A federal inquiry into multiple allegations of tax evasion could lead to indictments for American account holders at UBS, the Swiss banking giant accused of enabling illegal tax dodges. UBS recently turned over 70 names of American account holders to the Justice Department, which is working with the Internal Revenue Service to determine whether these depositors knowingly violated U.S. tax law.
The investigation into UBS’s potentially wrongful doings began in June with the confession of a former UBS executive who said he had assisted his American clients in dodging millions in taxes. The banker, Bradley Birkenfeld, admitted to hiding 200 million tax-eligible dollars on behalf of his clients between 2001 and 2006. Following Birkenfeld’s confession, the FBI sent agents to Switzerland to obtain evidence to build a case against the bank.
While tax evasion is legal in Switzerland, it is illegal in the United States, and UBS executives are thus liable in the event that they have indeed enabled their American clients to avoid taxation. Prosecutors believe that UBS concealed $20 billion through the use of offshore accounts between 2000 and 2007, resulting in a $300 million evasion, according to The New York Times.
Like most financial firms worldwide, UBS is reeling from the financial crisis, having suffered billions in subprime mortgage-related losses and a credit rating reduction. They have recently received support from the Swiss government, which has purchased a 9 percent stake in the company for $60 billion.