WASHINGTON (AFP) — A US manager working for a Swiss bank Thursday admitted conspiring to help US clients dodge millions of dollars in taxes by hiding assets in Switzerland and Liechtenstein, officials said.
Bradley Birkenfeld pleaded guilty to conspiring with co-defendant Mario Staggl to hide some 200 million dollars, liable to 7.2 million in US taxes, through an elaborate system of fraud, the Department of Justice said.
Birkenfeld, an American citizen, who was reportedly a top executive at the Swiss bank UBS, pleaded guilty at a federal court in Fort Lauderdale, Florida.
Earlier this month, the Neue Zurcher Zeitung daily in Zurich said US authorities had urged Switzerland to help in the tax fraud inquiry involving Swiss banking giant UBS.
"I believe this case will send a strong signal to anyone hiding money in offshore bank accounts to avoid paying the taxes they should," said Internal Revenue Service (IRS) Commissioner Douglas Shulman.
"The IRS will pursue people using offshore accounts in this manner as well as financial advisers and others who orchestrate these tax fraud schemes," he added.
According to a report in the Wall Street Journal last month, UBS frequently teamed up with bankers in the tiny neighboring tax haven of Liechtenstein to help wealthy Americans hide their assets from the IRS.
The Justice Department statement did not mention UBS by name, just referring to a large Swiss banking firm where Birkenfeld was employed.
But Birkenfeld admitted that between 2001 and 2006, while he was a director of the Swiss bank's private banking division, he was a frequent visitor to the United States to meet with wealthy Americans wanting to conceal their assets.
According to statements and documents filed with the court, Birkenfeld's services to US clients violated a 2001 agreement that the Swiss bank would identify or withhold any reportable US income and anonymously pay a 28 percent withholding tax.
But when the bank told its rich US clients of the deal, many of them refused to be identified, to sell their investments or to have any tax withheld from the income earned on their funds.
Instead, Birkenfeld revealed the bank then helped these American clients to conceal their offshore assets by setting up false companies.
These funds referred to by the bank as "United States undeclared business" allegedly amounted to some 20 billion dollars, earning the bank some 200 million dollars in annual revenues, the statement said.
Birkenfeld admitted he and Staggl as well as other managers also advised clients to conceal their assets by buying jewels, art and luxury goods using the money in their Swiss accounts and then deposit them in Swiss safety boxes.
UBS, Switzerland's biggest bank, confirmed last month that US authorities had briefly detained one of its senior managers during investigations of suspected tax evasion between 2000 and 2007.
It has said it is cooperating with the investigations by the Department of Justice and the Securities and Exchange Commission regulator.
It was another blow to the bank, which recently announced huge write-downs following the banking crisis related to subprime mortgages, and has also seen its shares plunge in recent weeks due to rumors of more writedowns and bad news from the United States banking sector.
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