The Justice Department on Friday withdrew tax evasion charges against UBS months after the Swiss banking giant paid millions of dollars in fines and provided the names of thousands of its U.S. customers, the Associated Press reported.

UBS in February 2009 entered into a deferred prosecution agreement with the DOJ in which the bank admitted guilt on charges of conspiring to defraud the United States by impeding the Internal Revenue Service. As part of the deal, the DOJ would drop charges against the bank after 18 months if the financial institution disclosed to the United States the identities and account information for about 4,450 U.S. customers of UBS. The agreement also required the payment of $780 million in fines, penalties, interest and restitution.

“Given that UBS AG has fully complied with all of its obligations … the United States believes that dismissal is appropriate under the circumstances,”  Assistant U.S. Attorney Jeffrey Neiman and other prosecutors said in a court filing, according to the AP.

The DOJ has prosecuted about 10 people for tax evasion so far in connection with this case, with several dozen individuals still under investigation, according to the AP.

The UBS saga continues.

On Wednesday, the Swiss government said it would seek approval from parliament to go ahead with a deal struck last year with U.S. authorities to reveal the names of Americans with offshore accounts, according to Reuters and the Wall Street Journal (subscription required).

The 2009 agreement between Zurich-based UBS and U.S. and Swiss officials called for the bank to turn over names and account details for 4,450 American UBS clients. In recent years, the Department of Justice Tax Division and the Internal Revenue Service have stepped up its efforts to find and prosecute offshore tax evasion. The U.S. had hoped to obtain the information from UBS to for use in prosecuting tax dodgers.

However, last month a Swiss court threw a wrench into the agreement, halting the turnover and ruling the deal would violate Swiss bank secrecy laws. The court also held that the accounts did not amount to tax fraud, a criminal offense under Swiss laws, but merely tax evasion, a civil offense.

According to Reuters, the Swiss government will ask parliament to eliminate the legal distinction between the two offenses, which would allow UBS to provide the Internal Revenue Service and the U.S. Department of Justice with the information sought.

“We will in this way uphold the international commitments made by Switzerland with a view of finding a definitive resolution to the legal and sovereignty conflict with the United States,” the Swiss government said in a statement. UBS in a statement said it intends to fulfill all commitments under both a criminal and civil settlement of the tax row, including providing relevant account information to Swiss tax authorities, Reuters reports.

According to Reuters, the future of UBS  is “crucial for the stability of the Swiss financial market.” Reuters reports that uncertainty surrounding the agreement has prompted UBS account holders to withdraw billions of Swiss francs. The Swiss government on Thursday will unveil a strategy on how to support its financial services industry, Reuters reports.

A Virginia doctor pleaded guilty Tuesday to conspiracy charges involving an undeclared Swiss bank account under his control, the Justice Department announced.

According to a DOJ news release, Dr. Andrew Silva made false statements about an undeclared Zurich bank account to the Justice Department, Immigration and Customs Enforcement and the U.S. Postal Inspection Service.

Silva, of Sterling, Va., is the most recent American to plead guilty to charges stemming from hidden money in Swiss bank accounts. On Feb. 4, Florida resident Jack Barouh pleaded guilty to filing a false tax return in an attempt to hide $10 million in offshore bank accounts with the Swiss banking giant UBS AG. Barouh was the seventh former client of UBS to plead guilty to a tax felony.

Silva’s account also was in Switzerland, but not with UBS. The DOJ news release did not name the bank where the account was held, but said that it was one world’s largest international banks headquartered in England, with offices in Switzerland and Virginia. UBS is headquartered in Zurich.

Whatever the bank’s identity, today’s news illustrates the Justice Department’s heightened efforts to go after offshore money.

“Today’s plea shows the continued efforts of the Justice Department to investigate and prosecute those citizens who use offshore accounts to hide income and assets,” John A. DiCicco, acting assistant attorney general of the Justice Department’s Tax Division, said in the release. “American taxpayers should rest assured that those who do not file accurate tax returns and who utilize offshore accounts to hide money will be investigated, and when appropriate, prosecuted and sent to jail.”

Silva inherited the undeclared Swiss account from his mother in 1997, the news release said. In 1999, a Zurich-based attorney instructed Silva not to keep any records of the account, and to keep it “hush.” The account was held under the name of a fake trust in Liechtenstein. The attorney also told Silva that he could transport or mail less than $10,000 in U.S. dollars without declaring it.

In September 2009, the bank told Silva that it was closing the account and that he had until the end of the year to withdraw the funds. According the news release, the Zurich attorney and a Swiss banker advising Silva refused to wire the money to the U.S. out of fear of leaving a trail for U.S. authorities. Instead, they advised Silva to smuggle hundreds of thousands of dollars into the U.S. in two individually wrapped “bricks” of cash.

From the release:

According to court documents, Silva admitted that on Nov. 23, 2009, upon his return to the United States, he falsely informed a U.S. Customs Inspector at Dulles International Airport that he had traveled to Switzerland to purchase diamonds. Further, he falsely stated to a U.S. Customs Inspector that he had not recently mailed any U.S. currency from Switzerland into the United States.

According to court documents, for the years 1997 through 2008, Silva made and subscribed false U.S. Individual Income Tax Returns, Forms 1040, that failed to report on the Schedules B attached to the returns that he had an interest in a financial account in a foreign country. Additionally, Silva failed to report the income he earned on his undeclared Swiss account on his tax returns.

According to court documents, from 1997 through 2008, Andrew Silva failed to file with the Department of the Treasury a Report of Foreign Bank and Financial Accounts on Form TD F 90-22.1 (FBAR) reporting his interest in his undeclared Swiss account that had an aggregate value of more than $10,000 at any time during a particular year.

Silva is free on a $50,000 bail pending sentencing, which is set for May 7, the release said. As part of a plea agreement, Silva agreed to forfeit to the government $211,200 that law enforcement officials seized from packages that he mailed from Switzerland. . He faces up to 10 years in prison and a maximum fine of $500,000.

Along with DiCicco, Neil H. MacBride, U.S. attorney for the Eastern District of Virginia, Scot R. Rittenberg, deputy special agent in charge for ICE in Washington, Daniel S. Cortez, postal inspector in charge of the Washington Division, and IRS Criminal Investigation Chief Victor S. O. Song announced the plea in the news release.

Assistant U.S. Attorney Gordon Kromberg, Tax Division Senior Litigation Counsel Kevin M. Downing, and Tax Division Trial Attorneys Mark F. Daly and John E. Sullivan are prosecuting the case.

A former UBS employee who blew the whistle on the Swiss banking giant is seeking a multi-billion dollar reward, and legal experts say odds are good he’ll collect, The New York Times reports.

Bradley Birkenfeld was sentenced to 40 months in prison for helping wealthy Americans dodge their taxes. Whistleblower advocates say the sentence was disproportionate given his assistance — he shared tax evasion secrets of UBS and its rich American clients — and worry that it could have a chilling effect on others considering coming forward.

A coalition of groups, including the National Whistleblowers Center, wrote Attorney General Eric Holder last week, asking him to push for a lesser sentence.

Regardless of the duration of his sentence, the ex-banker could exit prison a rich man.

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 are being turned over to U.S. authorities under a settlement with the bank.

Birkenfeld’s lawyer, Stephen Kohn, said his client is entitled to a portion of the billions of dollars the federal government stands to recover. Under a 2006 law meant to encourage tax informants to come forward, whistle blowers can reap rewards of 15 to 30 percent of the taxes, fines, penalties and interest ultimately collected by the I.R.S.

Kohn, executive director of the NWC, told the Times he was seeking “at least several billion dollars.”

Erika Kelton, a partner at Phillips & Cohen, a law firm that specializes in large whistle-blower claims, said Birkenfeld has a serious claim.

“It was very credible, very useful information from inside UBS that he provided. The law is pretty clean on this,” she told the Times.

Birkenfeld pleaded guilty in June 2008 to conspiring to defraud the United States government. He admitted to, among other things, helping to smuggle diamonds in a tube of toothpaste.

Justice Department prosecutors have said they doubt whether the fraud scheme would have been uncovered without Birkenfeld’s help, but they consider him more of an informant than a formal whistle-blower because he provided few details on actual clients, according to the Times.

Birkenfeld could begin his prison term as soon as January.

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

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.

The Justice Department probably won’t get all of the 52,000 names of rich Americans suspected of using UBS bank accounts to evade the Internal Revenue Service. But Swiss and U.S. negotiators said that the disclosure of at least 4,450 names is all but certain. Read The Washington Post report from this morning here.

UBS and DOJ lawyers cut an out-of-court deal last week on a civil lawsuit seeking the names after spending hours in a D.C. building without air conditioning. The final negotiations came after months of heated back and forth on the lawsuit that was turned into a diplomatic issue by the Swiss government.

Swiss government officials previously said they would forbid UBS from complying with any U.S. court order to reveal names. Officials in the Alpine tax haven have not explicitly agreed to disclose any names, but Swiss and U.S. negotiators have agreed that at least 4,450 names will inevitably be turned over to the IRS, The Post reported.

“We will be receiving an unprecedented amount of information,” said IRS Commissioner Doug Shulman, according to The Post.

Read the DOJ news release here, the U.S.-Swiss declarations here and the bank agreement and consent here.

The Justice Department and UBS AG cut an out-of-court deal this week after months of heated back and forth on a civil lawsuit that seeks to force the Swiss bank to divulge the names of rich Americans suspected of tax evasion. The details of the deal forged in the early hours of Wednesday morning still aren’t public but Reuters reported today that it was a hot and steamy affair.

An individual close to the negotiations told Reuters that when the Swiss and American lawyers signed off on the agreement at 2:45 a.m., they had been in a Mint Annex Building room on 9th Street NW in Washington without air conditioning for nearly five hours. D.C. was just recovering from a two-day heat wave which brought temperatures that neared 100 degrees.

“They were all sweating pretty good,” the person close to the negotiations told Reuters.

The Justice Department has demanded that UBS to turn over 52,000 names of account holders suspected of using Swiss accounts to evade Internal Revenue Service.  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. The latest reported settlement talks focused on some 7,000 to 5,000 accounts tied to offshore companies and trusts.

Read our previous report here.

UBS AG and the Justice Department have reached an out of court agreement on a contentious civil lawsuit that seeks to force the Swiss bank to divulge the names of rich Americans suspected of tax evasion, The Associated Press reported this morning.

No details of the agreement were announced during a telephone conference that included U.S. District Judge Alan S. Gold, DOJ Tax Division attorney Stuart Gibson and UBS attorney Eugene Stearns, according to The AP. The lawyers only told Gold that they concluded negotiations, the news wire service reported.

The Justice Department demanded that UBS to turn over 52,000 names of account holders suspected of using Swiss accounts to evade Internal Revenue Service.  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 the latest  settlement talks focused on some 7,000 accounts tied to offshore companies and trusts.

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.

UBS.com

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.