News

Local man sent to prison for cheating IRS

By Lightning Reports, Published: February 19, 2016

ASHEVILLE — A federal judge sentenced a 66-year-old Hendersonville man to nine months in prison for hiding money in a Swiss bank account and cheating the IRS out of taxes, the U.S. Attorney's office announced.

Jill Westmoreland Rose, U.S. attorney for the Western District of North Carolina, announced on Thursday that U.S. District Judge Martin Reidinger imposed the sentence on Jarrett D. Mitchem after he was convicted of the tax evasion charges. Reidinger also ordered Mitchem to serve two years of court supervision after his release plus an additional three months of home confinement and ordered him to pay $151,089 restitution to the Department of Treasury.
The Union Bank of Switzerland (UBS) entered into a deferred prosecution agreement with federal prosecutors in February 2009 on charges of conspiring to defraud the United States by impeding the IRS by helping U.S. taxpayer clients hide funds from the IRS in secret offshore accounts, the U.S. attorney said. As part of its deferred prosecution agreement, UBS also agreed to provide to the government the identities of, and account information for, of persons who likely had engaged in actions designed to evade United States income tax liabilities, including Mitchem’s, prosecutors said.
Beginning in November 1995, Mitchem opened a Swiss bank account at UBS. Court records show that in 2005, Mitchem transferred $4 million inheritance from his parents to a UBS account. His parents had also maintained a bank account at UBS, court records said.
In May 2011 an IRS revenue agent contacted Mitchem regarding the UBS accounts. According to court records, Mitchem initially withheld some information about his UBS accounts then agreed to provide the UBS bank records after an IRS agent confronted him. When he complied, he provided only bank records for his parents’ UBS account — not his personal UBS account, prosecutors said.
In November 2011, Mitchem filed his federal tax return forms for tax years 2004 through 2007, in which he failed to claim capital gains and substantial interest income from money held in his UBS bank account. Mitchem admitted in court and in filed documents that he knew his earnings should have been claimed and that he willfully omitted reporting them to avoid the payment of additional income tax. Mitchem also admitted that the tax loss associated with the unclaimed income from his Swiss bank account was more than $150,000.
“Hiding money in secret offshore accounts and failing to report the income generated from those accounts is a crime that my office takes very seriously,” said Rose, a graduate of. “Tax cheats like Mitchem who choose not to pay their fair share and increase the burden on honest taxpayers will be prosecuted for their actions. Citizens must ask themselves, is it worth a stint in federal prison to be a tax cheat?”
Mitchem will be ordered to report to the federal Bureau of Prison upon designation of a designation of a federal facility. All federal sentences are served without the possibility of parole.