The private banking unit of UBS AG, the Swiss bank, engaged in a variety of schemes to help wealthy US clients conceal $20 billion in assets and evade income tax laws, an ex-banker said in pleading guilty to conspiracy, Bloomberg reports.
Bradley Birkenfeld, 43, and his colleagues helped wealthy Americans hide money by telling them to put cash and jewelry in Swiss safety deposit boxes, buy artwork and jewels using offshore accounts, and set up accounts in the names of others.
Birkenfeld is helping a Justice Department probe of Zurich-based UBS, and says the practices he described are common among his former colleagues. Birkenfeld says UBS helped wealthy Americans evade taxes even after signing a 2001 agreement that required it to identify account holders and their income to US tax authorities. He says many clients refused to disclose their assets because it will defeat the purpose of banking with UBS – evading taxes.
“Rather than risk losing the approximately $20 billion of assets under management in the United States undeclared business, UBS assisted these wealthy US clients in concealing their ownership of the assets held offshore,” says Birkenfeld in a written statement accompanying his plea.
UBS earned about $200 million a year in revenue by helping high-income clients through such practices as setting up sham entities in tax havens including Switzerland, Panama, British Virgin Islands, Hong Kong and Liechtenstein, Birkenfeld says.
In one case, Birkenfeld even agreed to buy diamonds for a US client using Swiss funds and “smuggled the diamonds into the United States in a toothpaste tube,” Birkenfeld says.
UBS spokesman Mark Arena declines to comment on the plea. He says UBS is cooperating in a Justice Department investigation of whether the bank helped US clients evade taxes from 2000 to 2007, and a Securities and Exchange Commission probe of whether it failed to register as a broker-dealer or investment adviser.
“UBS is treating these investigations with the utmost seriousness and will appropriately and responsibly address and correct any issues raised in the investigations, including taking appropriate disciplinary action,” Arena says in an e- mailed statement.
Birkenfeld’s admission may help prosecutors as they continue to probe UBS bankers and their clients. Birkenfeld’s cooperation will assist the Justice Department “nationwide” in its investigation, US prosecutor Kevin Downing says.