A former UBS private banker has admitted he conspired to help a US billionaire evade $7.2m (£3.65m) in income taxes after agreeing to co-operate with prosecutors in the case.
Birkenfeld an American citizen, was accused of helping a wealthy US property developer, identified as Igor Olenicoff, to evade taxes on $200m (£102m) held in UBS and other accounts in Switzerland and Liechtenstein.
But Birkenfeld had ‘numerous’ other American clients, according to his lawyer, Danny Onorato.
‘He’s going to tell the government everything he knows about what was going on at UBS,’ said Onorato.
Birkenfeld said he and other senior managers at the Swiss bank, had helped US clients in concealing their ownership of the assets held offshore by helping these wealthy customers create ‘nominee and sham entities’, prosecutors said.
Birkenfeld told prosecutors that he took these actions ‘to prevent the risk of losing the approximately $20bn (£10.2bn) of assets under management in the United States . . . which earned the bank approximately $200m (£102m) per year in revenues’.
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. 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.’
Birkenfeld was indicted in May, along with Mario Staggl, a Liechtenstein national, and ‘others known and unknown’, for his role in helping Olenicoff evade paying taxes by helping to conceal $200m in Switzerland and Liechtenstein. Staggl is still at large. Olenicoff has pleaded guilty to filing a false tax return.
Birkenfeld was formerly part of a team headed by Martin Liechti, UBS’s head of international private banking for North and South America. Liechti was detained by US authorities in April and remains in the US as a ‘material witness’.
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.
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