Former UBS AG banker Renzo Gadola, who aided Americans in cheating U.S. tax authorities before helping prosecutors snare other bankers, avoided prison when a judge sentenced him to five years of probation.
U.S. District Judge James Lawrence King in Miami rewarded Gadola today, citing the “extraordinary cooperation you’ve rendered to the United States.” He faced from 10 to 16 months in prison.
“You’ve demonstrated remorse of your activities, you have cooperated fully and the results have been extraordinary,” said King. He cited prosecutions of several people, saying “but for the link that was formulated by the cooperation you have given, a great deal of this would not have happened, perhaps none of it.”
Gadola pleaded guilty Dec. 22, admitting he serviced hundreds of secret Swiss bank accounts at UBS from 1995 to 2008 and later as an asset manager. Prosecutors sought leniency for Gadola, who helped build cases against two other bankers in the U.S. crackdown on offshore tax evasion. He will help in future grand jury probes and testify against former customers and colleagues, prosecutors wrote to the judge.
Gadola was willing to give “information and answer questions about his U.S. customers who used secret Swiss bank accounts to evade their income taxes as well as the Swiss bankers and Swiss financial advisers who aided and abetted those U.S. customers,” prosecutors wrote.
Justice Department attorney Mark Daly told the judge today that a Gadola client was charged this week in a tax case still under court seal. Gadola’s cooperation was “extremely helpful,” Daly said.
“He went through client by client, colleague by colleague, laying out their participation in tax evasion schemes,” Daly said. “It has not only given the government a better conception of how it operated from the Swiss banker’s side, but as well as how it operated from the U.S. client’s side.”
Gadola, who was free on bail, returned yesterday from Switzerland to Miami, where he was detained at the airport because his visa had expired, his attorney, Peter Raben, said. Immigration officials threatened not to let him into the country, Raben said.
“I thought it was a bit ironic that he had to try to convince the United States that he be allowed to be sentenced here,” Raben said. As part of his probation, Gadola must return to the U.S. at least once a year, King ordered.
The case has changed Gadola’s life forever, Raben said.
“He was an honored citizen and banker in Switzerland,” Raben said. “That’s gone. He spent 25 years in the banking business. That’s gone. He’s no longer going to be involved in the financial world anywhere.”
Gadola was arrested on Nov. 7, 2010, after U.S. authorities secretly recorded him in a Miami hotel talking to a client about ways to hide money from the Internal Revenue Service.
Within days, he helped record phone calls with U.S. customers who held secret Swiss bank accounts, according to prosecutors.
Gadola is among 21 bankers, lawyers and advisers charged in a U.S. crackdown on offshore tax evasion. He was the first accused of discouraging taxpayers from joining an IRS program to avoid prosecution by voluntarily disclosing their accounts. More than three dozen taxpayers also were charged.
About 30,000 U.S. taxpayers disclosed their accounts to the IRS since 2009, when UBS AG, the biggest Swiss bank, was charged with helping Americans hide assets from the IRS. UBS avoided prosecution by admitting it fostered tax evasion, paying $780 million and handing over data on 250 secret accounts. It later disclosed another 4,450 accounts.
Gadola was the second banker sentenced in the U.S. crackdown. Former UBS banker Bradley Birkenfeld, who revealed the UBS tax scheme to U.S. authorities, was sentenced in August 2009 to 40 months in prison. He asked President Barack Obama to reduce his sentence, saying he was treated unfairly as a whistle-blower.
After his arrest, Gadola gave the U.S. valuable evidence that led to criminal charges against bankers Martin Lack and Christos Bagios, according to prosecutors.
Lack was an executive director of the UBS North America International business until 2003, when he set up an asset management company in Zurich, according to prosecutors.
He was indicted Aug. 2 on a charge of conspiring to help Americans evade taxes by hiding accounts in a smaller Swiss regional bank. Lack, a Swiss resident and independent investment adviser, hasn’t responded in court and is considered a fugitive by prosecutors.
Bagios was charged in January with helping 150 American clients hide as much as $500 million in assets from the IRS when he worked at UBS, where he spent more than 15 years. He later worked for Credit Suisse Group AG. A Greek citizen who lived in Switzerland, he has been free on bail.
The case is U.S. v. Gadola, 10-cr-20878, U.S. District Court, Southern District of Florida (Miami).