Barack Obama

Obama Advisory Board Member Is Senior Exec With Firm Under Federal Investigation For Tax Scam

Zachary Roth | February 10, 2009, 7:30PM

Last week, President Obama announced the members of his new Economic Recovery Advisory Board.

And one of the names piqued our interest:

Robert Wolf, Chairman & CEO, UBS Group Americas

That's because UBS isn't exactly the kind of company you'd expect Obama might want to associate with just at the moment. It's the subject of a widening federal investigation, being conducted by both DOJ and the IRS, into its offshore private banking services, focused on allegations that it helped an estimated 19,000 wealthy clients evade billions in taxes.

Last fall, Raoul Weil, who ran the firm's global wealth management and business banking division, was indicted in connection with the alleged scheme.

A few months earlier, a former UBS exec, Bradley Birkenfeld, pleaded guilty to helping a client evade millions of dollars in federal income taxes while with the firm.

Of course, there's no indication that Wolf had any connection to the alleged scheme. But it's worth noting that he and Weil did serve together on UBS's Group Executive Board. So it's not like they don't know each other, it appears. (Weil stepped down from the board temporarily after his indictment.)

You'd think President Obama could have rounded out his advisory board with someone from a firm that's not under federal investigation for helping rich people cheat on their taxes -- especially given the current financial climate. Guess not.

Brad Birkenfeld

Former UBS Banker Pleas Guilty to Tax Evasion

Kate Klonick | June 19, 2008, 2:02PM

Besides the sub-prime mortgage crisis, UBS has an entirely different set of problems to worry about: the criminal prosecution of their former employees and the possible public exposure of their massive wealth management business.

Bradley Birkenfeld, a former UBS banker in Geneva, pled guilty in a Florida court today, for conspiring to hide $200 million in client assets in order to avoid paying U.S. taxes. The plea is the latest in bad news for the bank, who has its wealthiest clients running for cover as authorities pressure bank officials to give up the names of over 20,000 of their high-net- worth clients.

And it's all because no one wanted to pay their taxes. Birkenfeld and colleague Mario Staggl, currently at large, helped billionaire American real estate developer and owner of Olen Properties Corp., Igor Olenicoff avoid almost $7.2 million in taxes between 2001 and 2006. Olenicoff was sentenced on April 14, 2008 and agreed to pay $52 million in back taxes.

In his statement today in U.S. District Court in Fort Lauderdale, Birkenfeld detailed how he, Staggl and other managers and bankers at UBS had concealed client assets.

From a Department of Justice press release earlier today:

Birkenfeld, managers and bankers at the Swiss bank, and U.S. clients prepared false and misleading IRS forms that claimed that the owners of the accounts were sham off-shore entities' and failed to prepare and file IRS forms that should have identified the true U.S. owner of the accounts.

To further assist U.S. clients of the bank in concealing their offshore accounts, Birkenfeld admitted that he, Mario Staggl, additional private bankers and managers at the Swiss bank, and others advised U.S. clients to place cash and valuables in Swiss safety deposit boxes, and purchase jewels, artwork and luxury items using the funds in their Swiss bank account while overseas. Additionally, they advised the clients to misrepresent the receipt of funds from the Swiss bank account in the United States as loans from the bank; destroy all off-shore banking records existing in the United States; utilize Swiss bank credit cards that they claimed could not be discovered by U.S. authorities; and file false U.S. individual income tax returns that omitted income earned by the clients and fraudulently misrepresented that the clients did not have an interest in and signature authority over accounts held offshore.

. . . To circumvent the requirements of the agreement between the bank and the IRS, Birkenfeld and others conspired to conceal the American real estate developer's ownership and control of the $200 million of assets hidden offshore by creating and utilizing nominee and sham entities, including Bahamian corporations, Liechtenstein trusts and Danish corporations.

According to the DOJ, Birkenfeld and his co-conspirators actions were in direct violation of a 2001 agreement between UBS and the American government, which stated that the Swiss bank would "identify and document any customers who received reportable U.S. source income or would withhold and anonymously pay a 28 percent withholding tax."

The guilty plea is the latest in what has been an ongoing and dramatic investigation of UBS and its Geneva bankers. In April of 2008, Martin Liechti, head of UBS' international wealth management business for the America's was briefly detained while passing through Miami airport. Birkenfeld, who has been talking to prosecutors for over a year regarding this matter, was arrested on May 7 upon entering the U.S. at Logan Airport for a high school reunion.

Staggl, co-founder of New Haven Trust Company Ltd. in Liechtenstein is considered a fugitive and is still at large.