Former UBS banker given prison term
By Joanna Chung in New York
Published: August 21 2009 20:19 | Last updated: August 21 2009 20:19
Bradley Birkenfeld, the former UBS private banker turned informant, was on Friday sentenced to a tougher-than-expected 40 months in prison for helping wealthy American clients evade taxes.
The prison term is 10 months longer than was recommended by prosecutors, who had asked William Zloch, the judge in the federal court in Fort Lauderdale, Florida, for leniency on behalf of Mr Birkenfeld, citing his “substantial assistance” to their tax evasion investigation involving UBS, Switzerland’s biggest bank.
His sentencing comes two days after the US and Swiss governments signed a deal under which the Internal Revenue Service, the US tax authority, would receive information about 4,450 UBS clients suspected of tax evasion.
US officials said the sentencing should send a powerful signal. “To those taxpayers who have illegally hidden their income in foreign bank accounts and to those who have illegally helped clients hide income and assets, today’s sentencing serves as notice: come in and completely come clean,” said John DiCicco, acting assistant attorney- general at the justice department’s tax division.
In a statement to the court, Mr Birkenfeld expressed regret for his actions and said he and other bankers had been “pressured and incentivised” by UBS to engage in illicit business practices.
Mr Birkenfeld’s defence lawyer, David Meier, told reporters that the prison sentence was “disappointing.” Yet, his client would continue to work with prosecutors and “intends to continue to fully co-operate with the government,” he said.
“Judges frequently look to the government’s recommendation when sentencing co-operators,” said Daniel Richman, a law professor at Columbia University and a former federal prosecutor.
However, “co-operators’ sentences are always difficult because the judge has to weigh the conduct against the gains from the information given.” It is possible that the sentence could be reduced, at the government’s request, if co-operation continues.
Mr Birkenfeld, who had faced as much as five years in prison, pleaded guilty in June last year to aiding a US billionaire property developer to avoid paying $7.2m in in taxes.
The methods used to avoid tax included advising clients to place cash and valuables in Swiss safety deposit boxes and purchase luxury items using the funds in their Swiss bank account while overseas.
The US is broadening its crackdown on offshore tax evasion. Over 150 cases involving UBS clients are under way in the US, but that number is set to rise.
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