Ex-UBS Banker Sentenced To 40 Months

Published on August 19, 2009

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Ex-UBS Banker Sentenced To 40 Months

WASHINGTON (Dow Jones)–A key government informant in the U.S. tax investigation of UBS AG’s (UBS) cross-border banking business was sentenced Friday to 3 years and 4 months in prison for helping the Swiss bank’s American clients cheat on their taxes.

Former UBS private banker Bradley Birkenfeld, who pleaded guilty in June 2008, was sentenced in a federal court in Ft. Lauderdale, Fla.

Birkenfeld was facing a maximum sentence of five years in prison.

U.S. District Court Judge William J. Zloch gave Birkenfeld a longer prison sentence than that recommended by prosecutors, who had urged a lighter prison term of 2 1/2 years because Birkenfeld provided key information in the government’s unprecedented UBS tax probe.

Birkenfeld’s sentence comes the same week as the announcement that UBS, as part of a landmark settlement with U.S. tax authorities, will reveal the identities of approximately 4,450 of its American clients who are suspected of evading taxes through secret Swiss accounts.

In an earlier settlement to avoid criminal prosecution, UBS admitted in February to helping wealthy Americans shirk their tax obligations and agreed to pay $780 million in penalties and reveal the names of roughly 250 U.S. customers who allegedly set up sham accounts.

Prosecutors said Birkenfeld helped an American billionaire real estate developer evade $7.2 million in taxes by concealing $200 million in assets.

They also said Birkenfeld admitted he and other UBS bankers advised rich American clients of several ways to hide money offshore.

“Today, he is paying the price for that role,” Eileen Mayer, the chief of criminal investigation at the Internal Revenue Service, said in a statement. Justice Department spokesman Charles Miller said Birkenfeld is continuing to cooperate with U.S. authorities and the government may ask for a further reduction of his prison sentence at a later date.

A lawyer for Birkenfeld did not immediately return a call for comment.

Dean Zerbe, a lawyer with the National Whistleblowers Center, blasted the judge’s sentencing decision.

“It stuns me that the reward for a whistleblower who shined the light on extensive tax fraud and corruption is being sent to jail,” Zerbe said in a statement. “Without Mr. Birkenfeld coming forward, the U.S. would not be where it is today in cracking open secret Swiss bank accounts.”

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