A US judge has ruled that the Internal Revenue Service can demand information from UBS after one of its private bank clients pleaded guilty to conspiring to evade US taxes.
US District Judge William H. Pauley III signed an order on 25 January that allows the IRS to serve UBS with a summons as it seeks to analyse Wegelin & Co.'s so-called correspondent account at the US-based offices of Switzerland's largest bank. Wegelin admitted to assisting hundreds of US taxpayers hide more than $1.2bn (€893m / £764m) in assets from the IRS earlier this year and closed its 250-year firm following its guilty plea.
"(The) summons is the latest step in our efforts to identify and prosecute US taxpayers who think they can evade their legal responsibility to pay taxes by secreting their money away in anonymous offshore accounts at Wegelin and other banks and to recover the hundreds of millions of dollars that is owed to the IRS," said US Attorney Preet Bharara in a statement published on the website for the US Attorney's Office for the Southern District of New York. "Wegelin's recent guilty plea for facilitating this conduct - the first such plea by a Swiss financial institution - made it possible for us to take this step and our work continues in earnest."
The summons will allow authorities to determine who held assets at Wegelin and other Swiss institutions using the UBS correspondent account in Stamford, Connecticut.
UBS told IBTimes UK that "the court order refers exclusively to information in the US. It does not refer to UBS client data, and no data from Switzerland is concerned. The UBS cross-border issue was concluded for good in 2010. With the order, the US court demanded information about transactions, which Wegelin executed via its publically known correspondent banking relationship with UBS in the US. A correspondent bank account is a standard service for third-party banks that do not have local representation. UBS will comply with local legal obligations."
Wegelin representatives declined to comment when contacted by IBTimes UK.
Wegelin bankers Michael Berlinka, Urs Frei and Roger Keller were indicted by US prosecutors in January of last year and were accused of holding more than billion dollars in undeclared assets after it poached and set up accounts for at least 70 US taxpayers who had left UBS when it was embroiled in a disupte with US authorities.
As part of its guilty plea, Wegelin agreed to pay $20m in restitution to the IRS as well a civil forfeiture of $15.8m. A further $22m in fines are pending district court approval and $16m in Wegelin funds have been seized from a UBS account in Stamford.
UBS eventually admitted to aiding tax evasion and paid a $780m penalty in 2009 after which the bank handed over data on 250 accounts held by US citizens and later disclosed information on another 4,450.
The latest filing for In the Matter of the Tax Liabilities of John Does, 13-mc-21, U.S. District Court, Southern District of New York (Manhattan).
And the original case filing is U.S. v. Wegelin & Co et al, U.S. District Court, Southern District of New York, No. 12-cr-00002.