Getting a better picture of tax cheats

Attn: News desks

     A federal investigation into the use of foreign bank accounts to hide assets and money from U.S. tax collectors might get a boost from an examination of photographs that were taken of the grandstands behind the 17th green at this year’s TPC Players Championship at the Sawgrass course in Ponte Vedra Beach, Fla. Or, by checking the tail numbers on private jet aircraft that landed at nearby Jacksonville airport during the tournament weekend.

     A staff report released last week by the Senate Subcommittee on Permanent Investigations reveals that UBS AG (the Union Bank of Switzerland), the golf tournament’s sponsor, used sporting and cultural events in the U.S. to promote its business of selling private banking services that are tailored to evade U.S. disclosure and tax laws.

     For years, UBS has sent a small army of bankers to rub shoulders with wealthy Americans. At least 20 UBS bankers, even though the bank has branch offices in all 50 states, made over 300 trips from Switzerland to the U.S. between 2003 and 2008. Their customs declaration forms, which all visitors to the U.S. must complete prior to entering the country, described the purpose of their visits as “non-business.” But, an analysis of the dates and ports of entry showed the trips coincided with UBS-sponsored events, suggesting that the trips were, in fact, business related.

     Credentials to enter the grandstands behind the 17th green, and the hospitality tent behind it, became a hot item at this year’s TPC tournament when Sergio Garcia and Paul Gaydos were deadlocked after 72 holes of regulation play and headed to the 17th tee to start their playoff. Garcia won the tournament–and a $1.7 million prize, the winner’s share of a $9.5 million purse which is golf’s largest–when he sank a putt on the 17th green.

     Whatever UBS paid to sponsor the tournament, it was chickenfeed compared to the business which the Swiss bank does with American customers who have parked billions of dollars into accounts that are carefully structured to avoid their disclosure to U.S. taxing authorities.

     The subcommittee report focused on UBS and another tax haven bank, the LGT Bank in Liechtenstein which is co-owned by UBS and Liechtenstein’s royal family.

    U.S. tax authorities have fought a never-ending and never-winning battle against foreign bank secrecy laws for decades. There are 50 tax haven countries, some in places most Americans have never heard of such as Andorra and Vanuatu, but they “are engaged in economic warfare against the United States,” Sen. Carl Levin (D-Mich.), the subcommittee’s chairman, said at a July 17 hearing.

     “Each year,” the staff report said, “the U.S. loses an estimated $100 billion in tax revenues due to offshore tax abuses. Offshore tax havens today hold trillions of dollars in assets provided by citizens of other countries, including the U.S.”

     Today, the U.S. government is on the brink of cashing in on its biggest break ever. Last February, a Liechtenstein bank employee delivered the names of 1,400 LGT Bank customers to U.S. and other tax authorities.

     “The former employee who exposed LGT’s dirty laundry had to go into hiding to avoid arrest by Liechtenstein which has listed him as its Number 1 target for arrest,” Sen. Levin said.

     Levin added: “A $10 million reward has been placed on his head…the subcommittee obtained about 12,000 pages of LGT documents related to U.S. clients from this former LGT employee. The documents and information he provided depict a bank that is a willing partner, and an aider and abettor, to clients trying to evade taxes, dodge creditors, or defy court orders. Internal LGT documents and other information show secrecy was a deeply embedded way of life at the bank.”

     In May, U.S. authorities broke open a second international banking scandal with the arrest of a former UBS banker while he was travelling on business in Florida. The banker, Bradley Birkenfeld, 43, pleaded guilty to defrauding the IRS by helping bank clients structure their accounts to avoid disclosure and taxation. It is believed to be the first time that the U.S. has criminally prosecuted a Swiss banker for helping a U.S. taxpayer evade payment of U.S. taxes.

     The subcommittee report describes the lengths taken by the Swiss and Liechtenstein banks to attract new customers for their tax evasion services.

     LGT Bank, the report said, advises customers to establish “transfer corporations” to disguise asset transfers to and from LGT accounts that might otherwise trigger a disclosure requirement. “It was also not unusual for LGT to assign its U.S. clients code words to confirm their respective identities,” the report said. An LGT memorandum reveals that the bank used the Swiss bank secrecy law as a selling point (by pointing out that Liechtenstein’s law was even more stringent), and that it used the Liechtenstein royal family to help secure new customers.

     Although UBS has branch bank offices in all 50 states, the company used its Swiss banking staff to target U.S. citizens to open bank accounts in Switzerland. The subcommittee said the Swiss bank has approximately 20,000 American accounts.

–EZ