FT: Ex-UBS employee pleads guilty in tax case

Ex-UBS employee pleads guilty in tax case

By Joanna Chung in New York
Financial Times
Published: June 19 2008 22:29

A former UBS private banker has pleaded guilty to charges that he
conspired to help a US billionaire evade income taxes after agreeing
to co-operate with prosecutors in the case.

“He’s going to tell the government everything he knows about what was
going on at UBS,” said Danny Onorato, attorney for Bradley Birkenfeld.

Mr Birkenfeld, a US citizen living in Switzerland, said he and others,
including private bankers and managers at the Swiss bank, had assisted
US clients in concealing their ownership of the assets held offshore
by helping these wealthy customers create “nominee and sham entities”,
prosecutors said.

Mr Birkenfeld told prosecutors that he took these actions “to prevent
the risk of losing the approximately $20bn of assets under management
in the United States . . . which earned the bank approximately $200m
per year in revenues”.

Mr Birkenfeld said he and others also advised US 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, prosecutors said.

“I was employed by UBS and paid a large salary and incentivised to do
this business,” Reuters quoted Mr Birkenfeld as saying at his hearing
in Florida. Mr Birkenfeld, who could face a maximum sentence of five
years, turned whistleblower after an acrimonious parting with UBS in
2006.

UBS said it was treating these investigations with the “utmost
seriousness” and would “appropriately and responsibly address and
correct any issues raised in the investigations”.

It added: “UBS will continue to work with US governmental authorities
in an effort to achieve a satisfactory resolution of these matters.”

Mr Birkenfeld was indicted in May, along with Mario Staggl, a
Liechtenstein national, and “others known and unknown”, for his role
in helping Igor Olenicoff, a real estate developer, evade paying $7.2m
in taxes by helping to conceal $200m in Switzerland and Liechtenstein.
Mr Staggl is still at large. Mr Olenicoff has pleaded guilty to filing
a false tax return.

Mr Birkenfeld was formerly part of a team headed by Martin Liechti,
UBS’s head of international private banking for North and South
America. Mr Liechti was detained by US authorities in April and
remains in the US as a “material witness”.

Mr Birkenfeld’s services to American clients violated a 2001 agreement
that the Swiss bank entered into with the US, the US attorney’s office
said.



Copyright The Financial Times Limited 2008
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