http://www.bloomberg.com/apps/news?pid=20601087&sid=aLSAtQJlo7hE&refer=home UBS Helped Clients Hide $20 Billion, Birkenfeld Says (Update1) By David Voreacos and Carlyn Kolker June 19 (Bloomberg) -- The private banking unit of UBS AG, the Swiss bank, engaged in a variety of schemes to help wealthy U.S. clients conceal $20 billion in assets and evade income tax laws, an ex-banker said today in pleading guilty to conspiracy. Bradley Birkenfeld, 43, and his UBS colleagues helped wealthy Americans hide money by telling them to put cash and jewelry in Swiss safety deposit boxes, buy artwork and jewels using offshore accounts, and set up accounts in the names of others, he admitted in federal court in Fort Lauderdale, Florida. Birkenfeld is helping a Justice Department probe of Zurich- based UBS, and said the practices he described are common among his former colleagues. Birkenfeld said UBS helped wealthy Americans evade taxes even after signing a 2001 agreement that required it to identify account holders and their income to U.S. tax authorities. He said many clients refused to disclose their assets because it would defeat the purpose of banking with UBS - - evading taxes. ``Rather than risk losing the approximately $20 billion of assets under management in the United States undeclared business,'' UBS ``assisted these wealthy U.S. clients in concealing their ownership of the assets held offshore,'' Birkenfeld said in a written statement accompanying his plea. UBS earned about $200 million a year in revenue by helping high-income clients through such practices as setting up sham entities in tax havens including Switzerland, Panama, British Virgin Islands, Hong Kong and Liechtenstein, Birkenfeld said. In one case, Birkenfeld even agreed to buy diamonds for a U.S. client using Swiss funds and ``smuggled the diamonds into the United States in a toothpaste tube,'' Birkenfeld said. U.S. Investigations UBS spokesman Mark Arena declined to comment on the plea. He said UBS is cooperating in a Justice Department investigation of whether the bank helped U.S. clients evade taxes from 2000 to 2007, and a Securities and Exchange Commission probe of whether it failed to register as a broker-dealer or investment adviser. ``UBS is treating these investigations with the utmost seriousness and will appropriately and responsibly address and correct any issues raised in the investigations, including taking appropriate disciplinary action,'' Arena said in an e- mailed statement. Birkenfeld's admission may help prosecutors as they continue to probe UBS bankers and their clients. Birkenfeld's cooperation will assist the Justice Department ``nationwide'' in its investigation, federal prosecutor Kevin Downing said today. Conspired with Billionaire Birkenfeld pleaded guilty to conspiring with his biggest client, California billionaire Igor Olenicoff, to help him evade $7.2 million in income taxes. Birkenfeld admitted that he helped Olenicoff hide $200 million in assets through Bahamian corporations, Liechtenstein trusts and Danish corporations. Olenicoff, a real estate developer and chief executive officer of Olen Properties Corp., pleaded guilty Dec. 12 to filing a false income tax return. He was sentenced to two years' probation and agreed to pay $52 million in back taxes, interest and penalties. Birkenfeld said he conspired with Liechtenstein banker Mario Staggl, 43, who was indicted with him on April 10. Staggl is considered a fugitive. In his plea statement, Birkenfeld said a UBS manager assured him that the bank was committed to assisting wealthy clients despite signing the 2001 accord known as a Qualified Intermediary agreement. Encouraged by Superiors Birkenfeld, a U.S. citizen who lived for the last 13 years in Switzerland, said his superiors encouraged him to travel to the U.S. to solicit new clients. UBS, which sponsored an art show and a tennis tournament in Miami, trained bankers to avoid detection by U.S. law enforcement by stating falsely on customs forms they were traveling on pleasure, not business, he said. The UBS bankers ``knew that they were not licensed to provide banking services, offer investment advice or solicit the purchase or sale of securities through contact with clients in the United States,'' according to Birkenfeld's statement. Birkenfeld faces as much as five years in prison. He is free on a $2 million bond secured by his father, a neurosurgeon, and a brother, who is a lawyer. He also must wear an electronic monitoring device and remain at his brother's home in Boston under house arrest. The case is U.S. v. Birkenfeld, 08-cr-60099, U.S. District Court, Southern District of Florida (Fort Lauderdale).