getting a federal judge in Miami to issue a summons forcing UBS to
turn over information about US taxpayers who may be using Swiss
bank accounts to evade federal income taxes. The summons would be
the first by the US against a foreign bank.
The move follows a guilty plea by Bradley Birkenfeld, a former UBS
private banker, to charges that he conspired to help a US
billionaire evade income taxes. Birkenfield has alleged UBS helped
wealthy Americans conceal $20 billion in assets and evade income
tax.
Go deeper with GlobalData
Officials in the Justice Department’s tax division said in a
statement that the US has been “working co-operatively’’ with UBS
and the Swiss government to obtain the account information, but
would seek enforcement if these negotiations were not
successful.
A UBS spokeswoman said the bank is “working diligently with both
Swiss and US government authorities.’’
Tax experts believe that the involvement of the Swiss government
and court action makes it virtually inevitable that UBS will accede
to US demands for client disclosures, albeit in some agreed
restricted formula. Hundreds, rather than thousands of documents,
may be disclosed.
The summons requires UBS to produce records identifying US
taxpayers who had accounts with the bank in Switzerland between
2002 and 2007 and which were not disclosed to the Internal Revenue
Service (IRS).
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By GlobalDataIn his guilty plea, Birkenfeld said that he and colleagues assisted
wealthy US citizens to hide money by telling them to put cash and
jewellery in Swiss safety deposit boxes, buy artwork and jewels
using offshore accounts and set up accounts in the names of
others.
In court filings, IRS agents said that Birkenfeld said he was one
of 40 to 50 UBS private bankers who made quarterly trips to the US
to manage customers. It was alleged that the bankers were trained
by UBS to claim on customs forms that they were visiting the US for
personal reasons rather than for business. They also travelled with
encrypted laptop computers that contained client portfolios.
Birkenfeld pleaded guilty to conspiring to help California real
estate billionaire Igor Olenicoff evade $7.2 million in income
taxes. After pleading guilty to evasion charges, Olenicoff was
sentenced to two years’ probation and agreed to pay $52 million in
back taxes, interest and penalties.
In another blow to UBS, regulators in the state of Massachusetts
have charged UBS Securities LLC and UBS Financial Services Inc with
fraud and dishonest conduct in undertaking retail sales of
auction-rate securities, such as municipal bonds.
The action, filed by William Galvin, the state’s securities
regulator, charged that UBS representatives told investors that
auction-rate securities were safe, liquid cash alternatives when
the bank knew they were not.
“The game was fixed; only the customers were in the dark,” Galvin
said in a statement. He is seeking to make UBS return to investors
the money they invested in the securities at the original par value
and make good any losses made by investors who subsequently sold
the securities.
