BAKERSFIELD, Calif. (CN) – Customers claim in court that banking powerhouse UBS threw them to the wolves of the IRS as part of a fight between the bank and the government.
“Left in the wake of the UBS-IRS clash were tens of thousands of U.S. customers, many of whom were naïve pawns believing they were acting within the law,” says the federal complaint.
“The Defendants’ plan was so perfectly thought out that it placed its customer in a position where it would be difficult to seek recourse against the bank once the wheels fell of the bus,” added the 69-page complaint. “Having finally been caught and making several full public confessions of their intent to defraud the U.S. and its customers, it is now time for UBS AG to make its customer whole.”
Lead plaintiff Nadia Roberts claims that in 2000, Switzerland-based UBS AG “was faced with new IRS requirements that threatened the very existence of U.S.-based business for the Swiss firm. Its response was to hatch and execute a strategy so perfect that it took eight years for the IRS to catch up to it, only to be punished with a meager slap on the wrist. This meticulously thought-out plan involved dozens of board members, directors, and employees and included the cooperation of several third parties located in the United States, Switzerland and Liechtenstein.”
Roberts claims that “UBS AG acted duplicitously as it reported plaintiffs to the U.S. Treasury as tax violators, in violation of Swiss law. In some instance, UBS AG siphoned money from plaintiffs as ‘compensation’ for providing false information that these parties were not being investigated by the Department of Justice. In other instances, UBS AG simply refrained from informing its customers anything at all, waiting until much too late to provide its required notice. Meanwhile, UBS AG wrongfully took control over the plaintiffs’ respective accounts, arbitrarily freezing assets, and advising them that their investments were properly identified for tax purposes or otherwise placed in IRS-compliant vehicles.
“In truth, UBS AG concealed key information from plaintiffs, intentionally failing to send proper instructions and tax documents for filing purposes, and sending documents in direct contravention to U.S. reporting requirements in accordance with a 2001 Qualified Intermediary Agreement UBS AG had signed with the U.S. government mere months before carrying out its scheme.
“For plaintiffs, this scheme robbed them of millions of dollars in unwarranted service fees, legal fees, and inappropriate investments. It also placed them and their family years of tremendous stress, unnecessary criminal investigations, threats of or actual incarceration, audits by the Internal Revenue Service and the DOJ. Further, the scheme has caused each of them to incur millions of dollars in tax penalties, interest and professional fees while forever tarnishing their good names and business reputations. All for what amounted to be mere thousands of dollars in taxes which none of these plaintiffs had any intention of evading.”
The nine plaintiffs-seven people and two corporations-seek compensatory damages of at least $100,000 apiece, and punitive damages for fraud, breach of fiduciary duty, RICO violations and deceptive trade.
They are represented by William King with the WJK Law Firm, of Tustin.