What is is about yachts and tax evasion?

Earlier this month I posted an article entitled, ‘There’s that Word: ‘Cooperation.’ ”  In February UBS paid the government $780 million—settling charges related to tax evasion.  The bank also agreed to cooperate, which led to the arrest of “Client One” for submitting fraudulent tax returns.

Now we have “Client Two.”  The New York Times just reported that a second UBS client pleaded guilty to tax fraud.  And Client Two is, you guessed it, cooperating.  It seems everybody is cooperating these days.  There’s nothing like the specter of jail to produce model citizens.  Even Bernie Madoff is cooperating, though to the best of my knowledge, his offenses are unrelated.

Here’s the rub.  Client One and Client Two were both yacht brokers from Florida.  No doubt this line of business makes tax evasion more pleasurable:  power up the engines; cruise down to Central America; and fill out the paperwork necessary to establish Panamanian entities that hide money in Swiss bank accounts.  While you’re at it, write off the fuel charges as an operating expense.

Not.

Client Two was the agent for a yacht named Amnesia, which sounds alarmingly like a failed tax strategy.  He also represented a craft named “Battered Bull,” which should not be confused with Madoff’s Leopard yacht named “Bull” or the more modest 24-footer named “Little Bull.”  I heard that someone took a bucket of red paint to Battered Bull and renamed it “Cooperation.”  But I can’t confirm the rumor to be true.

Secrecy, like all good things, comes to an end.  Hiding assets is not a reliable tax strategy.