A former UBS banker, Bradley Birkenfeld, pled guilty to conspiring with an American billionaire real estate developer, Swiss bankers and co-defendant Mario Staggl to help the developer evade paying $7.2 million in taxes by helping him conceal $200 million of assets in Switzerland and Liechtenstein.
Birkenfeld admitted that between 2001 and 2006, while employed as a director in UBS's private banking division, he routinely helped wealthy Americans conceal ownership of offshore assets and evade income taxes on the assets.
Birkenfeld's services violated a 2001 agreement that UBS entered into with U.S. authorities to identify and document any customers who received reportable U.S. source income, or withhold and anonymously pay a 28 percent withholding tax. This agreement was a major departure from historical Swiss bank secrecy laws.
When the bank notified U.S. clients of the requirements of the agreement, many refused to be identified, to have taxes withheld, or to sell their U.S. investments. These accounts were known at the Swiss bank as the United States undeclared business.
Managers and bankers at UBS helped wealthy customers to create nominee entities to prevent the loss of approximately $20 billion of assets under management in the U.S. undeclared business, which earned the bank approximately $200 million per year in revenues, according to the Justice Department. Birkenfeld, managers and bankers at the Swiss bank, and U.S. clients prepared IRS forms that claimed that the owners of the accounts belonged to off-shore entities, and failed to file IRS forms that should have identified the true U.S. owner of the accounts, the Justice Department said.
To further assist U.S. clients in concealing their offshore accounts, Birkenfeld admitted that he, Staggl (who has remained in Liechtenstein), and others at the bank advised U.S. clients to place cash and valuables in Swiss safety deposit boxes, and purchase jewels, artwork and luxury items using the funds in their Swiss bank account while overseas.
Additionally, they advised clients to misrepresent the receipt of funds from the Swiss bank account in the United States as loans from the bank, destroy all off-shore banking records existing in the United States, utilize Swiss bank credit cards that they claimed could not be discovered by U.S. authorities, and file false income tax returns, according to the Justice Department.
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