Ex-UBS Banker Pleads Guilty, Will Help Prosecutors
FORT LAUDERDALE, Florida — A former UBS executive has pleaded guilty to helping clients hide hundreds of millions of dollars and evade U.S. taxes in a case that is part of a probe into whether the Swiss banking giant did the same for other wealthy individuals.
Bradley Birkenfeld entered the plea of guilty to one count of conspiring to defraud the United States in federal court in Fort Lauderdale. The 43-year-old had previously pleaded not guilty to the charge but changed that plea Thursday and in an agreement with prosecutors said he would offer assistance in the wider probe. The charge carries a potential five-year prison term and $250,000 in fines.
Birkenfeld worked for UBS AG from 2001 to 2006. Prosecutors say he and others helped a California real estate magnate hide $200 million in assets in Switzerland and Liechtenstein, helping the developer evade $7.2 million in taxes.
Birkenfeld said little during the approximately 30-minute hearing, answering questions from District Court Judge William J. Zloch about whether he understood the plea.
When the judge asked why he had helped conceal assets he said he was employed by UBS and "paid a large salary" to "incentivise" him. Asked if his actions at the time worried him, Birkenfeld responded that he "did have doubts" and that he later resigned from the bank.
Documents released Thursday in the case said that at one point Birkenfeld purchased diamonds using one client's Swiss bank account and smuggled the diamonds into the United States in a toothpaste tube. He and others also advised clients to purchase "jewels, artwork and luxury items" using funds in their Swiss bank accounts while overseas.
Zurich-based UBS, Switzerland's largest bank, disclosed in May that the U.S. Justice Department is investigating whether the bank was helping clients evade taxes from 2000 to 2007.
Karina Byrne, a spokeswoman for UBS in New York, said the bank would not comment on Birkenfeld's case Thursday. The bank did, however, issue a statement saying that UBS was "working diligently with both Swiss and U.S. government authorities" in the wider investigation.
In Birkenfeld's case, prosecutors said he and others were helping California real estate magnate Igor Olenicoff hide millions of dollars in assets overseas.
Olenicoff, whose fortune is estimated at $1.6 billion by Forbes magazine, pleaded guilty last year to tax charges and agreed to pay the IRS more than $52 million in back taxes, penalties and interest. A Liechtenstein banker charged along with Birkenfeld, 43-year-old Mario Staggl, has been declared a fugitive.
Birkenfeld was told that if he provides "substantial assistance," the government could recommend a reduction in his eventual sentence. Kevin Downing, an attorney with the U.S. Department of Justice, told the court that Birkenfeld's help was expected to assist the government "nationwide."
Sentencing in the case was set for Aug. 13.
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JESSICA GRESKO | June 19, 2008 03:26 PM EST |
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