A Manhattan federal court sentenced diamond merchant Richard Werdiger to a year and a day in prison for conspiring to hide more than $7.1 million in Swiss bank accounts.

Werdiger, 64, who owns jewelry firms Michael Werdiger Inc. and Eloquence Corp., stashed away millions at UBS AG and defrauded the Internal Revenue Service by filing phony federal income tax returns, evading hundreds of thousands of dollars in taxes, according to New York Southern District U.S. Attorney Preet Bharara.

“For over two decades, Richard Werdiger engaged in an elaborate subterfuge to avoid paying his fair share of taxes to the U.S. government,” Bharara said. “As his case shows, along with the many others we are prosecuting against those who use offshore accounts to hide their income and assets, we will find tax cheats of all stripes and they will be punished.”

From 1986 to 1988, the diamond dealer opened multiple accounts at UBS under the name of fake Liechtenstein-based foundations in order to avoid paying taxes on money that he inherited from his father.

 

In late 2000, Werdiger opened another account in the name of a sham Panamanian corporation, allowing him to continue to invest in U.S. securities without having UBS notify the IRS of his identity or withhold taxes on income from his securities investment.

Werdiger used these funds to pay off debts from his jewelry companies, according to authorities, who said that from 2000 to 2008 the defendant’s bank accounts earned more than $1.3 million in income, for which nearly $400,000 in taxes should have been paid. The Purchase, N.Y. resident, who pleaded guilty in March, has already paid a civil penalty of more than $3.8 million for his failure to report his overseas accounts to the IRS.

Judge Paul Gardephe, who sentenced Werdiger, fined the defendant $50,000 and ordered him to pay a $600 special assessment. Restitution will be determined at a later date.

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