From October 2001, UBS private banker Bradley Birkenfeld worked in Geneva soliciting wealthy U.S. clients and, according to his disclosures to the U.S. Department of Justice, helped channel assets through Swiss accounts protected by banking-secrecy laws. Birkenfeld resigned on October 5, 2005, and in 2007 reported that UBS personnel marketed offshore structures to Americans seeking to evade U.S. taxes, including through events such as art shows and yacht races. One client, California developer Igor Olenicoff, pleaded guilty to tax evasion and paid a $52 million penalty.
The disclosure produced a February 2009 deferred-prosecution agreement between the DOJ and UBS, under which the bank paid $780 million and supplied information about American account holders. UBS announced in July 2008 that it would stop providing cross-border private-banking services to U.S.-domiciled clients through non-U.S.-regulated units. Birkenfeld was arrested on May 7, 2008, pleaded guilty to conspiracy to defraud the United States, and served roughly 31 months in federal prison from January 2010 to August 2012 after being sentenced to 40 months and fined $30,000. Despite his conviction for withholding information about his own conduct, the IRS awarded him $104 million in 2012—26% of approximately $400 million in recovered taxes—helping accelerate the erosion of Swiss banking secrecy and international pressure on offshore tax evasion.
