From 2001, UBS private banker Bradley Birkenfeld worked in Geneva soliciting wealthy Americans and, according to his disclosures to the U.S. Department of Justice, helped clients conceal assets behind Swiss banking secrecy and evade U.S. taxes. Birkenfeld resigned from UBS on October 5, 2005, and in 2007 provided information about the bank’s practices to U.S. authorities. The disclosures described UBS-sponsored events, including art shows and yacht races, used to cultivate American clients and cross-border arrangements designed to keep accounts out of U.S. tax authorities’ view.
On February 18, 2009, the DOJ announced a deferred prosecution agreement with UBS requiring a $780 million payment and the release of information on American account holders. Client Igor Olenicoff, whom Birkenfeld had advised, pleaded guilty to tax evasion and paid $52 million. Birkenfeld himself was arrested on May 7, 2008, pleaded guilty to conspiracy to defraud the United States, and served approximately 31 months in federal prison from January 2010 to August 2012, plus a $30,000 fine, after prosecutors said he had withheld information about his conduct. In 2012, the IRS awarded him $104 million—26% of approximately $400 million in recovered taxes. UBS subsequently announced that it would stop providing cross-border private banking services to U.S.-domiciled clients through non-U.S.-regulated units, accelerating the collapse of Switzerland’s secrecy-based model for serving American taxpayers.
