When former UBS AG banker Bradley Birkenfeld was sentenced to 40 months in jail earlier this month for helping wealthy U.S. clients avoid taxes, local real estate owner Igor Olenicoff wasn’t just watching. He was in the Florida courtroom.
“It was truly a masterful process to watch from the sidelines,” Olenicoff said. “As we can see in the news on a daily basis, it is far from over.”
Olenicoff, president and owner of Newport Beach-based Olen Properties Corp., has more than a passing interest in the U.S. government’s battle with UBS and Switzerland over tax shelters.
Nearly a year ago, Olenicoff filed a $500 million lawsuit against Zurich-based UBS and others, claiming they orchestrated a massive fraud that led to federal tax charges against him in 2007.
His charges were updated last week in an amended complaint filed in federal court in Santa Ana.
Olenicoff alleges the bank’s actions and misrepresentations have “forever (tarnished) his good name and that of his business.”
UBS refutes Olenicoff’s allegations.
Birkenfeld—who once counted Olenicoff as his largest client—was charged last year with conspiring to defraud the U.S. government by creating fake corporations and trusts for clients.
The government contends that close to $20 billion in U.S. taxpayer wealth is hidden overseas in Swiss bank accounts.
After cooperating with the government’s probe into UBS and other Swiss banks, Birkenfeld was sentenced on Aug. 21.
The biggest name Birkenfeld gave to authorities was Olenicoff’s.
That led to the longtime developer and real estate owner pleading guilty in 2007 to filing a false tax return and paying $52 million in back taxes and penalties.
Olenicoff said last week he didn’t feel vindictive toward Birkenfeld.
“It would suffice to say that our judicial system worked,” he said.
Birkenfeld’s sentence came a few days after UBS agreed to turn over details on 4,450 accounts to the Internal Revenue Service. In February, the bank said it would pay $780 million to settle federal investigations into its activities.
Olenicoff—who’s had other run-ins with federal officials over tax matters in the past—said he’s been impressed by the willingness of the government to take on UBS over its use of secretive offshore accounts.
“This should be the moment when credit needs to be given to the Department of Justice and specifically the prosecutors who took on the enormous task of litigating against UBS,” he said.
When “someone litigates against UBS, you really are litigating against the entire government of Switzerland,” Olenicoff said.
Despite resistance from the Swiss government and foot dragging by UBS, the prosecutors were able to force “a complete change in the way UBS and others do cross-border business in the U.S.,” he said.
Olenicoff’s own lawsuit appears far from settled. The case moved ahead this month with Olenicoff’s amended complaint, following attempts by some of the parties—there are some 40 named in all—to get the suit dismissed.
Irvine-based Horizon Law Group LLP is handling the case for Olenicoff and Olen Properties.
The updated complaint includes allegations that are based on what Birkenfeld confessed to just prior to his sentencing hearing, according to Olenicoff.
