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Sins of the Father? Not Necessarily

Harry G.A. Seggerman, a pioneer in international investing, died in 2001, leaving an estate of $24 million dollars, with almost half of it undeclared in Swiss accounts. Seggerman never reported the foreign bank accounts during his lifetime, leaving it to his four children, who were handling their father’s estate, to address. The four children, Yvonne, John, Suzanne and Henry Seggerman, were well aware of the accounts not being reported but chose to stay silent and hid the offshore accounts from the IRS.

The prosecution of the Seggermans was a result of the U.S. crackdown on Swiss-aided tax evasion. The issue of Swiss-aided tax evasion began in 2007, when a former USB banker revealed how his employer had helped many Americans evade taxes. In the end USB ended up paying a $780 million dollar penalty and handed over information on 47,000 accounts. One of the accounts included among the 47,000 accounts was an account of Suzanne Seggerman.

Suzanne was served with a subpoena in 2009 and began cooperating with the government the following month. She was the first of the family members to come forward and in 2010 plead guilty to tax evasion. It did not take long for Yvonne, John and Henry to follow suit.

Judgement day for the Seggermans arrived on June 26th. Prosecutors citing substantial cooperation by the Seggermans during the investigation asked U.S. District Judge P. Kevin Castel in Manhattan to spare the Seggermans from any prison time. All four Seggerman siblings apologized to the judge.

While Judge Castel listened intently to the defendant’s pleas and the recommendations of prosecutors, he was firm in determining some jail time was warranted. Under federal sentencing guidelines, the Seggermans were facing 46 months in prison. In the end Henry was sentenced to six months in prison, as he had knowledge going back to the early 1990s of his father not reporting the accounts. Henry’s case was not helped by the fact he made trips to both the Bahamas and Mexico to bring money back to the U.S. Yvonne, John and Suzanne each received a four month sentence.

Was this a case of the “sins of the father” or the poor judgement of his heirs? All parties are culpable but only the living can serve jail time for their misdeeds.

 

About the Author

James Dawson is an experienced international business and tax advisor to growing global enterprises. His focus is on both U.S. and foreign tax planning, structuring of international operations, cross border transactions, project management and coordination of services in foreign jurisdictions.

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