and Willful Failure to file FBARs for the Swiss accounts. Quiel’s now disbarred attorney Rusch testified against Quiel at the criminal trial in 2013. Quiel was convicted of Willful Subscription to False Individual Income Tax Returns. He was acquitted of Conspiracy, and the jury returned no verdict on the Willful Failure to File FBARs charges.
Relentless in its pursuit against Quiel, in 2021, the Department of Justice filed a complaint in the United States District Court alleging that Quiel willfully failed to file FBARs for the Swiss accounts for 2007 and 2008 and was subject to penalties under 31 U.S.C. § 5321(a)(5)(C). The Department of Justice sought to recover $2.2 million as of September 2019, but noted that the balance continued to accrue interest, penalties, and costs.
During the jury trial, Frazer Ryan’s attorneys Keim and Farrow argued that Quiel did not have a financial interest in the Swiss accounts because he did not control them, they were held by Swiss corporations that Quiel did not control, and Quiel was unaware that he was listed as the beneficial owner. Keim and Farrow argued that if the jury determined Quiel had a financial interest, his failure to report the accounts on FBARs was not willful due to his reliance on Rusch’s advice.
The United States presented testimony from representatives of Swiss banks UBS and Pictet & Cie, each of whom verified the authenticity of the Swiss bank records but confirmed that the Swiss banks were not required to verify and did not verify that Quiel was actually a beneficial owner of the Swiss accounts. The representative from Pictet & Cie, who made the 5,700-mile journey from Switzerland to Arizona, testified during questioning by Farrow that any of the jurors could have been listed as a beneficial owner of the Swiss accounts. Keim argued in closing to the jury that the United States failed to present sufficient evidence to prove that Quiel had a financial interest in the Swiss accounts. The United States failed to present any testimony from the directors of the Swiss corporations that were listed as account holders, and the United States failed to present any testimony from the financial intermediaries or external account managers that completed the account opening forms listing Quiel as the beneficial owner.
After four and a half hours of deliberation, the 8-member jury returned a verdict finding that Quiel did not have a financial interest in any of the Swiss accounts during 2007 and 2008. Because of Quiel’s complete victory on the financial interest issue, the jury was not required to decide whether Quiel was willful in failing to report the accounts on FBARs because he had no requirement to report such accounts on the FBARs. The foreperson of the jury commented to Keim, Farrow, and Araya that the jury determined that the United States, who had the burden of proof, failed to provide sufficient evidence that Quiel had an interest in the Swiss accounts. The foreperson of the jury hugged Quiel and wished him well.
About Brandon A. Keim, LL.M.
Brandon A. Keim is a Certified Tax Law Specialist, Certified Public Accountant, and senior partner at Frazer Ryan Goldberg & Arnold. He combines litigation experience and a strong understanding of accounting and business concepts in tax matters to represent clients in defense of taxing authorities and provide strategic tax advice before a dispute arises. Brandon joined the Firm after serving as a senior trial attorney with the Internal Revenue Service. He is also a Certified Tax Law Specialist by the State Bar of Arizona Board of Legal Specialization.
About Trisha Farrow
Trisha Farrow is a member of the Firm’s tax controversy group that represents taxpayers in defense of taxing authorities and provide strategic tax advice. She is a former Internal Revenue Service senior trial attorney. During Trisha’s eight-year tenure at the IRS, she litigated cases involving captive insurance, research and development credits, tax promoter penalties, cannabis businesses, and fraud.
About Ida Araya
Ida Araya is a member of the Firm’s tax controversy group that represents taxpayers in defense of taxing authorities and provide strategic tax advice. She helps clients resolve a multitude of issues deriving from corporate taxes, individual income taxes, unemployment taxes, and sales and use taxes. Prior to working at Frazer Ryan she worked for the Arizona Department of Revenue.
