Patricia Hough, according to her lawyers, is an altruistic psychiatrist who helped her husband build two Caribbean medical schools. To prosecutors, she is a tax cheat who used offshore accounts to avoid paying taxes on millions of dollars from the schools sale.
Jury selection began today in federal court in Fort Myers, Florida, where Hough, 67, is accused of using accounts at UBS AG (UBSN), the largest Swiss bank, and elsewhere to hide assets and income from the Internal Revenue Service, including almost $34 million she and her husband made when the schools were sold in 2007.
The case is the largest, in dollar value, of four that have reached trial since the U.S. started a crackdown on offshore tax evasion in 2008. Prosecutors have secured 61 guilty pleas, including several involving larger accounts.
Hough and her husband, David Fredrick, used the proceeds to buy an airplane, two houses in North Carolina, and a condominium in Sarasota, Florida, according to a May 15 indictment. Fredrick vanished after the indictment, leaving Hough to face trial alone. U.S. District Judge John Steele, who is overseeing the trial, has declared Fredrick a fugitive.
Houghs lawyers say she helped Fredrick build Saba University School of Medicine, on the island of Saba in the Netherlands Antilles, and the Medical University of the Americas, or MUA, on Nevis in the West Indies.
The evidence at trial will show that Dr. Hough is a very humble, bright, hard-working and charitable person, Nathan Hochman, a lawyer for Hough, said in an interview. The idea that she would try to steal over $30 million from the very medical school foundation that she worked tirelessly to support for over a decade, and not report it on her tax return, is absurd.
Hough isnt charged with stealing. Prosecutors accuse her of conspiring to defraud the IRS by using nominee entities to conceal assets and income. Shes also charged with filing false individual tax returns for 2005, 2006, 2007 and 2008 that understated income and didnt disclose offshore accounts, according to the indictment.
Hochman, who represented Fredrick for two years before his indictment, said his whereabouts are unknown.
Prosecutors accuse Hough of scheming with her husband and two unindicted co-conspirators, Swiss financial adviser Beda Singenberger and UBS banker Dieter Luetolf.
Singenberger, who was separately charged with helping 60 U.S. clients hide $184 million in offshore accounts, hasnt responded in federal court in New York. Singenberger is one of 30 bankers, lawyers or advisers charged in the offshore crackdown. Prosecutors also accused 70 taxpayers of crimes, including at least six Singenberger clients who pleaded guilty. Luetolf isnt charged.
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Caribbean Medical School Founder Faces Trial Over Swiss Accounts