Offshore tax evasion

Battle over UBS secret accounts is before US court

Associated Press

MIAMI_U.S. tax authorities should quickly gain access to the secret accounts of 52,000 wealthy Americans at Swiss bank UBS AG to stop continuing tax evasion, U.S. lawyers told a federal judge.

“The United States does not believe justice is served by delay,” said Justice Department tax attorney Stuart Gibson in court papers. “Delay serves the cause of those U.S. taxpayers who continue to hide behind the actions” of the bank.

U.S. District Judge Alan S. Gold scheduled a hearing Monday to begin sorting through the government lawsuit. UBS claims that turning over the account names _ possibly in a matter of weeks _ would violate Swiss privacy law and jeopardize the bank’s license to stay in business. UBS wants Gold to slow down the process.

“Such violations would expose these (<span the UBS lawyers said in a court filing. “There is simply no reason to have, nor equity in having, such an expedited process here.”

Tax officials last week asked Gold to enforce so-called “John Doe summonses” seeking information about the 52,000 accounts that hold an estimated $14.8 billion in assets. The lawsuit was accompanied by dozens of internal UBS e-mails, memos and other material that U.S. tax agency the Internal Revenue Service contends shows a systematic, long-term scheme by bank employees to help wealthy Americans evade U.S. income taxes.

The lawsuit followed by one day an agreement in which the Justice Department would defer criminal prosecution of UBS in exchange for the identities of up to 300 U.S. customers and payment by the bank of $780 million. That deal did not cover the much broader list of 52,000 names now sought by the tax authority, but both sides knew the U.S. would ask for them.

UBS “knew this day was coming, and it knew this day would come sooner, rather than later,” Gibson said.

Another Miami federal judge in July 2008 approved the summonses seeking the account information, but UBS never complied. The new lawsuit asks Gold to enforce that earlier ruling, first by issuing an order requiring UBS to “show cause” why it has not done so.

Federal prosecutors in Miami previously charged a senior UBS executive, Raoul Weill, with conspiring to defraud the U.S. by helping American customers conceal some $20 billion from the IRS. Weill is a fugitive living in Switzerland, but his New York-based attorney has said he is innocent.

A former UBS banker, Bradley Birkenfeld, pleaded guilty last year in Fort Lauderdale to similar fraud conspiracy charges and has been cooperating extensively with U.S. investigators. Birkenfeld has not yet been sentenced.

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