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Ex-UBS banker pleads guilty in 17-year U.S. tax scheme

Feb 27, 2014 @ 9:25 am

fraud, overseas accounts, UBS AG, tax evasion
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A Swiss financial adviser became the fourth ex-UBS AG banker to plead guilty to aiding wealthy Americans evade taxes, admitting that for 17 years he helped U.S. clients maintain secret overseas accounts.

Martin Lack appeared today in federal court in Fort Lauderdale, Fla., where he was indicted in 2011. He turned himself in to U.S. authorities on Oct. 14, was free on $750,000 bond and was allowed to return to Switzerland.

Mr. Lack, 51, is one of a handful of offshore enablers of tax evasion to admit guilt since a U.S. crackdown began. About three dozen foreign bankers, lawyers and advisers have been charged.

Other former UBS bankers who pleaded guilty were Christos Bagios, Renzo Gadola and Bradley Birkenfeld. After serving a prison sentence, Mr. Birkenfeld received an Internal Revenue Service whistle-blower award of $104 million.

More than 70 taxpayers also have been charged by the Justice Department, which came under criticism by a U.S. Senate committee yesterday for its enforcement of the crackdown.

Fourteen banks are under criminal investigation, including Credit Suisse Group AG, Switzerland's second-largest bank, the subject of a Senate hearing Thursday. More than 43,000 U.S. taxpayers avoided prosecution since 2009 by voluntarily disclosing their offshore accounts to the Internal Revenue Service and paying back taxes, fines and penalties.

The Securities and Exchange Commission is investigating whether Credit Suisse improperly shifted money in its private banking unit to obscure a drop in asset growth amid the U.S. probe, said a person familiar with the matter.

U.S. District Judge William Dimitrouleas accepted the plea agreement and said it included a recommendation that Mr. Lack be sentenced to five years' probation. The agreement also recommended that Mr. Lack receive no fine or be forced to make restitution, the judge said.

“As a condition of probation, the lawyers are going to recommend that I require you to cooperate in any investigation they might be interested in,” Mr. Dimitrouleas said, noting Mr. Lack had already begun to cooperate with federal investigators.

“I'm very sorry for what I did and I apologize,” Mr. Lack told the judge.

Peter Raben, his attorney, declined to comment after the hearing, as did Justice Department attorney Mark Daly. Sentencing was set for May 7.

Mr. Lack's indictment charged him with conspiring from 1993 to 2010 to help clients hide assets from the IRS through accounts at UBS, the largest Swiss bank, and a Swiss cantonal bank. That bank, not named in the indictment, is Basler Kantonalbank, according to a person familiar with the matter.

Mr. Lack worked at UBS until founding his own management firm, Lack & Partner Asset Management AG, in Zurich in 2002, according to prosecutors. Mr. Lack “would and did solicit U.S. customers to open undeclared accounts at UBS and Cantonal Bank because Swiss bank secrecy would assist U.S. customers to conceal their ownership of the accounts,” according to the indictment.

He asked Renzo Gadola to meet his U.S. clients because “Lack feared that he would be arrested by U.S. authorities,” according to the indictment.

Mr. Gadola pleaded guilty in December 2010, admitting he serviced hundreds of secret Swiss accounts at UBS from 1995 to 2008 and later as an asset manager. He helped U.S. prosecutors and was given five years of probation by a judge who cited his “extraordinary cooperation.”

Mr. Gadola and Mr. Lack were accused of discouraging taxpayers from joining the IRS program to avoid prosecution by voluntarily disclosing their accounts.

(Bloomberg News)

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