US accuses 7 UBS customers of conspiring to cheat on taxes through hidden overseas accounts

US govt: 7 UBS customers hid Swiss-based assets

NEW YORK — Seven customers of banking giant UBS have been charged with conspiracy and criminal tax offenses in a scheme to conceal more than $100 million in Swiss-based assets and any profits from the Internal Revenue Service, prosecutors announced Thursday.

The charges were contained in five indictments in U.S. District Court in Manhattan. Two of the defendants pleaded guilty Thursday to filing false federal income tax returns and agreed to pay millions of dollars in penalties. Two others pleaded not guilty. The rest have yet to appear in court.

Those charged included Kenneth Heller, a disbarred Manhattan lawyer who prosecutors say evaded more than $2.3 million in federal income taxes on $26.4 million he had stashed in a Swiss account. Heller, arrested in Hoboken, N.J., was to appear in court on Friday.

Heller’s lawyer, Jeffrey Harris, noted the nature of the tax case and said “it’s kind of unusual for the government to proceed this way except that they like to make a big splash on April 15.” Heller was disbarred in 2004 for, among other things, screaming at, threatening and disparaging judges, adversaries and experts.

Prosecutors said four defendants removed their assets from UBS shortly after it was revealed in May 2008 that a criminal probe of UBS might cause disclosure of their unreported accounts to the Justice Department.

The government said those defendants moved tens of millions of dollars collectively to smaller, lower-profile Swiss and Liechtenstein banks because the banks did not have offices in the United States.

Two defendants returned their money to the United States either in person or by having a family member pick up hundreds of thousands of dollars in cash or travelers checks from UBS’s offices in Zurich, Switzerland, before returning to the U.S., authorities said.

The prosecution stemmed from a probe that determined that from at least 2000 to 2008, UBS helped U.S. taxpayers conceal their Swiss-based assets and the income earned from those assets from the IRS.

The government said UBS provided the service through its “U.S. cross-border banking business,” which employed about 60 UBS employees based in Switzerland.

Authorities say independent Swiss attorneys and financial advisers for the U.S. taxpayers helped them conceal their Swiss-based assets by listing sham offshore companies as the account holders rather than the U.S. taxpayers who controlled the accounts.

UBS in February 2009 entered a deferred prosecution agreement with the U.S. government, admitting that it helped U.S. taxpayers hide money from the IRS. Prosecutors said that the deal included an agreement by UBS to provide the identities of U.S. customers it had helped.

UBS spokeswoman Karina Byrne said the financial institution had no comment regarding the defendants.

U.S. Attorney Preet Bharara said the prosecution shows that the “rich are not different.”

He added: “Multimillionaires with secret Swiss bank accounts have to pay their taxes just like everyone else.”