Real estate investor and developer Igor Olenicoff didn’t make any headline-grabbing property acquisitions in 2009.
And his Newport Beach-based Olen Properties Corp. wasn’t in the news for any big loan defaults or foreclosures as some of its peers were last year.
Instead, Olenicoff made a splash on the world stage as a leading figure in a dust-up over secret overseas bank accounts for wealthy Americans.
Swiss banking executives—and Swiss government leaders—certainly know who Olenicoff is, as likely do thousands of this country’s wealthiest people, who now likely are rethinking their use of overseas bank accounts.
Olenicoff, the Russia-born billionaire who founded Olen in 1973, played a pivotal part in a groundbreaking case by the U.S. government against Swiss investment bank UBS AG, and the secretive Swiss banking system, which largely unfolded in 2009.
“I would have preferred not being the pebble that started the avalanche,” Olen said. “However, the resulting benefit to the U.S. is worth what I had to go through.”
Zurich-based UBS agreed in February to pay a $780 million fine and to close its cross-border operation, which was used by nearly 50,000 wealthy Americans, including Olenicoff.
IRS
The U.S. government in turn reached agreements with Switzerland to give the Internal Revenue Service information on several thousand UBS customers who are believed to have used the bank’s secret offshore accounts to evade income taxes.
“Simply seeing the change in the world’s secrecy laws, the reporting requirements by these banking centers, the penalties paid by banks to the U.S. and the turnover of thousands of names of U.S. residents who had accounts there is frankly gratifying,” Olenicoff said.
The government contends that close to $20 billion in U.S. taxpayer wealth is hidden in Swiss bank accounts.
The case arguably was the biggest global finance story of 2009, pitting two usually cooperative governments against each other.
This is “far bigger than I ever thought,” Olenicoff said earlier in 2009, when newspapers and TV stations from around the globe began calling on him.
Olenicoff’s Involvement
None of it likely would have happened without Olenicoff’s involvement, which began in earnest in 2007.
The longtime local developer and real estate owner—whose portfolio includes some 6 million square feet of commercial space and more than 8,000 apartments—had been through several battles with the IRS over the years concerning the extent of this wealth.
In 2007 he pleaded guilty to filing a false tax return and paid $52 million in back taxes and penalties related to overseas accounts he had with UBS.
Olenicoff said his tax case “is what it is.”
But the experience didn’t sit well with Olenicoff. In 2008, he filed a $500 million lawsuit against UBS and others—including his onetime personal banker, former UBS employee Bradley Birkenfeld—claiming they orchestrated a massive fraud that led to his federal tax charges.
His lawsuit accuses UBS and others of racketeering, creating sham corporations and running pump and dump schemes, among other charges.
Put more simply, “they’re crooks,” Olenicoff told the Business Journal in early 2009.
Case Ongoing
The case, filed in Santa Ana’s U.S. District Court, is ongoing. UBS lawyers refute Olenicoff’s allegations.
After entering his plea deal, Olenicoff said he learned it was Birkenfeld who was “dime-ing him out.”
Birkenfeld turned out to be the government’s star witness in its battle against UBS and the Swiss government.
He “laid the foundation for the federal government’s most devastating assault ever on Swiss banking secrecy,” according to a Los Angeles Times report.
In August, Birkenfeld was sentenced to 40 months in prison. Olenicoff was on hand in the Florida courtroom.
“I am gratified that this has come out and that as a result of my case they were able to get Birkenfeld to confess and plead guilty to his wrongdoing and implicate all of UBS,” Olenicoff said. “This has resulted in a total turnover of the bank’s executives and Birkenfeld has been sentenced to prison.”
Birkenfeld’s lawyers portray their client as a whistleblower and are trying to get a lighter sentence. He’s set to start serving his sentence this month.
Market
Olenicoff’s role in the UBS matter comes as the real estate owner is attempting to navigate a tricky market for commercial real estate. He sees it as a good time to invest, assuming properties can be bought for the right price.
“I have some very mixed feelings about the real estate industry,” Olenicoff said. “Olen is well positioned to take advantage and prosper as a result of this very severe downturn. All however is not rosy, as we continue to see many of our tenants simply not being able to survive.”
Olen’s been bidding on some of the county’s better-known distressed properties but to date hasn’t announced any acquisitions.
Last year, Olenicoff opened a labor of love—a restaurant in Irvine next to the company’s high-rise offices at Main Street and Jamboree Road. Andrei’s is named for his late son who died in a 2005 auto accident.
