April 16, 2010 4:38 PM

"New York's Most Obnoxious Lawyer" Among Seven Ex-UBS Clients Charged with Tax Crimes

Posted by Brian Baxter

CORRECTION: 9/17/10, 2:45 p.m. A previous version of this post misidentified the lawyer representing Ernest Vogliano in the second-to-last paragraph of this story. We regret the error.

Being dubbed the most obnoxious lawyer in the nation's largest city is an impressive feat. That's what the Village Voice called Kenneth Heller a few years ago, before he was disbarred for being, well, a boor. Now Heller is back in the headlines, charged along with six other defendants for collectively hiding $100 million from the IRS.

The charges are the latest salvo in the long-running tax battle between the U.S. Department of Justice and the IRS against Swiss banking giant UBS.

In a 12-page complaint filed Thursday in U.S. district court in Manhattan (available below), the government claims Heller stored $26 million in UBS accounts, $20 million of which he later transferred to a smaller Swiss bank. Bloomberg reports that Heller, 80, is charged with tax evasion and failing to file an FBAR--a report notifying the IRS of foreign bank or financial accounts.

This case isn't Heller's first brush with infamy. He was disbarred in 2004 for screaming at and threatening judges, reports the New York Daily News. The incident was followed by a profile of the ex-lawyer in the Village Voice, in which the paper dubbed Heller the nastiest lawyer in New York. (Noted civil rights lawyer William Kunstler reportedly used to call Heller "Kenny Yeller," according to an anecdote from Kunstler protégé Ronald Kuby in the Voice article.)

The New York Law Journal, a sibling publication, has covered some of Heller's past shenanigans. In February, a New York state court judge sanctioned Heller over a "vexatious" motion related to a dispute over a $3.7 million settlement negotiated by Jacoby & Meyers for one of Heller's former clients, the NYLJ reports. That followed a decision by the same judge in December denying Heller's request for a portion of $1.2 million in fees approved for Jacoby & Meyers after the firm replaced Heller following his disbarment.

Heller's attorney, Jeffrey Harris, says the case against his client and the other defendants is a publicity stunt by the government to spook wealthy Americans into paying their taxes.

"All these cases yesterday had indictments except for my client, where they went by criminal complaint," says Harris, a name partner at Washington, D.C.'s Rubin, Winston, Diercks, Harris & Cooke. "He's going to be indicted for felonies, but I can only assume that the reason they went forward with just a complaint is they wanted to take advantage of the April 15 media blitz that occurs every year with the IRS. So we'll evaluate the case when they get around to indicting him."

Heller isn't the only lawyer the feds seem interested in.

The other individuals charged by federal prosecutors are Shmuel Sternfeld, Sybil Nancy Upham, Ernest Vogliano, Richard Werdiger, Federico Hernandez, and Jules Robbins. Hernandez, a financial adviser, and Robbins, a watch distributor, promptly entered guilty pleas to charges of filing false tax returns and failing to disclose offshore accounts.

According to the government's charges against Robbins, the Jericho, N.Y., resident began investing with UBS in 1967 and transferred assets overseas with the help of an unidentified Swiss lawyer educated in the U.S. The unidentified lawyer set up a sham Hong Kong corporation for Robbins and served as a board member for other entities used by Robbins and UBS to conceal his ownership of certain offshore accounts, the government claims.

"Swiss Lawyer A received a master's degree in tax law from the University of San Diego in 1999 and was a member of the Swiss-American Chamber of Commerce," the government states. The lawyer "worked at an eponymous law firm" in Zurich.

The remaining defendants were scheduled to make appearances in federal court on Friday, The New York Post reports.

Upham has turned to Elkan Abramowitz of New York's Morvillo, Abramowitz, Grand, Iason, Anello & Bohrer. Blank Rome's Ian Comisky is representing Werdiger, a Manhattan jeweler. Morvillo's Richard Albert is representing Vogliano, the owner of Il Vagabondo restaurant in Manhattan. Sternfeld, a resident of Tel Aviv, remains at large.

Reuters reports that two other individuals--father and son real estate developers Mauricio and Leon Cohen--also were arrested in New York on Thursday to face tax charges in Miami. According to a statement by federal prosecutors in Florida, the Cohens concealed more than $45 million in domestic and offshore accounts from the IRS. The two are being represented by Sharon McCarthy of New York's Kostelanetz & Fink.

Download the Complaint against Kenneth Heller

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