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  • Writer's pictureThe San Juan Daily Star

UBS seeks removal of tax evasion allegations to federal court

By The Star Staff

UBS Bank has asked that a suit filed against the firm by two local residents alleging that the firm failed to pay Puerto Rico $48.5 million in tax revenue be moved to federal court from the local court.

The information appeared in a notice of removal filed last Friday, July 14. In the litigation, the plaintiffs seek to recover income taxes and licensing fees arising from UBS activities from 2003 to 2013. UBS argued that federal jurisdiction exists because the legal action is, at the very least, related to the Title III cases, especially the Title III case involving the commonwealth. It not only asserts claims that involve the property of the commonwealth and that could affect distributions under the commonwealth debt plan, the multinational banking firm contends, but also it raises substantial issues regarding the proper interpretation and implementation of that plan.

“This court must determine whether the plan precludes the relators from asserting the claims and, instead, the commonwealth must itself bring the claims if it believes the claims have any merit at all,” UBS’s notice of removal said.

Two Puerto Rico residents brought the action on behalf of the commonwealth in commonwealth court, in what is known as a “qui tam” action, a procedure that allows private citizens, known as relators, to sue on behalf of a government to recover money that was fraudulently obtained. In return, the relators receive a portion of the amount recovered.

The relators allege that from approximately 2003 to 2013, UBS issued thousands of loans and provided other banking services to residents of Puerto Rico without the necessary licenses, and that UBS failed to pay income taxes it owed on the interest earned from its loans.

The relators assert causes of action for unpaid income tax of at least $48.5 million, plus penalties, surcharges and interest, subject to trebling, and unpaid municipal license fees of at least $1.5 million, plus penalties, surcharges and interest, also subject to trebling. The commonwealth itself has not seen fit to bring any of those claims.

The case was filed by Vicente González and Francisco Pujol Meneses.

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