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US: Guilty Plea by Ex-Banker
Likely to Aid Probe of UBS


by Evan Perez The Wall Street Journal
June 20th, 2008

FORT LAUDERDALE, Fla. -- A former banker at UBS AG pleaded guilty in federal court to helping a billionaire client evade taxes by hiding $200 million in assets in offshore accounts, in a move expected to aid U.S. prosecutors in their probe of the Swiss banking giant.

The banker, Bradley Birkenfeld, 43 years old, answered softly when U.S. District Judge William Zloch asked why he had participated in the scheme. "I was employed by UBS. ... I was incentivized to do this business," he said.

According to prosecutors, Mr. Birkenfeld has provided evidence showing the tactics the bankers advised clients to use to hide their wealth, including purchasing artwork and jewels with funds from Swiss accounts.

Mr. Birkenfeld faces as many as five years in prison and $250,000 in fines. The judge set sentencing for August, but prosecutors are expected to seek a delay while they try to use Mr. Birkenfeld's knowledge to pierce the centuries-old secrecy for which UBS and other Swiss banks are known. The U.S. government says the bank helped wealthy U.S. clients hide assets in so-called undeclared accounts in tax havens.

A seven-page "statement of facts" agreed to by prosecutors and Mr. Birkenfeld says that the unnamed Swiss bank, identified in court by Mr. Birkenfeld as UBS, sponsored events for private bankers to meet their U.S. clients.

The bank generated $200 million a year in revenue from managing the $20 billion in assets in undeclared U.S. business, prosecutors said.

In return, UBS went to great lengths to keep its vaunted client secrecy, according to prosecutors. It trained its private bankers in techniques to avoid detection by U.S. law enforcement, including to "falsely state on customs forms that they were traveling to the United States for pleasure and not business," according to court documents.

The Justice Department is in talks with UBS to learn the names of the bank's U.S. clients, according to people familiar with the matter.

Danny Onorato, Mr. Birkenfeld's attorney, said Mr. Birkenfeld had "numerous U.S. clients" and that as a result of the case, "a number of individuals have been reaching out to U.S. authorities."

UBS said it "will continue to work with U.S. governmental authorities in an effort to achieve a satisfactory resolution of these matters."

Write to Evan Perez at evan.perez@wsj.com





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