The US District Court for the Southern District of Florida today released a "statement of facts" Download birkenfeld. statement of facts. 061908.pdf in connection with the guilty plea of Bradley Birkenfeld, a UBS banker, for his role in tax evasion schemes whereby the Swiss bank provided hidden offshore accounts for wealthy US taxpayers to hide their income from the US and avoid US taxes. The statement of facts indicate that the bank earned about $200 million a year on assets of about $20 billion connected with these "undeclared accounts" of wealthy US clients, which were set up in tax havens such as Liechtenstein or Panama identified as belonging to sham offshore entities. Birkenfeld's largest client was "a billionaire real estate developer" with initials "I.O."(identified by news media as Igor Olenicoff) who evaded more than $7 million in taxes from 2001 on the income from a nest egg of $200 million hidden offshore in this way.
UBS will likely be in for more pain from this, as will be various wealthy US residents and perhaps even some politicians. According to an article on Bloomberg.com by Kolker and Voreacos, Birkenfeld's plea provides a description of the bank's systematic attempt to cater to wealthy US tax-avoiders and his attorney said he would "tell the government everything he knew about UBS." According to an earlier New York Times article, UBS is considering divulging the names of some 20,000 private banking US clients. See Lynnley Browning, Wealthy Americans Under Scrutiny in UBS Case, June 6, 2008. They may well be shaking in their boots about possible criminal tax convictions. Let's hope so.
Phil Gramm, former US Senator from Texas, is vice chairman of UBS's investment banking arm, UBS Securities. Mr. Gramm is also "McCain's econ brain" (that's presidential candidate John McCain, who has publicly stated that he isn't as well-informed about the US economy as he should be). If the bank's assistance to wealthy US taxpayers' tax evasion was a pervasive as it appears to have been from the Olenicoff and Birkenfeld guilty pleas, one wonders how someone in as prominent a role as Mr. Gramm could possibly have been unaware of the shenanigans. One suspects that either he was turning a blind eye (not a very good role model for providing the leading economic analysis to a presidential candidate) or he was in the know and not doing anything to stop the bank's engaging in such practices (not a very good role model for providing the leading economic analysis to a presidential candidate).
ASIDE: McCain is now described as a "budget-shrinking, flat-tax-embracing, healthcare-privatizing champion of free markets." Id. In other words, one might say, one who supports the kind of tax policy that embraces the tax aid to corporations and the wealthy along with unworkable "you only get what you can pay for" solutions for people at the bottom of the income scale that have put us into an economy that works only for the wealthy, after 7 years of the Bush regime.
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