Financial Regulatory Forum

UBS case whistleblower seeks prison postponement

By Reuters Staff
December 28, 2009

By Pascal Fletcher

MIAMI, Dec 27 (Reuters) – A key informant in the U.S. tax evasion case against Swiss bank UBS AG has asked a federal court in Florida to postpone the scheduled Jan. 8 start of his prison term so that he can cooperate further with the U.S. government to uncover tax cheats.

Former UBS banker Bradley Birkenfeld, who was sentenced in August to three years and four months in prison for helping a billionaire hide assets from U.S. tax authorities, made the postponement request in a filing this weekend by his lawyer to a U.S. district court in Florida.

The filing also requested a hearing to reconsider the 4O-month sentence imposed on Birkenfeld, a U.S. citizen, by federal Judge William Zloch on Aug. 21.

Birkenfeld’s sentencing in August came two days after U.S. and Swiss authorities signed a pact in which Switzerland agreed to reveal the names of about 4,450 wealthy American clients of UBS to U.S. tax investigators.

Supporters of Birkenfeld and whistleblower advocates had criticized the sentence against as too harsh, saying his testimony was pivotal in helping prosecutors to uncover massive tax cheating by U.S. holders of undisclosed UBS accounts.

The critics said the informant’s tougher-than-expected treatment would undermine future U.S. efforts to expose secretive offshore tax havens used by tax evaders.

“Since the Aug. 21, 2009, sentencing hearing, Mr. Birkenfeld has been ready, willing and able to cooperate further with the Government” in helping bring cases against other UBS clients suspected of concealing assets from U.S. tax authorities, the filing by attorney David Meier said.

“Accordingly … the defendant respectfully submits that the court should extend the date on which Mr. Birkenfeld is to self-report to the Bureau of Prisons (presently scheduled to be January 8, 2010), the document said.

The filing noted that despite the U.S. government’s stated intention, expressed at the original sentencing hearing, to continue to use him in its investigations, it had “neither met with Mr. Birkenfeld, not asked him a single question” in the last four months.

The request said an extension of Birkenfeld’s voluntary surrender was warranted to give him sufficient time to provide additional assistance to the government.

There was no immediate comment from prosecutors.

Government lawyers had said that by coming forward in the summer of 2007 and volunteering insider information to the Justice Department, Birkenfeld had exposed UBS practices that encouraged tax fraud by U.S. citizens.

The Swiss bank earlier in the year settled criminal charges by paying $780 million, and then promising to name thousands of suspected American tax cheats and exit the U.S. tax-shelter business.

Birkenfeld had pleaded guilty to a single fraud conspiracy count in June 2008 for helping a billionaire client hide assets from the Internal Revenue Service.

Justice Department officials, in a claim disputed by Birkenfeld’s supporters, said he received a prison sentence instead of probation because he had initially sought to conceal his personal involvement in tax fraud. (Editing by Leslie Adler) ((pascal.fletcher@thomsonreuters.com))

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