The U.S. charged a former UBS AG banker with helping American clients hide assets from the Internal Revenue Service by shifting them to a smaller Swiss bank.
Renzo Gadola, 44, was accused yesterday of conspiring with a Swiss banker to encourage U.S. clients who hadn’t told the IRS about their UBS accounts to open undeclared accounts at Basler Kantonalbank. Gadola and the banker told clients not to join a partial amnesty program that led 18,000 Americans to disclose offshore accounts to the IRS, prosecutors said.
Gadola and the unidentified banker told U.S. clients “not to disclose their undeclared accounts at Basler Kantonalbank and other banks to the United States government, including the IRS,” according to a charge filed in federal court in Florida.
UBS, the largest Swiss bank, admitted last year that it helped thousands of Americans evade taxes. The bank, which avoided prosecution by paying $780 million, also gave secret account data on thousands of Americans to the IRS. U.S. prosecutors have charged two dozen UBS clients, as well as three ex-UBS bankers and two other advisers.
Gadola, who worked at UBS from 1995 to 2008, is the first person charged with trying to discourage taxpayers from entering the IRS voluntary disclosure program. Basler Kantonalbank, based in Basel, has not previously been linked to the U.S. crackdown. The bank has signed an agreement requiring it to withhold taxes for the IRS on accounts beneficially owned by U.S. taxpayers.
Michael Buess, a spokesman for Basler Kantonalbank, declined to comment, saying the bank doesn’t comment on legal issues involving third parties.
Gadola, a Swiss citizen who waived indictment, appeared yesterday in federal court in Miami and pleaded not guilty. He faces as long as five years in prison if convicted. His attorney Peter Raben declined to comment.
IRS Commissioner Douglas Shulman said Dec. 9 that the agency is “seriously considering” a new voluntary disclosure program after drawing nearly 15,000 taxpayers from March 2009 to October 2009 and another 3,000 since then.
Taxpayers had to name their foreign banks, bankers and advisers, and contact information of those who handled their money.
Shulman said the IRS is “scouring the vast quantity of data” that “has already proved invaluable in supplementing and corroborating prior leads, as well as developing new leads, involving numerous banks, advisers and promoters from around the world, including Asia and the Middle East.”
Gadola began working in Switzerland in 2009 as an independent investment adviser and teamed with the banker, who once serviced “hundreds of undeclared accounts at UBS” before saying he was taking 150 clients with him when he left the bank in 2003, according to the charge. Gadola did business under the name of RG Investment Partner AG.
A U.S. client from northern Mississippi told the banker in September 2009 that he was joining the voluntary disclosure program and would tell the IRS about his accounts at both UBS and the smaller bank, according to the charge.
The banker told the client that if he did reveal the UBS account, “he should not disclose his at Basler Kantonalbank, as disclosure would bring trouble for them both.”
Gadola, who met the client Nov. 6 in a Miami hotel, said the banker told him the chances of the U.S. learning of the account were “practically zero percent,” according to the charge.
“He was very adamant about you not going forward and not going through with the voluntary disclosure,” Gadola told the client, according to the government.
At the meeting, Gadola used his mobile phone to call the banker, who told the client there was no “paper trail” of his Basler Kantonalbank account, according to prosecutors.
Gadola was arrested on Nov. 8, two days after the hotel meeting, according to the charge.
The client in the case and his siblings inherited an undeclared UBS account in 1999 from their deceased mother, the government said. The client and his siblings met in Atlanta in 2000 with the banker, who said they would have to go to Zurich to assume ownership of the account.
The client went to Zurich in 2001, and on “a number of occasions” until 2006, to discuss the account, according to the charge. In 2006, the banker went to Mississippi, where the client said he had a “substantial cash hoard” in a safe deposit box.
In January 2007, the client met the banker in a New Orleans hotel, where he gave him half of the cash, or $200,000, the government said. Three months later, the client went back to a New Orleans hotel and gave the banker $245,000 in cash and got a receipt that said “Bank: Basler Kantonalbank ZH.”
In September 2007, the banker opened an account at Basler Kantonalbank for the client, who signed documents in the spring of 2009 to close it. The banker told the client he put the funds in his business account, and he would wire him the money. The banker still hasn’t sent the money, the government said.
In the Nov. 6 meeting, Gadola told the client that the cash from his account is “in a safe in our office.”
Martin Press, a tax attorney not involved in the case, said his firm has done “dozens” of voluntary disclosures.
“The government has been very interested in the movement of accounts from UBS to other banks outside the U.S.,” said Press, of the Gunster Law Firm in Fort Lauderdale, Florida. “We have had a number of clients who came into the voluntary disclosure program after they were advised by UBS operatives to move their accounts to Swiss banks with no U.S. presence.”
The case is U.S. v. Gadola, 10-mj-20878, U.S. District Court, Southern District of Florida (Miami).
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