Banker Pleads Guilty to Helping American Real Estate Developer Evade Income Tax on...

Banker Pleads Guilty to Helping American Real Estate Developer Evade Income
Tax on $200 Million

WASHINGTON, June 19 /PRNewswire-USNewswire/ -- Banker Bradley Birkenfeld
pleaded guilty today to conspiring with an American billionaire real estate
developer, Swiss bankers and his co-defendant, Mario Staggl, to help the
developer evade paying $7.2 million in taxes by assisting in concealing $200
million of assets in Switzerland and Liechtenstein, the Justice Department,
the U.S. Attorney's Office for the Southern District of Florida and the
Internal Revenue Service (IRS) Criminal Investigation Division announced.

Birkenfeld, an American citizen employed by a Swiss bank, pleaded guilty
before U.S. District Court Judge William J. Zloch in Fort Lauderdale, Fla.
During the plea, Birkenfeld admitted that between 2001 and 2006, while he was
employed as a director in the private banking division of a large Swiss
banking firm, he routinely traveled to and had contacts within the United
States to help wealthy Americans conceal their ownership in assets held
offshore and evade the payment of taxes on the income generated from those
assets.

According to statements and documents filed with the court, Birkenfeld's
services to American clients violated a 2001 agreement that the Swiss bank
entered into with the United States. Under the terms of the agreement, the
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. This agreement was a major departure from historical Swiss bank secrecy
laws under which Swiss banks concealed bank information for U.S. clients from
the IRS.

When the bank notified its U.S. clients of the requirements of this agreement,
many of the bank's wealthy U.S. clients refused to be identified, to have
taxes withheld from the income earned on their offshore assets or to sell
their U.S. investments. These accounts were known at the Swiss bank as the
United States undeclared business.

In evidence provided by Birkenfeld to the court, managers and bankers at the
firm, including Birkenfeld, assisted the U.S. clients in concealing their
ownership of the assets held offshore by helping these wealthy customers
create nominee and sham entities. This was done to prevent the risk of losing
the approximately $20 billion of assets under management in the United States
undeclared business, which earned the bank approximately $200 million per year
in revenues. To this end, 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.

Birkenfeld admitted that from at least 2001 through the date of the
indictment, he conspired with Staggl, the American real estate developer,
additional private bankers and managers employed by the Swiss bank, and others
to defraud the United States of approximately $7.2 million in tax revenue by
assisting the real estate developer in evading income tax on the income earned
on $200 million of assets hidden offshore in Switzerland and Liechtenstein.

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.

"I want to thank the attorneys and agents of the Southern District of Florida,
the Department of Justice's Tax Division and the Internal Revenue Service, who
have worked diligently on this matter," said R. Alexander Acosta, U.S.
Attorney for the Southern District of Florida. "It is sad that individuals
with wealth and access to offshore accounts would abuse their advantages and
use schemes to evade tax obligations. We must fully investigate and prosecute
these offshore schemes."

"U.S. taxpayers who honestly report their income and pay their taxes can rest
assured that those who do not, those who secrete and conceal their assets
offshore to avoid paying their fair share, will be investigated and prosecuted
by the IRS and Department of Justice," said John A. Marrella, Deputy Assistant
Attorney General of the Tax Division.

"I believe this case will send a strong signal to anyone hiding money in
offshore bank accounts to avoid paying the taxes they should. The IRS will
pursue people using offshore accounts in this manner as well as financial
advisers and others who orchestrate these tax fraud schemes," said IRS
Commissioner Douglas Shulman.

Besides the IRS agents involved in this case, the prosecution is being handled
by Senior trial attorney Kevin M. Downing and trial attorney Michael P.
Ben'Ary of the Justice Department's Tax Division, as well as Assistant U.S.
Attorneys Jeffrey A. Neiman and Jeffrey Kay of the U.S. Attorneys Office for
the Southern District of Florida.

SOURCE U.S. Department of Justice

U.S. Department of Justice Office of Public Affairs, +1-202-514-2007, TDD,
+1-202-514-1888