Former UBS banker charged in tax evasion case

The former UBS executive, 43-year-old Bradley Birkenfeld, and 43-year-old Mario Staggl of Liechtenstein are charged with a single count of conspiring to defraud the United States by creating fictitious trusts, bogus corporations and other false entities to hide some $200 million in assets. They each face up to five years in prison if convicted.

Birkenfeld, a U.S. citizen, was employed by UBS from 2001 to 2006 and worked as a director in the company's private banking division.

UBS said earlier this month in a regulatory filing that the Justice Department is investigating whether it helped clients evade U.S. taxes between 2000 and 2007.

A senior manager was briefly detained in the United States in connection with the probe, UBS said May 7.

In an e-mailed statement Tuesday, the bank said it is "continuing to cooperate" with the Justice Department but declined to comment on the charges. The federal indictment was unsealed in the U.S. District Court for the Southern District of Florida, based in Ft. Lauderdale.

Real estate developer Igor Olenicoff of Newport Beach, Calif., pleaded guilty last year to filing a false tax return and paid the Internal Revenue Service more than $52 million in back taxes, penalties and interest.

Olenicoff, whose fortune is estimated at $1.6 billion by Forbes magazine, was sentenced to two years' probation and is not charged in the new indictment. His company has large commercial and residential real estate holdings in California, South Florida and elsewhere.

Olenicoff's attorney in California, Edward M. Robbins Jr., said his client had no comment.

Birkenfeld made his initial appearance before a federal magistrate judge Tuesday in Fort Lauderdale, where he pleaded not guilty. It was not immediately clear if he had hired an attorney.

Staggl, owner of New Haven Trust Co. Ltd in Leichtenstein, is still in that country and is not under arrest, prosecutors said.

According to the indictment, UBS offered to hide the accounts of wealthy Americans, meaning their assets would not be reported to U.S. authorities as required under a 2001 agreement.

"The cornerstone to the defendants' pitch was that Swiss and Leichtenstein bank secrecy was impenetrable," Miami U.S. Attorney R. Alexander Acosta said in a statement.

The Swiss bank told the IRS it was honoring its disclosure agreement with the U.S. But in fact, Birkenfeld and Staggl were helping Olenicoff -identified as "I.O." in the indictment -prepare false documents, advising him to destroy all foreign bank records and assisted in preparing false tax returns, the indictment claims.

The advice included setting up entities in the Bahamas, British Virgin Islands, Panama, Denmark and elsewhere to hide assets, prosecutors claim. Olenicoff was told to transfer ownership of his 147-foot yacht from the U.S. to Gilbraltar.

UBS said earlier this month that the Securities and Exchange Commission is examining whether any of its bankers failed to receive U.S. regulatory approval to act as broker dealers or investment advisers.

An SEC spokesman declined to comment.

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AP Business Writer Christopher S. Rugaber in Washington contributed to this report.