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L.A. billionaire evading taxes overseas?

July 17, 2008 12:00:00 AM PDT
Congress is going after offshore tax havens, on the trail of some of the wealthiest people in America; including one of the richest men in Los Angeles.The IRS said offshore banking is the wealthy version of hiding money in a mattress. It cheats the United States Treasury out of $100 billion each year.

On Capitol Hill Thursday, the investigation pointed to a Swiss bank and Liechtenstein's LGT Group.

The LGT Bank has a reputation as the perfect place for rich Americans to hide their money from the IRS. The reigning Prince Hans Adams owns the bank and enforces the country's bank secrecy laws.

"Liechtenstein is regarded as one of the most secretive places in the world," said John Christensen, Tax Justice Network International Secretariat.

But secrecy was uncloaked by a disgruntled computer technician at the prince's bank. The technician downloaded the names of account holders, including hundreds of Americans, and sold them to tax authorities for millions of dollars. A Senate committee has opened hearings on the so-called secrecy and deception.

"Tax havens are engaged in economic warfare against the United States and against honest, hardworking American taxpayers," said Senator Carl Levin, (D) Michigan.

The computer tech testified in silhouette, on videotape, about what happened when he spoke up at the bank.

"The answer was always the same: 'None of your business. Just stick to your designated job,'" said Henrich Kieber, former LGT bank employee.

Kieber has gone into hiding. Liechtenstein has issued a warrant for his arrest. He will get a cut of the recovered tax money.

The Senate panel wants to hear from Peter Lowy, one of the wealthiest men in Los Angeles. He and his family control the giant Westfield Shopping Center fortune. The Lowys' Washington lawyer, Robert S. Bennett, issued a written statement saying the family has done nothing improper. The statement goes on to say: "We have not yet had the chance to thoroughly review the report, but any process that results in a report being issued ... before the subjects of the report have any meaningful opportunity to respond is grossly unfair, deeply flawed and unreliable."

The giant Swiss bank UBS is also under scrutiny. According to the IRS, the bank may have helped Americans hide $20 billion.

"UBS genuinely regrets any compliance failures that may have occurred," said Mark Branson, CFO, UBS Global Wealth Management.

UBS agreed to stop offshore banking for U.S. clients through foreign branches.

American taxpayers are required to report foreign financial accounts that exceed $10,000. Failure to report can result in a penalty of up to 50 percent of the amount.

 

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