Igor S. Drabkin, Former IRS Attorney
U.S. prosecutors have charged an ex-UBS banker with tax fraud for encouraging his wealthy American clients not to disclose to U.S. tax authorities that they had money in offshore accounts. Renzo Gadola, an investment adviser based in Switzerland, faces charges of conspiracy to defraud the United States, the U.S. attorney’s office in Miami said in a statement on December 15, 2010. Gadola, a Swiss citizen who worked at UBS AG from 1995 to 2008, was arrested on November 8, 2010, two days after meeting a client at a Miami hotel and attempting to persuade the person from disclosing offshore account information to U.S. officials. In court documents filed in the District Court, prosecutors charged that Gadola worked with another unidentified former UBS banker to hide clients’ money from U.S. tax authorities by shifting their undeclared funds from UBS accounts to Switzerland-based Basler Kantonalbank. The unnamed ex-UBS bank executive was described by prosecutors as a former executive director for UBS’s North America International business who left the bank seven years ago taking 150 clients with him to set up an independent investment group in Switzerland.
In the Gadola case, prosecutors said the unidentified Swiss banker had received some $445,000 from a Mississippi client who had kept the money in a safe deposit box before transferring it first to UBS and then to a Basler Kantonalbank account. The client later told the bankers he wanted to declare the money under a voluntary disclosure program launched by the IRS, but was advised against it because his account was too small. During the November meeting, according to prosecutors, Gadola told the client “you have nothing to worry about” because there was “no paper trail” tied to his Basler Kantonalbank account since the money had been withdrawn and placed in a safe in his office.
The case comes after U.S. authorities recently ended a probe into UBS, which was charged by federal prosecutors with helping roughly 17,000 clients with $20 billion of assets hide their accounts from the Internal Revenue Service. As part of a settlement, Zurich-based UBS paid $780 million, handed over names of more than 250 client accounts, agreed to disclose names of additional 4,450 clients, and ended its U.S. cross-border banking business.