A billionaire involved in the UBS tax scandals is saying that UBS lied to him by saying they would report his earnings to the IRS. You can read a segment of the Bloomberg article covering the story below, or find the full segment here.
California billionaire Igor Olenicoff had already invested $200 million with UBS AG in 2001 when his Swiss bankers ushered him to an underground vault in Geneva.
Olenicoff, a real estate developer with a taste for yachts and Russian art, saw floor upon floor of safe-deposit boxes. His private banker, Bradley Birkenfeld, and a colleague showed Olenicoff his own space for valuables.
“They said, ‘Whatever you want -- corporate stock, cash, gold, silver -- put it in here,’” says Olenicoff, 66, at the Newport Beach, California, headquarters of Olen Properties Corp., the company he founded in 1973. “It was that aura of legitimacy and secrecy. They say, ‘We’re the world’s largest wealth manager,’ so how do you question?”
Birkenfeld, 44, had spent years wooing Olenicoff, visiting his homes in Laguna Beach, California, and Lighthouse Point, Florida; cruising on his 147-foot (45-meter) yacht to Mayan ruins in Honduras; and flying on his Cessna Citation II jet.
Four years later, both men are admitted felons. Since December 2007, the billionaire and his banker have pleaded guilty to tax crimes.
The court cases open a door on the normally secretive world of dummy companies, offshore havens and phony financial filings that wealthy Americans often use to avoid paying U.S. taxes. President Barack Obama has proposed to end such tax breaks for U.S.-based multinational corporations and individuals within a decade.
‘Obligation of Citizenship’
“Most Americans meet their responsibilities because they understand it’s an obligation of citizenship,” Obama said on May 4. “Yet there are others who are shirking theirs. We shouldn’t let some citizens dodge their responsibilities, while ordinary Americans pick up the slack. Unfortunately, that’s exactly what we’re doing.”
The Olenicoff and Birkenfeld cases come amid a widening U.S. crackdown on offshore firms that cater to wealthy Americans. U.S. Senator Carl Levin, a Michigan Democrat, estimates the cost in unpaid taxes to the U.S. Treasury is $100 billion a year.
With evidence from the Olenicoff case and cooperation from Birkenfeld, U.S. prosecutors have been able to penetrate the veil of financial invisibility that Switzerland guards as a national treasure.
To avoid immediate prosecution, UBS, Switzerland’s second- largest bank by stock market value, behind Credit Suisse Group AG, agreed on Feb. 18 to pay the U.S. $780 million.
It renewed a pledge to stop unlicensed recruiting of customers in the U.S. and agreed to cooperate with investigators during 18 months of probation. The bank admitted in court that it had helped American clients dodge taxes from 2000 to 2007.
52,000 UBS Accounts
The bank turned over information on more than 250 customers -- an unprecedented breach of Switzerland’s bulwark of secrecy. The U.S. Internal Revenue Service is suing UBS in federal court in Miami to get the names of 52,000 American account holders who may have broken U.S. tax laws.