UBS

Feb. 19, 2009

Swiss bank UBS to pay U.S. in tax havens scheme

Jay Weaver and Martha Brannigan

The largest bank in Switzerland admitted Wednesday to defrauding the IRS and agreed to pay the U.S. government $780 million it made by setting up offshore income tax havens for thousands of wealthy Americans — a substantial number in South Florida.
In an unprecedented move, UBS agreed to turn over the names of customers who retained the Swiss bank to assist them in hiding their assets from U.S. tax authorities, according to documents filed in federal court in Fort Lauderdale. It's a highly sensitive issue because of Swiss bank secrecy laws.

In the "deferred prosecution agreement," UBS admitted it broke U.S. tax laws, but it won't have a criminal conviction if the bank meets various conditions of the deal. If it doesn't satisfy those terms, prosecutors will seek to convict the bank.

The agreement signed by UBS breaks down two ways: It requires the bank to pay $380 million of its profits to the government, including $200 million to the Securities and Exchange Commission, for the period 2001-2008. And it requires the bank to pay the government an additional $400 million in taxes, including interest and penalties, that it had failed to withhold on its clients' offshore investments.

The agreement — which reflects an extraordinary battle between two powerful institutions, the Justice Department and the Swiss banking icon — could lead to criminal prosecutions of hundreds of major UBS clients who did not pay their fair share of income taxes in the United States, federal authorities said.

UBS bankers cultivated these customers at venues known for rich and famous patrons, such as Art Basel Miami Beach and the Sony Ericsson tennis tournament in Key Biscayne.

The agreement filed Wednesday, however, does not include a top UBS executive, Raoul Weil, who was indicted separately in November for allegedly conspiring to help wealthy U.S. clients dodge federal income taxes by hiding assets in bogus offshore shell companies and other secret entities. He is a fugitive, believed to be living in Switzerland.

(Hmmm, makes you wonder if any Democrats are going to be on this list. Time will tell. This is an interesting story and I'm not hearing a lot about it in the MSM. Wouldn't it be delicious, simply divine if Senator Daschle was on this list? VN8)