Boston banker Bradley Birkenfeld thinks he’s a hero for unveiling the secret world of alleged tax evasion at UBS.
In a huge report done by Global Post, Birkenfeld explains how he exposed how UBS protected alleged tax evader’s information:
At vaunted UBS, the only seam of vulnerability resided in nothing more advanced than the kind of old-school card catalogue you might find in a local library.
At the start of business each morning, private bankers like Birkenfeld, then a director in the wealth management division of UBS, would check in at combination vaults to pull their “racks” — wooden trays of 4×5 paper index cards that are the Achilles heel of Swiss secrecy. Printed on each confidential client card — in plain, unencrypted typeset — is the client’s name, account and safety deposit box numbers, the fees paid, and home addresses and unique passwords — secret challenge phrases known only to the banker and the client.
Two “challenge phrases,” for example, are “Rose” and “Eagle.”
The entire – very long – report seems incredible. We haven’t had a chance to read the full 5-part piece yet, but wanted to bring your attention to it because it’s a big deal for tax evaders and UBS.
The information Bradley Birkenfeld eventually provided — first to the DOJ, then to investigators from the IRS, SEC, Department of Treasury and U.S. Senate — would set off cascading criminal and civil investigations into UBS. Within two years, it would bring down UBS’ entire U.S. cross-border banking division and compel intensive negotiations between the highest levels of the American and Swiss governments.
The bank would admit to intentionally subverting U.S. tax laws and defrauding the U.S. government by sending dozens of unregistered bankers, Birkenfeld among them, to the United States on thousands of illegal trips to facilitate tax evasion schemes for wealthy U.S.-based clients — a fraud hiding as much as $20 billion in secret undeclared accounts and earning UBS up to $200 million a year in ill-begotten profits.
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