If charges stick, aiding tax evaders is serious. It is jail time ina any Western country. Probably death in most Asian Societies........ May 8, 2008 Probe May Lay Open UBS U.S. Investigation Into Private Bank To Embroil Clients? By GLENN R. SIMPSON in Washington, DAVID CRAWFORD in Zurich, AND CARRICK MOLLENKAMP in London May 8, 2008 The secrets of UBS AG's private bank could be spilling into the open at a time when Switzerland's biggest bank is struggling to maintain a reputation tarnished by billions of dollars in losses. U.S. prosecutors are investigating whether the private bank, which provides services to wealthy individuals, was involved in tax-evasion schemes that may have been carried out through Liechtenstein, a European principality that was beyond the reach of U.S. tax officials. The U.S. investigation is being aided by a former UBS insider who has met with U.S. prosecutors, according to two people with knowledge of the situation. U.S. securities regulators also are conducting an inquiry. MORE ON UBS ⢠UBS to Sell Mortgage Assets, Cut Jobs1 ⢠UBS Sale Holds a Caution2 ⢠Video: Simon Kennedy on UBS's move 3The U.S. probe into UBS's private bank, the world's largest as ranked by assets under management and one that prides itself on conservatism and confidentiality, threatens to implicate UBS clients. The former UBS employee, who also is under investigation for potential wrongdoing, has provided U.S. officials with names of American clients of UBS, said the people familiar with the probe. A UBS spokesman said that access to client data are provided only on a "need-to-know" basis. "We are not aware of any data loss," the spokesman, Serge Steiner, said. The inquiry into the dealings of the lucrative private bank comes at a time when UBS is facing harsh criticism for lack of oversight at its investment bank, which made an ill-fated push into the selling and trading of securities tied to U.S. subprime home loans. The bank has written down some $38 billion, and on Tuesday reported a first-quarter net loss of 11.54 billion Swiss francs ($10.97 billion), together with plans to cut some 5,500 jobs. "Such investigations could hamper UBS's wealth management, too, and hurt trust," said Dirk Becker, an analyst at Landsbanki Kepler. "UBS can only hope to solve this problem quickly." The investment bank's troubles are already spilling over into the private bank, which had been a reliable earner. UBS said the private bank attracted only 5.6 billion Swiss francs in fresh money during the months from January to March, a fraction of the 30 billion francs it took in a year earlier. New UBS Chairman Peter Kurer, former top legal counsel for the bank, and Chief Executive Marcel Rohner have said they are taking steps to restore confidence in UBS. Those have included efforts to unload troubled securities, cut back risky operations and raise some $30 billion in fresh capital from UBS shareholders and investors including those from Asia and the Middle East. This week, UBS disclosed in a securities filing that the U.S. Justice Department and the Securities and Exchange Commission are examining whether UBS aided U.S. clients in avoiding taxes. The probe is focused on advice given by UBS between 2000 and 2007. According to the filing, the Justice Department "is examining whether certain U.S. clients sought, with the assistance of UBS client advisors, to evade their U.S. tax obligations." The UBS probe is being led by the U.S. Attorney's Office for the Southern District of New York and may have ties to an investigation being conducted by the Internal Revenue Service and other national tax agencies into how banks in Liechtenstein played a role in helping German, U.S., British, French, Canadian and Australian clients evade taxes. A spokesman for the Justice Department declined comment. Countries are investigating their citizens for hiding assets in the tiny principality, located between Austria and Switzerland, as part of an international probe. Liechtenstein's largest financial firm, LGT, is one target of the inquiry. A spokesman for LGT said the bank is unfamiliar with the new investigation and unable to confirm or deny details at this time. One potential focus of the U.S. probe is whether UBS sought to get around a U.S.-Swiss tax treaty that requires the Swiss to identify U.S. money in Switzerland. According to people familiar with the situation, U.S. citizens may have approached a UBS office in New York for help in avoiding taxes on funds held in UBS's private bank. The people said UBS took on the clients but may have deposited their money in Liechtenstein -- a move that would have allowed the Swiss bank to avoid the treaty with the U.S. Liechtenstein officials have said they are willing to cooperate with U.S. investigators. Additionally, U.S. securities regulators are examining whether UBS took the right steps to register as a broker or investment adviser in the U.S. Martin Liechti, Zurich-based head of North and South America for UBS's international wealth-management business, was detained at one point by U.S. authorities as part of the tax probe, said a person familiar with the situation. Mr. Liechti isn't the former UBS insider who approached U.S. prosecutors, said people familiar with that communication. Mr. Steiner, the UBS spokesman, said that a senior UBS employee was briefly detained as a "material witness" in connection with the Justice Department probe of U.S. private bank clients, but declined to discuss specific names. Mr. Liechti wasn't available at his office for comment. --Goran Mijuk in Zurich and Amir Efrati in New York contributed to this article. Write to Glenn R. Simpson at glenn.simpson@wsj.com4 and David Crawford at david.crawford@wsj.com5
Wow, Americans park their money in Swiss banks to evade paying taxes? No shit?! I always thought they did it solely for the pleasure of paying 50 times normal U.S. fees... Live and learn, I suppose. <i>"If charges stick, aiding tax evaders is serious. It is jail time ina any Western country."</i> Actually, assisting foreign citizens evade their home country's taxes isn't even a crime at all in Switzerland. On the other hand, violating a client's privacy without a subpoena from a Swiss judge is a serious felony there. U.S. clients are the exception and not the rule, due to the above mentioned U.S.-Swiss treaty.
I was surprised a few years ago to learn that every year quite a few US citizens renounce their citizenships, for the sole purpose of lower taxes. I have come to know a few of these ex-US citizens. http://www.iht.com/articles/2006/12/17/news/expat.php US is the only country in the world where its citizens need to pay federal incomes taxes anywhere in the world, regardless of residency. Also, more than a few foreign banks, especially a few that cater to their own particular ethnic groups, have been providing dubious (and most likely illegal) tax avoidance schemes for decades. A lot of it involves using other foreign nationals to act as "proxies" for income generating assets, and in turn paid a % of the tax avoided.
Umm... yeah... you see, I was on the L-Train one day, on my way to uh... what's that place called where people volunteer to feed, bathe & diaper the homeless? The name escapes me, but um, yeah, that's exactly where I was going. So anyways, these two rich guys sitting near me were discussing the Swiss banking laws, and I just happened to overhear their conversation. Incidentally, if you happen to have any questions about hard drugs or how many â¬500 notes can fit into each respective body cavity, I've overheard a ton of those conversations too.
You're a real smart guy, and I respect that. But This is politics. The Germans were after Batliner and Liechtenstein for years, and they made a score. Duess is in prison, and Interpol has a list of his 'depostitors.' And the public is not in the mood for tax cheats. We're on the balls of our ass, and a foreign entity alledgedly is helping our citizens avoid taxes? Doesn't play well.
"The public is not in the mood for tax cheats?" Do you mean the Treasury/IRS isn't? Paulsen is one of the biggest cheats out there by way of the tax waiver he got for joining Bush Co. .gov That exemption was rolled out just before he moved to .gov...go figure!
Hmm. Now for all those clever people who figured out how they could "hide their money" offshore. And razzed the rest of us who paid our taxes. It is not a matter of IF they catch you, but WHEN in an electronic world. If they can staunch the flow of money for Al Qaida, why do they think they will be not caught eventually?