By Joseph Ax
NEW YORK, Jan 29 (Reuters) - A federal judge has authorized
the Internal Revenue Service (IRS) to seek records from UBS AG
of U.S. taxpayers suspected of hiding their income in accounts
with Swiss bank Wegelin.
Wegelin, the oldest Swiss private bank, pleaded guilty in
Manhattan federal court on Jan. 3 to charges of helping wealthy
Americans evade taxes through secret accounts, then said it
would close down as a result.
U.S. District Judge William Pauley in Manhattan granted the
IRS's request to issue a "John Doe" summons - which seeks
information about possible tax fraud committed by individuals
whose identities are not known - on UBS for the names of
taxpayers who may have hidden income at Wegelin and other Swiss
A spokesman for UBS in Zurich said the bank would follow the
court's ruling, which demands U.S. records, and not Swiss ones.
No UBS client data is affected, he said.
UBS ended its own U.S. probe in 2009 by admitting it
provided tax-evasion services to rich Americans, entering into a
deferred-prosecution agreement, turning over 4,450 client names
and paying a $780 million fine.
However, UBS was subsequently ensnared as a so-called
correspondent bank for Wegelin when the government indicted that
bank nearly a year ago. The government alleged Wegelin used a
U.S. correspondent account at UBS to handle funds for American
clients, a standard industry practice for foreign banks.
By covertly transferring money from undeclared Swiss
accounts, Wegelin allowed clients to avoid paying income taxes
in the United States, the government alleged.
Wegelin last February became the first foreign bank in
recent memory to be indicted by U.S. authorities, opening a new
chapter in a broad probe into Swiss bank secrecy.
As part of its guilty plea, the bank agreed to pay $57.8
million in fines after admitting to helping U.S. clients evade
taxes on at least $1.2 billion for more than a decade.
It announced on the same day that it would shut its doors
permanently after more than 270 years in operation.
Since UBS's probe, dozens of Swiss bankers and their clients
have been indicted in a crackdown on tax evasion.
(Additional reporting by Katharina Bart)
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