US: Guilty Plea by Ex-Banker Likely to Aid Probe of UBS

Publisher Name: 
The Wall Street Journal

FORT LAUDERDALE, Fla. -- A former banker at UBS
AG pleaded guilty in federal court to helping a billionaire client
evade taxes by hiding $200 million in assets in offshore accounts, in a
move expected to aid U.S. prosecutors in their probe of the Swiss
banking giant.

The banker, Bradley Birkenfeld, 43 years old, answered
softly when U.S. District Judge William Zloch asked why he had
participated in the scheme. "I was employed by UBS. ... I was
incentivized to do this business," he said.

According to prosecutors, Mr. Birkenfeld has provided
evidence showing the tactics the bankers advised clients to use to hide
their wealth, including purchasing artwork and jewels with funds from
Swiss accounts.

Mr. Birkenfeld faces as many as five years in prison
and $250,000 in fines. The judge set sentencing for August, but
prosecutors are expected to seek a delay while they try to use Mr.
Birkenfeld's knowledge to pierce the centuries-old secrecy for which
UBS and other Swiss banks are known. The U.S. government says the bank
helped wealthy U.S. clients hide assets in so-called undeclared
accounts in tax havens.

A seven-page "statement of facts" agreed to by
prosecutors and Mr. Birkenfeld says that the unnamed Swiss bank,
identified in court by Mr. Birkenfeld as UBS, sponsored events for
private bankers to meet their U.S. clients.

The bank generated $200 million a year in revenue from
managing the $20 billion in assets in undeclared U.S. business,
prosecutors said.

In return, UBS went to great lengths to keep its
vaunted client secrecy, according to prosecutors. It trained its
private bankers in techniques to avoid detection by U.S. law
enforcement, including to "falsely state on customs forms that they
were traveling to the United States for pleasure and not business,"
according to court documents.

The Justice Department is in talks with UBS to learn
the names of the bank's U.S. clients, according to people familiar with
the matter.

Danny Onorato, Mr. Birkenfeld's attorney, said Mr.
Birkenfeld had "numerous U.S. clients" and that as a result of the
case, "a number of individuals have been reaching out to U.S.
authorities."

UBS said it "will continue to work with U.S.
governmental authorities in an effort to achieve a satisfactory
resolution of these matters."

Write to Evan Perez at evan.perez@wsj.com

AMP Section Name:Financial Services, Insurance and Banking
  • 185 Corruption