http://online.wsj.com/article/SB121070914075689235.html?mod=hps_us_whats_news
May 13, 2008 4:30 p.m. EDT
Two Indicted in Tax-Evasion Case
By CARRICK MOLLENKAMP, GLENN R. SIMPSON and ALEX FRANGOS
May 13, 2008 4:30 p.m.
A widening U.S. probe into alleged tax-evasion schemes that a former UBS AG private banker provided to wealthy U.S. clients has led to the indictment of the former banker and a Liechtenstein financial consultant on claims they devised ways for clients to avoid paying U.S. taxes.
The indictment, filed last month in Florida federal court and unsealed Tuesday in Fort Lauderdale, details how the two men allegedly advised one clientâidentified only as an American billionaire real-estate developerâon how to set up secret bank accounts in Switzerland and Liechtenstein to avoid taxes on $200 million in assets. A person familiar with the U.S. case identified the developer as Igor Olenicoff, a businessman with holdings across the U.S.
The indictment doesn't name UBS and identifies only a Swiss bank. A person familiar with the matter said it was UBS. UBS recently disclosed that it was the subject of a U.S. investigation in a regulatory filing with the U.S. Securities and Exchange Commission. (Read the indictment.1)
Mr. Olenicoff pleaded guilty in December to a criminal count of filing a false U.S. tax return in 2002. As part of his plea agreement, Mr. Olenicoff agreed to cooperate with U.S. authorities and pay $52 million to the U.S. Treasury Department. In April, the developer was sentenced to two years of probation and 120 hours of community service.
Mr. Olenicoff's lawyer, Edward Robbins Jr. of Beverly Hills, Calif., declined comment Tuesday.
The indictment comes at a difficult time for UBS. Switzerland's biggest bank already is reeling from about $38 billion in write-downs tied to subprime mortgage loan securities and has replaced its senior leadership team this year. The U.S. probe threatens to taint UBS's private bank, which has long prided itself on its ability to provide confidential services to the world's wealthiest and been considered the steady part of the company.
UBS first disclosed that it was under Justice Department investigation for possibly aiding U.S. clients in avoiding taxes in a U.S. securities filing earlier this month. As par of the tax probe, a high-ranking UBS executive named Martin Liechti was detained in the U.S. Mr. Liechti, based in Zurich, is the head of North and South America for UBS's international wealth-management business.
In an emailed statement, UBS said it is continuing to cooperate with the Department of Justice investigation of its conduct in relation to cross-border services provided by Swiss-based UBS client advisers to U.S. clients. "In light of the pending investigation it is not appropriate to comment on charges brought against a former UBS employee," UBS said in its statement.
The indictment against former UBS banker Bradley Birkenfeld, 43 years old, and Liechtenstein consultant Mario Staggl, also 43, provides a rare window into the typically secret world of tax strategies. Mr. Birkenfeld appeared in court Tuesday while Mr. Staggl remains at large, the Justice Department said. The duo, according to the complaint, used a series of deceptions, including filing false tax returns, urging the destruction of documents, and Swiss credit cards, to help Mr. Olenicoff avoid paying taxes. A lawyer for Mr. Birkenfeld couldn't be located for comment.
Write to Carrick Mollenkamp at
carrick.mollenkamp@wsj.com2, Glenn Simpson at
glenn.simpson@wsj.com3 and Alex Frangos at
alex.frangos@wsj.com4
