Posts Tagged ‘tax evasion’
Friday, March 12th, 2010

The search for U.S. offshore tax shelters won’t be ending with UBS.

HSBC announced Thursday that 24,000 accounts — nearly one-quarter of the bank’s worldwide clientele — may have been compromised last year by an employee who stole client data.  Now U.S. Department of Justice and IRS officials believe they will be able to obtain the data, which likely includes names of U.S.-based clients using the accounts to evade paying taxes, Reuters reported Friday.

In December, a former HSBC employee, Herve Falciani, allegedly took information on thousands Swiss accounts and turned it over to French tax authorities. According to the news service, U.S. officials believe they can negotiate with France to obtain the information via a treaty.

“To the extent the HSBC data includes U.S. based taxpayers having interests in HSBC foreign accounts, it is a virtual certainty such information will be delivered to the U.S. government,” attorney Chuck Rettig, who presents U.S. clients who held previously undisclosed accounts, told Reuters.

While not condoning the theft, U.S. officials hope the leak might lead more people to come forward.

“A lot of folks, and they seem to be IT (information technology) people, see what’s happening” and bring information to the U.S., Reuters quoted Kevin Downing, a top DOJ lawyer, as telling a group of private and government lawyers at a conference in Washington. “We welcome these guys; please come in.”

Read more from the Reuters account here.

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Tuesday, January 5th, 2010

Despite a high-profile public relations blitz to argue for his freedom, the American banker-turned-informant who tipped prosecutors to alleged widespread tax evasion among clients of Swiss banking giant UBS AG must report to prison on Friday.

Bradley Birkenfeld, who faces a sentence of three years and four months after pleading guilty to a fraud conspiracy charge, had asked U.S. District Judge William Zloch to postpone his surrender date and to hold a hearing to consider a lower sentence. In an order Monday, Zloch refused both requests, The Associated Press reported.

The judge’s order came on the same day the New York Times reported that the Justice Department was considering asking the judge to reduce Birkenfeld’s sentence.

On “60 Minutes” Sunday, Birkenfeld said he didn’t think it is fair that he is the only person in the alleged tax evasion scheme to be sent to prison. ”I gave them the biggest tax fraud case in the world. I exposed 19,000 international criminals. And I’m going to jail for that?” Birkenfeld asked.

But Birkenfeld didn’t tell the government about tax evasion by his biggest client, California real estate developer Igor Olenicoff, who eventually paid $52 million in fines and back taxes. Olenicoff, however, didn’t serve any prision time.

Associate Attorney General Tom Perrelli on 60 Minutes Sunday said of Birkenfeld: “If he had come in with everything he knew, including his own conduct, we think there’s a very good chance he wouldn’t have been prosecuted at all.”

Birkenfeld’s lawyer, Stephen Kohn, said on the same program that “putting Bradley Birkenfeld in jail will be one of the biggest mistakes the United States can make, and it will hurt every taxpayer because you will lose access to other Bradley Birkenfeld’s who will bring to our treasury billions and billions of dollars both immediately and in the future.”

Birkenfeld is seeking a multi-million dollar award for his assistance in the UBS case. Under a 2006 law meant to encourage tax informants to come forward, whistleblowers can reap rewards of 15 to 30 percent of the taxes, fines, penalties and interest ultimately collected by the IRS.

The reward, Kohn said, was a necessary incentive. ”How are you going to get other international bankers, particpants, to come forawrd and tell us about these schemes?” he said.

Prosecutors credited Birkenfeld, who was based in Switzerland, with pointing investigators to thousands of suspected American tax evaders who allegedly concealed assets in UBS’s Swiss bank accounts. More than 14,700 offshore tax evaders have come forward under an I.R.S. amnesty program, and the names and account details of about 4,450 UBS clients were turned over to U.S. authorities under a settlement with the bank.

Below are video clips of Birkenfeld and Perrelli on 60 Minutes:

Watch CBS News Videos Online

Watch CBS News Videos Online

Tuesday, September 29th, 2009

We weren’t the only ones who immediately thought, UBS!, when we heard that Switzerland had arrested film director Roman Polanski, long a fugitive from U.S. justice.

Call us conspiratorial, but after living openly in Switzerland for years, the only reason we could see for the arrest now of the 76-year-old Polanski was that the Alpine tax haven was trying to placate the U.S. after the Swiss refused to hand over the names of 52,000 Americans suspected of hiding assets from the IRS at UBS AG. The dispute over the Swiss bank sparked a huge diplomatic row and ended with Switzerland agreeing to let UBS hand over a more limited number of names.

Well, it appears an editor at The Associated Press had the same idea. In an embarrassing mistake, The AP sent out a “news story” on its wire that was actually internal reporting notes — the kind of raw exchanges between reporters and editors at news organizations as they prepare stories, but which are, quite obviously, not meant for public consumption.

Part of the note, which briefly appeared on The New York Times web site, said:

new york is really hot on this. they particularly want to know why now. (has he never set foot in switzerland before?) sheila, theorizes that’s because they’re under intense pressure over ubs and want to throw the U.S. a bone, but can you check with justice department sources there

Polanski is one of Europe’s most celebrated fugitives. The director of such classics as Chinatown hopped out of the the United States 31 years ago after admitting in a plea bargain he’d had sex with a 13-year-old girl in the home of actor Jack Nicholson. He was also the husband of actress Sharon Tate, who was murdered when she was eight months pregnant in the couple’s Los Angeles home by members of the Charles Manson cult. As a child, he escaped the Jewish  ghetto in Krakow, Poland after the Nazi invasion, but lost his father at Auschwitz.

Polanski says he will fight extradition to the U.S., where he is wanted by local authorities in Los Angeles.

Here is the full text of The AP “story,” which was quickly withdrawn:

Swiss arrest Polanski on US request in sex case
Associated Press, 09.27.09, 10:41 AM EDT

OK, can you do some more probing? New York will want to know
frank’s out today.
i checked already, and so did zurich. they say the question is irrelevant. he answered me with the quote i used, about we knew when he was coming this time. he’s been here many times in the past, we think.
thx brad. aptn is aware, but unfortunately won’t make it in time, but is hoping to catch tail end.
i’m pushing out another writethru with some more background details before press conference.
no surprise, new york is really hot on this.
they particularly want to know why now. (has he never set foot in switzerland before?) sheila, theorizes that’s because they’re under intense pressure over ubs and want to throw the U.S. a bone, but can you check with justice department sources there?
is frank around too, or are you alone?
u can tell aptn press conf 1700 (15 gmt) in bern at the parliament
i’ll watch it live on internet

Wednesday, August 19th, 2009

The former UBS banker who blew the whistle the Swiss bank that helped Americans evade taxes, Bradley Birkenfeld, 44, is profiled in the Washington Post today. A son of a Massachusetts neurosurgeon, Birkenfeld had homes in Switzerland, drove a BMW, and once smuggled diamonds for a client in a toothpaste tube. Read the Post story here.

Birkenfeld first contacted his superiors at the bank in 2006 about discrepancies between UBS’s written and actual policies in marketing its bank accounts to wealthy Americans. After the bank didn’t pay a promised bonus, Birkenfeld invoked official “whistleblower” status because he he believed he was being retaliated against, the Post reported. Before he’d settled his bonus dispute, Birkenfeld in 2007 contacted the Internal Revenue Service, the Justice Department, Securites and Exchange Commission, and a Senate investigative panel, the Post said.

Birkenfeld’s contacts with the government led to his guilty plea last year to a criminal charge for aiding UBS’s cross-border business. He coooperated with the government, which has recommended his potential 5-year prison sentence be cut in half. He is scheduled to be sentenced Friday in Fort Lauderdale, Fla.

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Friday, July 31st, 2009

UBS AG and the Justice Department have agreed that they will seek an out of court settlement on a contentious civil lawsuit that seeks to force the Swiss bank to divulge the names of rich Americans suspected of tax evasion. Read today’s New York Times article here.

The Justice Department demanded that UBS to turn over 52,000 names of account holders suspected of using the Swiss accounts to evade U.S. taxes.  The Swiss government turned the matter into a diplomatic issue, saying it would forbid UBS from complying with any U.S. court order to reveal the names. We previously reported that settlement talks are now focusing on some 7,000 accounts tied to offshore companies and trusts. While the final contours of the settlement aren’t known, it’s likely the DOJ will get at least some of the names it sought.

Tax Division attorney Stuart Gibson said in a conference call with U.S. District Court Judge Alan Gold in Miami that UBS and the U.S. would be able to reach a final deal by Aug. 7, according to The Times. Gold said he would call off a trial that was slated to start Monday, the newspaper reported.

UBS paid $780 million to settle criminal charges in February. And it was the criminal side of the Tax Division that helped negotiate the settlement, after “high-ranking Swiss officials” flew to Washington to resolve it, the Times reported. Gibson, who is heading up the civil case, learned about the agreement Thursday at 7:45 p.m, the Times reported.

Secretary of State Hillary Clinton is slated to discuss the matter with Swiss Foreign Minister Micheline Calmy-Rey today, The Times added.

UPDATE: The final version of the New York Times story deleted information that had appeared on the Web mid-day Friday about the criminal division participating in international settlement negotiations that did not include the civil division lawyers pursuing the case. The possible explanations for the deletion are 1) the information was wrong and someone complained or 2) an editor deemed it extraneous and cut it.

Tuesday, June 30th, 2009

Stuart D. Gibson and Richard D. Euliss – I have no idea what you Tax Division guys look like. But the brief you filed Tuesday in the UBS AG tax case is so muscular, so righteous, so full of passion …. so, dare we say, sexy?

Sure, you gave the filing in Miami federal court a demure title, Memorandum of Law In Support of Petition to Enforce “John Doe” Summons. But it’s really a big extended middle finger from the Tax Division to the Swiss government and whomever (note: probably the State Department) leaked to the New York Times that the U.S. was considering dropping one of its most important tax-evasion cases ever. The table of contents comes out blasting:


And so on.

The confrontational language sure suggests the U.S. won’t settle this civil suit without getting what it demands: the names of 52,000 Americans suspected of hiding assets from the IRS in Swiss-based UBS accounts. Jack Blum, a Washington lawyer who specializes in tax evasion investigations, said UBS is “the best case on the facts the U.S. government will ever have.”

Blum added: “The precedent is essential. UBS subjected itself to U.S. jurisdiction through its conduct. Give up here, and it’s Game Over for IRS.”

Indeed, the brief by Gibson, a senior litigation counsel, and Euliss, a trial attorney, states: “The United States has a vital national interest in maintaining the integrity of its system of taxation.”

The brief paints a portrait of arrogance on the part of UBS. Its bankers “lied on Customs forms – claiming to be in the United States for pleasure … and conducted their business under the radar.”

The bank “openly and notoriously” helped U.S. citizens evade taxes and “secretly and consistently violated with impunity” a Qualified Intermediary agreement to disclose foreign and U.S. beneficial owners of its accounts.

UBS trained its bankers in “spycraft” and “illegally” sent them into the U.S. to “troll” for customers, the brief says.

You can read the 55-page filing here.

To step back for a moment: The U.S. is cracking down on tax havens. In February, UBS admitted under a deferred prosecution agreement that it routinely violated U.S. law by recruiting U.S. clients to put assets in offshore accounts, and by filing paperwork to hide its crimes. The bank disclosed as many as 300 U.S. clients identities to the government and agreed to pay a $780 million fine.

A former UBS executive, Bradley Birkenfeld, earlier pleaded guilty to defrauding the U.S. and is reported to be cooperating with federal investigators.

The U.S. pursuit of UBS has ignited a diplomatic uproar in Switzerland, whose whole economy revolves around being a tax haven for the world’s wealthy. The Swiss cited a tax treaty with the U.S. to argue it could not breach its stringent bank secrecy laws.

The brief drips with contempt for UBS’s argument that by signing the tax treaty, the U.S. was essentially saying it was in America’s national interest not to press the Swiss in such delicate matters.

“It is, to put in mildly, presumptuous for a foreign bank that has engaged in serious criminal conduct in the United States to suggest what is in the best interests of the United States,” the brief said in footnote 49.

Then there’s UBS’s argument that the IRS should only get information on customers the bank has acknowledged were engaged in criminal conduct. The brief says that “would be tantamount to the convicted bank robber arguing that he should be given credit for all the times he walked into a bank and didn’t rob it.”

And to UBS’s argument it always acted in “good faith” to comply with U.S. law, the brief bellows: It “bears all the hallmarks of an eleventh-hour confession, made in the hopes the sinner will be absolved from the full consequences of his wrongdoing.”

 “It is time for UBS to face … the consequences it has brought on itself,” the government said.

Acting Assistant Attorney General John A. Dicicco of the Tax Division was also on the brief. U.S. District Judge Alan S. Gold has scheduled a July 13 hearing on the U.S. request for the UBS client names. For UBS’s response read this Associated Press story.

Wednesday, June 17th, 2009

The Nevada U.S. Attorney office has scaled back Assistant U.S. Attorney Greg Damm’s subpoena to the Las Vegas Review-Journal seeking identifying information about people who commented on a May 26 article about an ongoing tax evasion trial, including one commenter who called Damm “evil incarnate.” Click here for our earlier report on the flap.

Now, the office is only requesting information about two comments that may be considered threatening to jurors or prosecutors.

Review-Journal Editor Thomas Mitchell has indicated he will comply with the new, much narrower, request. ”I’d hate to be the guy who refused to tell the feds Timothy McVeigh was buying fertilizer,” Mitchell said in the R-J article.  But the ACLU is not satisfied.  The civil liberties organization has filed a motion to quash the new subpoena.

U.S. District Judge David Ezra will have to decide whether the two comments constitute a threat to the safety of jurors or prosecutors. One of the comments refers to the jurors as “12 dummies” who should be hung if they return a conviction.  The other comment came from someone who wanted to wager ”quatloos” (Star Trek currency) that one of the federal prosecutors would not reach his next birthday.

Both comments have been removed from the site because they violate the paper’s policies, the R-J reported. After the newspaper publicized the subpoena, the number of comments on the story almost doubled, from 100 to around 200, the paper said.

The scaled back subpoena bore the name of Assistant U.S. Attorney Eric Johnson, not the author of the original subpoena, Damm.  This isn’t the first time Damm has been the subject of public scrutinty.  Last year, Damm was blasted by the 9th Circuit Court of Appeals for witholding 650 pages of evidence from the defense.

Gregory A. Brower

Gregory A. Brower

Judge Kim Wardlaw wrote: “This is prosecutorial misconduct in its highest form; conduct in flagrant disregard of the United States Constitution; and conduct which should be deterred by the strongest sanction available.”  Wardlaw dismissed the charges and refused to allow a retrial.  Nevada U.S. Attorney Greg Brower’s spokesman Natalie Collins told that ”OPR’s investigation concluded that the U.S. Attorney’s Office did not engage in any intentional misconduct.”