Former UBS Banker Sentenced to 40 Months
August 25, 2009
A former UBS banker who cooperated with the U.S. investigation of the Swiss bank was sentenced to over three years in jail for helping a billionaire real estate developer evade $7.2 million in taxes.
Bradley Birkenfeld pleaded guilty in June 2008 to conspiring to defraud the United States and was said to be assisting the Justice Department and the IRS in their probe of the bank. Because of his cooperation, Birkenfeld was expected to receive a lighter sentence.
Birkenfeld worked as a private banker in Geneva for UBS and helped California real estate developer Igor Olenicoff conceal $200 million of his assets offshore in Switzerland and Liechtenstein. While at UBS, Birkenfeld routinely traveled back and forth to the U.S. to advise wealthy American clients on how they could conceal their assets overseas and evade taxes.
Birkenfeld admitted that he and others 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 they were overseas. He also admitted to helping clients misrepresent the receipt of funds from the Swiss bank account in the U.S. as loans from UBS, and destroy all their offshore banking records in the U.S.
Clients would use Swiss credit cards that Birkenfeld told them could not be traced by U.S. authorities. He admitted that he and his colleagues would also advise clients to file U.S. tax returns that omitted the income earned by their accounts, and that the bank would claim their clients did not have an interest in the accounts held offshore.
UBS entered into a deferred prosecution agreement in February in which the bank admitted to helping U.S. taxpayers hide accounts from the IRS, and agreed to pay $780 million to avoid prosecution. As part of the agreement, UBS provided the U.S. government with the identities and account information of approximately 285 U.S. customers.
The deferred prosecution agreement stated that the U.S. would be seeking enforcement of a civil “John Doe” summons seeking records of other U.S. persons who maintained accounts with UBS in Switzerland. UBS agreed this week to provide the Swiss and U.S. governments with the names of an additional 4,450 customers who are believed to have violated U.S. law.