S. Hrg. 110–614 

TAX HAVEN BANKS AND U.S. TAX COMPLIANCE 

HEARINGS 

BEFORE THE

PERMANENT SUBCOMMITTEE ON INVESTIGATIONS 

OF THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

OF THE

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

JULY 17 AND 25, 2008 

Available via http://www.gpoaccess.gov/congress/index.html 

Printed for the use of the 

Committee on Homeland Security and Governmental Affairs 

( 

TAX HAVEN BANKS AND U.S. TAX COMPLIANCE 

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

44–127 PDF 2008

S. Hrg. 110–614 

TAX HAVEN BANKS AND U.S. TAX COMPLIANCE 

HEARING 

BEFORE THE

PERMANENT SUBCOMMITTEE ON INVESTIGATIONS 

OF THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

OF THE

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

JULY 17 AND 25, 2008 

Available via http://www.gpoaccess.gov/congress/index.html 

Printed for the use of the 

Committee on Homeland Security and Governmental Affairs 

( 

(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

JOSEPH I. LIEBERMAN, Connecticut, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

THOMAS R. CARPER, Delaware 

MARK PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

BARACK OBAMA, Illinois 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

SUSAN M. COLLINS, Maine 

TED STEVENS, Alaska 

GEORGE V. VOINOVICH, Ohio 

NORM COLEMAN, Minnesota 

TOM COBURN, Oklahoma 

PETE V. DOMENICI, New Mexico 

JOHN WARNER, Virginia 

JOHN E. SUNUNU, New Hampshire 

MICHAEL L. ALEXANDER, Staff Director 

BRANDON L. MILHORN, Minority Staff Director and Chief Counsel 

TRINA DRIESSNACK TYRER, Chief Clerk 

PERMANENT SUBCOMMITTEE ON INVESTIGATIONS 

CARL LEVIN, Michigan, Chairman 

THOMAS R. CARPER, Delaware 

MARK L. PRYOR, Arkansas 

BARACK OBAMA, Illinois 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

NORM COLEMAN, Minnesota 

TOM COBURN, Oklahoma 

PETE V. DOMENICI, New Mexico 

JOHN WARNER, Virginia 

JOHN E. SUNUNU, New Hampshire 

ELISE J. BEAN, Staff Director and Chief Counsel 

ROBERT L. ROACH, Counsel and Chief Investigator 

ZACHARY I. SCHRAM, Counsel 

MARK L. GREENBLATT, Staff Director and Chief Counsel to the Minority 

MICHAEL P. FLOWERS, Counsel to the Minority 

ADAM PULLANO, Staff Assistant to the Minority 

MARY D. ROBERTSON, Chief Clerk 

(III) 

C O N T E N T S 

Opening statements: Page 

Senator Levin .................................................................................................... 1, 45 

Senator Coleman .............................................................................................. 7, 50 

WITNESSES 

THURSDAY, JULY 17, 2008 

Hon. Douglas Shulman, Commissioner, Internal Revenue Service, U.S. Department of the Treasury .................................................................................... 11 

Hon. Kevin J. O’Connor, Associate Attorney General, U.S. Department of 

Justice ................................................................................................................... 14 

Shannon Marsh, Fort Lauderdale, Florida, accompanied by Sharon Kegerrels, 

Esq. ........................................................................................................................ 31

William Wu, Forest Hills, New York, accompanied by Henry Klingeman, 

Esq. ........................................................................................................................ 32

Martin Liechti, Head, UBS Wealth Management Americas, Zurich, Switzerland, accompanied by David M. Zornow, Esq. ................................................... 35 

Mark Branson, Chief Financial Officer, UBS Global Wealth Management 

and Business Banking, Member, UBS Group Managing Board, Zurich, 

Switzerland ........................................................................................................... 36 

FRIDAY, JULY 25, 2008 

Steven Greenfield, New York, New York .............................................................. 51 

Peter S. Lowy, Beverly Hills, California; accompanied by Robert Bennett, 

Esq. ........................................................................................................................ 52

ALPHABETICAL LIST OF WITNESSES

Branson, Mark: 

Testimony .......................................................................................................... 36 

Greenfield, Steven: 

Testimony .......................................................................................................... 51 

Liechti, Martin: 

Testimony .......................................................................................................... 35 

Lowy, Peter S.: 

Testimony .......................................................................................................... 52 

Marsh, Shannon: 

Testimony .......................................................................................................... 31 

O’Connor, Hon. Kevin J.: 

Testimony .......................................................................................................... 14 

Prepared statement .......................................................................................... 65 

Shulman, Hon. Douglas: 

Testimony .......................................................................................................... 11 

Prepared statement .......................................................................................... 55 

Wu, William: 

Testimony .......................................................................................................... 32 

APPENDIX 

Staff Report titled ‘‘Tax Haven Banks and U.S. Tax Compliance’’ ...................... 73 

Page

IV 

EXHIBITS 

1. Marsh Foundations, chart prepared by the U.S. Senate Permanent Subcommittee on Investigations .......................................................................... 209 

2. Wu Foundation, chart prepared by the U.S. Senate Permanent Subcommittee on Investigations .......................................................................... 210 

3. Greenfield Foundation, chart prepared by the U.S. Senate Permanent 

Subcommittee on Investigations .................................................................... 211 

4. Lowy Foundation, chart prepared by the U.S. Senate Permanent Subcommittee on Investigations .......................................................................... 212 

5. a. Statement of former LGT Treuhand employee, formerly known as 

Henrich Kieber ........................................................................................... 213 

b. Liechtenstein warrant for the arrest of Henrich Kieber ......................... 222 

DOCUMENTS RELATING TO MARSH ACCOUNTS: 

6. Letter of wishes, Lincol Foundation, October 15, 1985 ................................ 223 

7. LGT receipt for US $3,320,700 cash from Lincol Fondation, dated October 15, 1985 ..................................................................................................... 224 

8. Handwritten letter signed by Shannon N. Marsh to Mr. Alvate, to give 

Kerry M. Marsh permission to review all documents and receipts pertaining to Lincol Foundation and Chateau Foundation, dated May 23, 

1992 .................................................................................................................. 226 

9. Instruction signed by Shannon Neal Marsh, empowering Marsh family 

members to act as principals for Lincol Foundation, dated November 

17, 1993 ........................................................................................................... 227 

10. Correspondence from James A. Marsh, Jr. to Peter Meier, LGT, dated 

October 4, 1994, re: Lincol and Chateau ...................................................... 228 

11. Letter of wishes, Lincol Foundation and Foundation Chateau, October 

11, 2000 ........................................................................................................... 229 

12. LGT Memorandum to File about Lincol and Chateau Foundations, dated 

February 7, 2002 ............................................................................................. 231 

13. Deed of Signature accepting appointment as Protector of the Chateau 

Foundation, signed by Kerry Michael Marsh, Shannon Neal Marsh, 

and James Albright Marsh, Jr. and Deed of Appointment of Successors, 

signed by James Albright Marsh, Jr. ............................................................ 233 

14. Resolution, The Foundation Board of Foundation CHATEAU, indicating 

the inventory of assets and liabilities at 31 December 2000 showing 

a total of USD 10’015’623,50, dated September 12, 2003 ............................ 237 

15. Letter from James A. Marsh, Jr. to LGT, dated November 10, 2004, 

granting LGT all administrational and management activities for Foundation Chateau ................................................................................................ 238 

16. Correspondence from Shannon Neal Marsh to Members of the Foundation Council of Chateau Foundation, dated November 4, 2004, re: appointment of members of the Foundation Council of Chateau Foundation ................................................................................................................... 239 

17. Excerpt from Estate of James A. Marsh, 2006 Income Tax Returns .......... 240 

18. Three letters from Baker & McKenzie LLP (Marsh Family attorney) 

to the Internal Revenue Service, dated May 12, 2008, forwarding amended returns for foreign income and foreign bank and financial accounts 

for calendar years 2002–2006 ........................................................................ 244 

DOCUMENTS RELATING TO WU ACCOUNTS: 

19. LGT report on JCMA Foundation, dated June 27, 2002 ............................. 255 

20. Declaration of Trust between Cobyrne Limited and JCMA Foundation, 

dated October 1, 1996 ..................................................................................... 257 

21. New York City property records, recording sale of Forest Hills, NY 

home of William S. Wu to Tai Lung Worldwide, Ltd., dated January 

21, 1997 ........................................................................................................... 259 

22. LGT Memorandum by Kim Choy regarding JCMA Foundation, dated 

June 26, 2002 .................................................................................................. 265 

23. Documents regarding withdrawal of $100,000 by JCMA Foundation/ 

William Wu from LGT through HSBC Hong Kong and Shanghai Banking Corp. Hong Kong, dated June 27,2002 ................................................... 266 

24. Excerpt from Resolution, The Foundation Board of JCMA Foundation, 

indicating statement of assets as per 31 December 2001 in the total 

amount of USD 4,283,473.49, dated February 7, 2002 ................................ 270 

Page

V 

25. Excerpt from Resolution, The Foundation Board of the JCMA Foundation, indicating inventory of assets and liabilities at 31 December 2003 

showing a total of USD 2,172,145.97, dated March 10, 2004 ..................... 272 

26. Excerpt from Resolution of the Foundation Board of JCMA Foundation, 

showing assets as per 31 December 2004 amount to USD 1,202,636.25, 

dated February 13, 2006 ................................................................................ 274 

27. Excerpt from Resolution of the Foundation Board of JCMA Foundation, 

showing assets as per 31 December 2005 amount to USD 1,188,957.64, 

dated March 30, 2006 ..................................................................................... 279 

28. Excerpt from Resolution of the Foundation Board of Desert Rose Foundation, showing assets as per 31 December 2006 amount to USD 

422,249.10, dated April 18, 2007 ................................................................... 284 

29. LGT report on Veline Foundation after a March 27, 2000, client visit ...... 288 

30. Statements of assets as per 31.12.2000, Veline Foundation, dated February 5, 2001 ................................................................................................... 290 

31. Bearer Share Certificate, Manta Company Limited, dated September 

3, 1997 ............................................................................................................. 291 

32. Handwritten organizational chart showing Veline Foundation ownership 

of corporations and property, undated .......................................................... 292 

DOCUMENTS RELATED TO LOWY ACCOUNTS: 

33. LGT Memorandum for the Record, dated November 26, 1996, memorializing a November 21, 1996, Meeting in Sydney regarding Westfields, 

Adelphi, Crofton between LGT and Frank Lowy, David Lowy, David 

Gronski, and Joshua Gelbard ........................................................................ 293 

34. LGT Memorandum for the Record, dated November 27, 1996, regarding 

New Establishment Westfields/Lowy ............................................................ 297 

35. LGT Note for File, dated December 17, 1996, regarding telephone conversation with Frank Lowy and Joshua Gelbard regarding Westfields, 

Adelphi, Crofton .............................................................................................. 299 

36. LGT Memorandum for the Record, dated January 23, 1997, regarding 

January 20, 1997 meeting in Los Angeles between LGT and Frank 

Lowy, David Lowy, and Peter Lowy regarding Westfield/Lowy Family .... 303 

37. LGT Memorandum for the Record, dated March 4, 1997, regarding 

March 3, 1997, phone call with Peter Widmer regarding March 12, 

1997 meeting in London with F.L. and J. Gelbert, the definitive structure 

as well as the asset transfer is to be discussed ............................................. 307 

38. Correspondence from J.H. Gelbard to LGT, dated March 12, 1997, regarding formation of a Foundation by the name Luperla Foundation ....... 309 

39. LGT Memorandum for the file, dated March 13, 1997, regarding March 

12, 1997, meeting in London between LGT and Frank Lowy and Josua 

Gelbard ............................................................................................................ 311 

40. LGT Memorandum for the Record, dated March 16, 1997, regarding 

March 12, 1997, meeting in London with F.L. regarding Luperla Foundation ............................................................................................................... 315 

41. Regulations, Luperla Foundation, Vaduz, dated April 30, 1997 ................. 319 

42. LGT Memorandum for the Record, dated May 2, 1997, regarding April 

30, 1997, meeting in the Hotel Savoy, Zurich between LGT and David 

Lowy and J.H. Gelbard .................................................................................. 322 

43. LGT Memorandum for the File, dated May 14, 1997, regarding Luperla 

Foundation, Vaduz ......................................................................................... 326 

44. LGT Memorandum for the File, dated October 23, 1997, regarding 

Luperla Foundation/Sewell Service Ltd. B.V.I. ........................................... 328 

45. LGT Memorandum for the File, dated January 29, 1998, regarding 

January 28, 1998, meeting in Bendern with Peter Widmer regarding 

Luperla Foundation, Vaduz (‘‘Luperla’’) ....................................................... 330 

46. LGT Memorandum for the File, dated June 26, 2001, regarding Luperla 

Foundation ...................................................................................................... 332 

47. LGT Memorandum for the File, dated July 16, 2001, regarding Luperla 

Foundation, Vaduz ......................................................................................... 334 

48. LGT Memorandum for the File, dated December 17, 2001, regarding 

Luperla Foundation, Vaduz ........................................................................... 342 

49. LGT Memorandum for the File, dated December 18, 2001, regarding 

Luperla Foundation, Vaduz ........................................................................... 348 

50. LGT Memorandum for the File, dated December 20, 2001, regarding 

Luperla Foundation, Vaduz ........................................................................... 352 

51. Documents regarding Beverly Park Corporation ......................................... 358 

Page

VI 

52. IRS Information Document Requests (IDR) regarding Beverly Park Corporation ............................................................................................................ 362 

53. State of Delaware, Division of Corporations, Entity Details for Beverly 

Park Corp. ....................................................................................................... 365 

DOCUMENTS RELATING TO GREENFIELD ACCOUNTS: 

54. LGT Memorandum for the Record, dated March 27, 2001, memorializing 

a March 23, 2001 meeting regarding Maverick Foundation between LGT 

and Harvey and Steven David Greenfield .................................................... 367 

55. LGT Summary of Maverick Foundation as of December 31, 2001, dated 

January 1, 2002 .............................................................................................. 372 

56. LGT report on Maverick Foundation, undated ............................................ 373 

57. LGT report on TSF Company Limited, undated .......................................... 375 

58. LGT report on Chiu Fu (Far East) Limited, undated .................................. 377 

59. LGT Background Information/Profile for Maverick Foundation, dated 

October 12, 2001 ............................................................................................. 379 

60. LGT Background Information/Profile for TSF Company Ltd., BVI, dated 

December 20, 2001 .......................................................................................... 380 

DOCUMENTS RELATING TO GONZALEZ ACCOUNTS: 

61. Foundation Tragique flow chart, undated .................................................... 381 

62. LGT report for Tragunda Foundation, dated December 3, 2001 ................ 382 

63. LGT Background Information/Profile for Auto and Motoren [Motors] 

Corp., dated October 3, 2001 ......................................................................... 384 

64. LGT report on Asmeral Investment Anstalt, undated ................................ 386 

65. LGT Memorandum for the File, dated September 11, 2001, regarding 

Foundation Tragique ...................................................................................... 388 

66. Stiftung flow chart, undated .......................................................................... 392 

67. LGT Background Information/Profile for Foundation Tragique, Vaduz, 

dated December 18, 2001 ............................................................................... 393 

68. LGT Background Information/Profile for FIWA AG, Vaduz, dated December 10, 2001 .............................................................................................. 395 

DOCUMENTS RELATING TO CHONG ACCOUNTS: 

69. LGT Background Information/Profile on Yue Shing Tong Foundation ...... 397 

70. Documents related to Apex Assets Limited .................................................. 398 

71. Communication between Chong and Chalet [Silvan Colanti at LGT], 

February-March 2008, regarding disclosure of LGT accounts .................... 407 

DOCUMENTS RELATING TO MISKIN ACCOUNTS: 

72. Declarations of Michael Miskin, dated 2003 ................................................ 413 

73. Declarations and court pleadings of Stephanie Miskin, dated 2003 .......... 417 

74. LGT Memorandum for the Record, dated June 30, 1998, regarding New 

Establishment Michel Misten ......................................................................... 426 

75. Michael Miskin Letter of Wishes with respect to the assets of Micronesia 

Foundation, dated July 28, 2000 ................................................................... 430 

76. LGT report on Micronesia Foundation ......................................................... 432 

77. LGT/Michael Miskin receipt for wire transfer of GBP 3,650,314.00, dated 

October 21, 1998 ............................................................................................. 436 

78. Fax from Thomas Lungkofler/LGT to Michael Miskin, dated February 

27, 2002, regarding tax situation in the US-area ......................................... 437 

ADDITIONAL DOCUMENTS RELATING TO LGT: 

79. Documents related to Sera Financial Corporation ....................................... 438 

80. Documents related to Jaffra Development Inc. ............................................ 448 

81. Documents related to Sewell ......................................................................... 454 

82. Excerpt from presentation related to LGT and the Qualified Intermediary (QI) Program .................................................................................... 460 

83. Documents related to LRAB Foundation ...................................................... 475 

DOCUMENTS RELATED TO UBS: 

84. Wealth Management And Business Banking, Client Advisor’s Guidelines 

For Implementation And Management Of Discretionary Asset Management Relationship With U.S. Clients (2002) ................................................. 477 

85. Cross-Border Banking Activities into the United States (version November 2004) .......................................................................................................... 480 

Page

VII 

86. Restrictions on Cross-Border Banking and Financial Services Activities, 

Country Paper USA (Effective Date June 1st, 2007), prepared by UBS ..... 483 

87. Excerpt of KeyClients in NAM, Business Case 2003–2005, prepared by 

UBS .................................................................................................................. 491 

88. Correspondence of UBS to Clients, dated November 4, 2002, We are 

writing to reassure you that your fear is unjustified and wish to outline 

only some of the reason why the protection of client data can not possibly 

be compromised . . . UBS’s entire compliance with its QI obligations 

does not create the risk that his/her identity be shared with U.S. authorities .................................................................................................................... 502 

89. Martin Liechti (Head of UBS Wealth Management Americas) email, 

January 2007, regarding net new money goal and Year of the Pig ........... 503 

90. Referral Campaign BU Americas, June 2003 (Swiss watch award) ........... 504 

91. BS North America Report, Overview Figures NAM, prepared by UBS ...... 506 

92. Case Studies Cross-Border Workshop NAM, prepared by UBS .................. 518 

93. UBS Memorandum, dated November 15, 2007, re: Changes in business 

model for U.S. private clients ......................................................................... 520 

94. Talking Points For Informing U.S. Private Clients With Securities Holdings About The Realignment Of Our Business Model Plus Q&A ................ 522 

DOCUMENTS RELATED TO OLENICOFF: 

95. Statement of Facts, United States of America vs. Bradley Birkenfeld, 

dated 2008 ....................................................................................................... 526 

96. Plea Agreement For Defendant Igor M. Olenicoff, dated 2007 .................... 533 

97. Emails between Birkenfeld/Olenicoff, dated July 2001, re: Meeting in 

California ........................................................................................................ 550 

98. Correspondence of Igor Olenicoff, dated October 2001, re: Guardian 

Guarantee Co. Ltd .......................................................................................... 551 

99. Email between Staggl/Olenicoff, re: Structure ............................................. 553 

100. UBS documents related to opening of account for Guardian Guarantee 

Company, Limited .......................................................................................... 554 

101. Emails related to Liechtenstein trust and a Danish corporation ............... 557 

102. Fax from Olenicoff to Birkenfeld, dated December 2001, re: Structure ..... 561 

103. Emails dated April 2002, re: transferring U.S. securities to a Liechtenstein account .............................................................................................. 562 

OTHER DOCUMENTS: 

104. Tax Haven Bank Secrecy Tricks, chart prepared by the U. S. Senate 

Permanent Subcommittee on Investigations ................................................ 564 

105. Liechtenstein Secrecy Laws, chart prepared by the U. S. Senate Permanent Subcommittee on Investigations ........................................................... 565 

106. Letter from Baker & McKenzie LLP (Marsh Family attorney) to the 

Permanent Subcommittee on Investigations, dated July 15, 2008, with 

clarification ...................................................................................................... 566 

107. Statement for the Record of the Australian Taxation Office ...................... 568 

ADDITIONAL DOCUMENTS RELATED TO LOWY ACCOUNTS: 

108. LGT report on Luperla Foundation ............................................................... 587 

109. LGT Background Information/Profile for Luperla Foundation, dated December 7, 2002 ................................................................................................ 591 

110. LGT Statement of Account for Luperla Foundation, dated December 

29, 2001 ........................................................................................................... 599 

111. LGT Memorandum for the Record, dated April 10, 2002, regarding retroactive dissolution of Luperla Foundation ..................................................... 600 

112. Letter to Peter Lowy from Leon C. Janks, dated December 13, 2001, 

enclosing documents related to Beverly Park Corporation ......................... 601 

113. a. Contract For The Purchase And Sale of Real Estate, sale by West 

Park Avenue Corporation to Beverly Park Corporation, March 1997 ... 607 

b. Beverly Park Corporation Guest Log, Beverly Hills House and New 

York Condo, July 1999-May 2000 ............................................................. 611 

ADDITIONAL MATERIALS: 

114. Hidden Money Trail, chart prepared by the U.S. Senate Permanent 

Subcommittee on Investigations .................................................................... 629 

Page

VIII 

115. a. Letter from O’Melveny & Myers LLP on behalf of their client, UBS 

AG, to the Permanent Subcommittee on Investigations, dated August 

5, 2008, regarding Subcommittee Staff Report on Tax Haven Banks 

and U.S. Tax Compliance .......................................................................... 630 

115. b. Memorandum of the Permanent Subcommittee on Investigations staff 

regarding August 5, 2008, letter from O’Melveny & Myers LLP .......... 635 

116. Tax Haven Liechtenstein, Transcript of the Frontal 21 Documentary, 

March 25, 2008 on ZDF Network in Germany ............................................. 640 

117. Statement for the record submitted on behalf of the Government of 

the Principality of Liechtenstein ................................................................... 653 

118. Organizational changes NAM, powerpoint presentation by Michel 

Guignard, of UBS private banking in Switzerland, May 10, 2005 ............. 655 

119. Transcript of Liechtenstein court proceeding involving Mario Staggl, 

April 28, 2005 .................................................................................................. 665 

120. Affidavit of William Wu clarifying his testimony at the Permanent Subcommittee on Investigations’ July 17th hearing .......................................... 681 

121. Correspondence between Caplin & Drysdale on behalf of Mr. Steven 

Greenfield and the Permanent Subcommittee on Investigations regarding the testimony of Mr. Greenfield at the Subcommittee’s hearing ......... 683 

122. Correspondence between Skadden, Arps, Slate, Meagher & Flom LLP 

on behalf of Peter S. Lowy and the Permanent Subcommittee on Investigations regarding the testimony of Mr. Lowy at the Subcommittee’s 

hearing ............................................................................................................. 699 

123. Documents relating to Footnotes found in the Staff Report, Tax Haven 

Banks and U.S. Tax Compliance, prepared by the Minority and Majority 

Staff of the Permanent Subcommittee on Investigations in conjunction 

with the Subcommittee hearings held July 17 and 25, 2008: 

[Note: Footnotes not listed are explanative, reference Subcommittee interviews for which records are not available to the public, or reference a 

widely available public document.] 

[*] Retained in the files of the Subcommittee. 

Footnote No. 16, See Hearing Exhibit No. 89 (above) ........................................... 503 

Footnote No. 100, See Hearing Exhibit No. 116 (above) ....................................... 640 

Footnote No. 109, See Attachment .......................................................................... 710 

Footnote No. 110, See Hearing Exhibit No. 105 (above) and Attachment. ................................................................................................................ 565, 722 

Footnote No. 112, See Attachments (2)............................................................. 725, 729 

Footnote No. 118, See Attachment .......................................................................... 743 

Footnote No. 119, See Attachments (3)..................................................... 754, 764, 772 

Footnote No. 120 and 121, See Hearing Exhibit No. 18 (above) .......................... 244 

Footnote No. 122, See Hearing Exhibit No. 17 (above) and Attachments 

(2)............................................................................................................. 240, 779, 802 

Footnote No. 123 and 124, See Attachments (10)........... 824, 832, 841, 845, 849, 854, 

862, 871, 875, 879 

Footnote No. 129, See Hearing Exhibit No. 11 (above) ......................................... 229 

Footnote No. 130 and 134, See Footnote No. 123 (above)...... 824, 832, 841, 845, 849, 

854, 862, 871, 875, 879 

Footnote No. 135, See Attachment .......................................................................... 884 

Footnote No. 136, See Footnote No. 135 (above) and Attachment .................. 884, 886 

Footnote No. 137, See Hearing Exhibit No. 7 (above) ........................................... 224 

Footnote No. 138, See Hearing Exhibit No. 6 (above) ........................................... 223 

Footnote No. 139, See Attachment .......................................................................... 888 

Footnote No. 140, See Attachment .......................................................................... 890 

Footnote No. 141, See Hearing Exhibit No. 12 (above) ......................................... 231 

Footnote No. 142, See Hearing Exhibit No. 11 (above) ......................................... 229 

Footnote No. 143, See Hearing Exhibit No. 14 (above) and Attachments 

(3)..................................................................................................... 237, 892, 893, 894 

Footnote No. 144, See Hearing Exhibit No. 13 (above) ......................................... 233 

Footnote No. 145, See Hearing Exhibit No. 10 and Footnote No. 136 

(above) ..................................................................................................... 228, 884, 886 

Footnote No. 146, See Hearing Exhibit No. 12 (above) ......................................... 231 

Footnote No. 148, See Hearing Exhibit No. 18 (above) and Attachments 

(2)............................................................................................................. 244, 895, 898 

Footnote No. 149, See Hearing Exhibit No. 17 (above) and Attachments 

(6)............................................................................ 240, 901, 902, 903, 904, 905, 906 

Footnote No. 150, See Hearing Exhibit No. 6 (above) ........................................... 223 

Page

IX 

Footnote No. 151, See Hearing Exhibit No. 8 (above) ........................................... 226 

Footnote No. 152, See Hearing Exhibit No. 9 (above) ........................................... 227 

Footnote No. 153, See Hearing Exhibit No. 12 (above) ......................................... 231 

Footnote No. 154, See Footnote No. 123 (above) .... 824, 832, 841, 845, 849, 854, 862, 

871, 875, 879 

Footnote No. 155, See Hearing Exhibit No. 13 (above) and Attachment................................................................................................................. 233, 907 

Footnote No. 156, See Hearing Exhibit No. 18 (above) ......................................... 244 

Footnote No. 158, See Attachments (3)..................................................... 909, 917, 922 

Footnote No. 159, See Hearing Exhibit No. 19 and 20 (above) ...................... 255, 257 

Footnote No. 160, See Hearing Exhibit No. 19 (above) ......................................... 255 

Footnote No. 161, See Attachment .......................................................................... 925 

Footnote No. 162, See Hearing Exhibit No. 21 (above) ......................................... 259 

Footnote No. 163, See Hearing Exhibit No. 19 (above) ......................................... 255 

Footnote No. 164, See Hearing Exhibit No. 24 (above) ......................................... 270 

Footnote No. 165, See Attachment .......................................................................... 926 

Footnote No. 166, See Attachments (6) ............................ 932, 934, 936, 938, 941, 955 

Footnote No. 167, See Attachments (2)............................................................. 971, 978 

Footnote No. 168–170, See Hearing Exhibit No. 23 (above) ................................. 266 

Footnote No. 171, See Hearing Exhibit No. 22 (above) ......................................... 265 

Footnote No. 172, See Attachment .......................................................................... 985 

Footnote No. 173, See Footnote No. 167 (above) .............................................. 971, 978 

Footnote No. 174–177, See Footnote No. 166 (above) ..... 932, 934, 936, 938, 941, 955 

Footnote No. 178, See Hearing Exhibit Nos. 27 and 28 (above)..................... 279, 284 

Footnote No. 179, See Hearing Exhibit No. 29 (above) and Attachment................................................................................................................. 288, 996 

Footnote No. 180, See Hearing Exhibit No. 30 (above) ......................................... 290 

Footnote No. 181, See Hearing Exhibit No. 31 (above) ......................................... 291 

Footnote No. 183, See Hearing Exhibit No. 29 (above) ......................................... 288 

Footnote No. 184, See Hearing Exhibit No. 32 (above) ......................................... 292 

Footnote No. 185, See Attachments (3)................................................... 997, 998, 1002 

Footnote No. 187, See Hearing Exhibit Nos. 33, 34, 39, 42 and 46 

(above) ..................................................................................... 293, 297, 311, 322, 332 

Footnote No. 188, See Hearing Exhibit No. 45 (above) ......................................... 330 

Footnote No. 189, See Hearing Exhibit No. 33 (above) ......................................... 293 

Footnote No. 191, See Hearing Exhibit No. 36 (above) ......................................... 303 

Footnote No. 192, See Hearing Exhibit Nos. 35 and 36 (above)..................... 299, 303 

Footnote No. 193, See Hearing Exhibit No. 39 (above) ......................................... 311 

Footnote No. 194, See Hearing Exhibit Nos. 40 and 45 (above)..................... 315, 330 

Footnote No. 195, See Hearing Exhibit Nos. 36, 39 and 42 (above)....... 303, 311, 322 

Footnote No. 196, See Hearing Exhibit No. 35 (above) ......................................... 299 

Footnote No. 197, See Hearing Exhibit No. 36 (above) ......................................... 303 

Footnote No. 198, See Hearing Exhibit No. 33 (above) ......................................... 293 

Footnote No. 199, See Hearing Exhibit No. 38 (above) ......................................... 309 

Footnote No. 200, See Hearing Exhibit No. 41 (above) ......................................... 319 

Footnote No. 201, See Hearing Exhibit No. 40 (above) and Attachment............................................................................................................... 315, 1005 

Footnote No. 202, See Hearing Exhibit No. 36 (above) ......................................... 303 

Footnote No. 204, See Hearing Exhibit Nos. 33, 35, 39, 45 and 46 

(above) ..................................................................................... 293, 299, 311, 330, 332 

Footnote No. 205, See Hearing Exhibit Nos. 38 and 40 (above)..................... 309, 315 

Footnote No. 206, See Hearing Exhibit Nos. 42 and 44 (above)..................... 322, 328 

Footnote No. 207, See Hearing Exhibit No. 38 (above) ......................................... 309 

Footnote No. 208, See Hearing Exhibit No. 41 (above) ......................................... 319 

Footnote No. 209 and 210, See Hearing Exhibit No. 43 (above) .......................... 326 

Footnote No. 211, See Hearing Exhibit Nos. 36, 46 and 47 (above)....... 303, 332, 334 

Footnote No. 212, See Hearing Exhibit No. 41 (above) ......................................... 319 

Footnote No. 213, See Hearing Exhibit No. 51 (above) ......................................... 358 

Footnote No. 214, See Hearing Exhibit Nos. 51, 113a and 113b 

(above) ..................................................................................................... 358, 607, 611 

Footnote No. 215 and 216, See Hearing Exhibit No. 46 (above) .......................... 332 

Footnote No. 217 and 218, See Hearing Exhibit No. 47 (above) .......................... 334 

Footnote No. 219 and 220, See Hearing Exhibit No. 48 (above) .......................... 342 

Footnote No. 221, See Hearing Exhibit Nos. 48–50 (above).................... 342, 348, 352 

Footnote No. 222 and 223, See Hearing Exhibit No. 48 (above) .......................... 342 

Footnote No. 224, See Hearing Exhibit No. 50 (above) ......................................... 352 

Footnote No. 225, See Attachment .......................................................................... 1009 

Page

X 

Footnote No. 226, See Hearing Exhibit No. 52 (above) and Attachment............................................................................................................... 362, 1015 

Footnote No. 227, See Hearing Exhibit No. 52 (above) and Attachment............................................................................................................... 362, 1019 

Footnote No. 229, See Hearing Exhibit Nos. 54 and 55 (above)..................... 367, 372 

Footnote No. 230, See Hearing Exhibit Nos. 56–58 (above).................... 373, 375, 377 

Footnote No. 231, See Hearing Exhibit No. 56 (above) ......................................... 373 

Footnote No. 232, See Hearing Exhibit No. 59 (above) ......................................... 379 

Footnote No. 233 and 234, See Hearing Exhibit No. 56 (above) .......................... 373 

Footnote No. 235, See Attachments (2)......................................................... 1023, 1025 

Footnote No. 236–241, See Hearing Exhibit No. 54 (above) ................................. 367 

Footnote No. 243, See Attachment .......................................................................... 1028 

Footnote No. 248, See Hearing Exhibit No. 61 (above) ......................................... 381 

Footnote No. 249, See Hearing Exhibit Nos. 61 and 68 (above)..................... 381, 395 

Footnote No. 261, See Hearing Exhibit No. 67 (above) ......................................... 393 

Footnote No. 264 and 265, See Hearing Exhibit No. 65 (above) .......................... 388 

Footnote No. 266, See Hearing Exhibit Nos. 61 and 65 (above)..................... 381, 388 

Footnote No. 267–269, See Hearing Exhibit No. 65 (above) ................................. 388 

Footnote No. 270, See Hearing Exhibit No. 64 (above) ......................................... 386 

Footnote No. 271, See Hearing Exhibit No. 63 (above) ......................................... 384 

Footnote No. 272, See Attachment .......................................................................... 1029 

Footnote No. 273, See Footnote No. 243 (above) .................................................... 1028 

Footnote No. 275, See Hearing Exhibit No. 69 (above) and Attachments 

(2)......................................................................................................... 397, 1030, 1032 

Footnote No. 276, See Hearing Exhibit No. 69 (above) and Attachment............................................................................................................... 397, 1034 

Footnote No. 277, See Footnote No. 276 (above) and Attachment .............. 1034, 1042 

Footnote No. 278, See Attachments (4)..................................... 1048, 1049, 1050, 1051 

Footnote No. 279, See Attachment .......................................................................... 1052 

Footnote No. 280, See Attachment .......................................................................... 1053 

Footnote No. 283, See Hearing Exhibit No. 70 (above) ......................................... 398 

Footnote No. 284, See Footnote No. 280 (above) .................................................... 1053 

Footnote No. 285, See Attachments (5)............................ 1059, 1060, 1061,1062, 1063 

Footnote No. 286–293, See Hearing Exhibit No. 70 (above) ................................. 398 

Footnote No. 294–297, See Hearing Exhibit No. 71 (above) ................................. 407 

Footnote No. 299, See Hearing Exhibit No. 74 (above) ......................................... 426 

Footnote No. 300, See Hearing Exhibit No. 72 (above) ......................................... 413 

Footnote No. 301 and 302, See Hearing Exhibit No. 73 (above) .......................... 417 

Footnote No. 303 and 304, See Hearing Exhibit No. 72 (above) .......................... 413 

Footnote No. 305, SEALED EXHIBIT and Hearing Exhibit No. 73 (above) ...... 417 

Footnote No. 306, See Hearing Exhibit No. 74 (above) ......................................... 426 

Footnote No. 307, See Hearing Exhibit Nos. 75 and 76 (above)..................... 430, 432 

Footnote No. 308, See Hearing Exhibit No. 76 (above) ......................................... 432 

Footnote No. 309, See Hearing Exhibit No. 74 (above) ......................................... 426 

Footnote No. 310, See Hearing Exhibit No. 76 (above) ......................................... 432 

Footnote No. 312, See Attachment .......................................................................... 1064 

Footnote No. 313, See Hearing Exhibit No. 72 (above) ......................................... 413 

Footnote No. 315, See Attachment .......................................................................... 1066 

Footnote No. 317, See Attachment .......................................................................... 1069 

Footnote No. 319, See Hearing Exhibit No. 74 (above) ......................................... 426 

Footnote No. 321, See Attachment .......................................................................... 1072 

Footnote No. 323, See Attachments (4)..................................... 1074, 1075, 1076, 1079 

Footnote No. 324, See Hearing Exhibit No. 77 (above) ......................................... 436 

Footnote No. 325, See Hearing Exhibit No. 75 (above) ......................................... 430 

Footnote No. 326, See Attachment .......................................................................... 1085 

Footnote No. 327, See Attachment .......................................................................... 1086 

Footnote No. 329, See Hearing Exhibit No. 78 (above) ......................................... 437 

Footnote No. 330, See Hearing Exhibit No. 73 (above) ......................................... 417 

Footnote No. 331, See Footnote No. 317 (above) .................................................... 1069 

Footnote No. 333, See Footnote No. 321 (above) .................................................... 1072 

Footnote No. 334, See Hearing Exhibit No. 73 and Footnote No. 317 

(above)............................................................................................................ 417, 1069 

Footnote No. 335, See Hearing Exhibit No. 82 (above) and See Attachments 

(2)......................................................................................................... 460, 1087, 1091 

Footnote No. 336–337, See Attachment .................................................................. 1093 

Footnote No. 339–343, See Hearing Exhibit No. 79 (above) ................................. 438 

Footnote No. 344, See Hearing Exhibit No. 80 (above) ......................................... 448 

Page

XI 

Footnote No. 345, See Hearing Exhibit No. 81 (above) ......................................... 454 

Footnote No. 346, See Hearing Exhibit Nos. 44 and 108 (above)................... 328, 587 

Footnote No. 347 and 348, See Hearing Exhibit No. 80 (above) .......................... 448 

Footnote No. 349, See Hearing Exhibit No. 83 (above) ......................................... 475 

Footnote No. 365, See Attachment .......................................................................... 1145 

Footnote No. 367, SEALED EXHIBIT ................................................................... * 

Footnote No. 370, See Hearing Exhibit No. 87 (above) ......................................... 491 

Footnote No. 372, See Hearing Exhibit No. 89 (above) ......................................... 503 

Footnote No. 373, See Hearing Exhibit No. 91 (above) ......................................... 506 

Footnote No. 375–380, See Hearing Exhibit No. 89 (above) ................................. 503 

Footnote No. 381, See Attachment .......................................................................... 1148 

Footnote No. 382, See Footnote No. 367 (above) SEALED EXHIBIT .................. * 

Footnote No. 384, See Hearing Exhibit No. 88 (above) ......................................... 502 

Footnote No. 390, See Hearing Exhibit No. 85 (above) ......................................... 480 

Footnote No. 392, See Hearing Exhibit No. 84 (above) and Attachment............................................................................................................... 477, 1170 

Footnote No. 393, See Hearing Exhibit No. 85 (above) ......................................... 480 

Footnote No. 398, See Footnote No. 367 (above) SEALED EXHIBIT .................. * 

Footnote No. 400, See Hearing Exhibit No. 85 (above) ......................................... 480 

Footnote No. 402, See Attachment .......................................................................... 1172 

Footnote No. 404, See Footnote No. 367 (above) SEALED EXHIBIT .................. * 

Footnote No. 405, See Hearing Exhibit No. 87 (above) ......................................... 491 

Footnote No. 409, See Footnote No. 367 (above) SEALED EXHIBIT .................. * 

Footnote No. 410, See Hearing Exhibit No. 93 (above) ......................................... 520 

Footnote No. 413, See Footnote No. 367 (above) SEALED EXHIBIT .................. * 

Footnote No. 415, See Hearing Exhibit No. 91 (above) and Attachment............................................................................................................... 506, 1173 

Footnote No. 416, See Hearing Exhibit No. 90 (above) ......................................... 504 

Footnote No. 417, See Hearing Exhibit No. 89 (above) ......................................... 503 

Footnote No. 418, See Hearing Exhibit No. 87 (above) ......................................... 491 

Footnote No. 420–432, See Footnote No. 367 (above) SEALED EXHIBIT .......... * 

Footnote No. 433, See Attachment .......................................................................... 1174 

Footnote No. 434, See Hearing Exhibit No. 85 (above) ......................................... 480 

Footnote No. 435, See Footnote No. 367 (above) SEALED EXHIBIT and Footnote No. 433 (above) ............................................................................................. 1174 

Footnote No. 436, See Footnote No. 367 (above) SEALED EXHIBIT .................. * 

Footnote No. 437, See Hearing Exhibit No. 92 (above) ......................................... 518 

Footnote No. 438 and 439, See Footnote No. 367 (above) SEALED EXHIBIT ... * 

Footnote No. 443, See Hearing Exhibit Nos. 84 and 85 (above)..................... 477, 480 

Footnote No. 444–450, See Footnote No. 367 (above) SEALED EXHIBIT .......... * 

Footnote No. 451, See Hearing Exhibit No. 86 (above) ......................................... 483 

Footnote No. 455, See Hearing Exhibit No. 93 (above) ......................................... 520 

Footnote No. 458, See Attachment .......................................................................... 1176 

Footnote No. 459, See Hearing Exhibit No. 94 (above) ......................................... 522 

Footnote No. 464, See Hearing Exhibit No. 96 (above) ......................................... 533 

Footnote No. 465, See Hearing Exhibit No. 97 (above) ......................................... 550 

Footnote No. 468, See Footnote No. 367 (above) SEALED EXHIBIT .................. * 

Footnote No. 469, See Hearing Exhibit No. 97 (above) ......................................... 550 

Footnote No. 471, See Attachments (2)......................................................... 1178, 1179 

Footnote No. 472, See Hearing Exhibit No. 98 (above) ......................................... 551 

Footnote No. 473–475, See Hearing Exhibit No. 100 (above) ............................... 554 

Footnote No. 476, See Hearing Exhibit No. 97 (above) ......................................... 550 

Footnote No. 477, See Hearing Exhibit No. 99 (above) ......................................... 553 

Footnote No. 478, See Hearing Exhibit No. 96 (above) and Attachment............................................................................................................... 533, 1180 

Footnote No. 480, See Attachment .......................................................................... 1181 

Footnote No. 481, See Attachment .......................................................................... 1182 

Footnote No. 483, See Attachments (2)......................................................... 1183, 1184 

Footnote No. 484, See Hearing Exhibit No. 102 (above) ....................................... 561 

Footnote No. 485, See Attachment .......................................................................... 1185 

Footnote No. 486, See Attachment .......................................................................... 1186 

Footnote No. 487, See Attachment .......................................................................... 1187 

Footnote No. 488, See Attachment .......................................................................... 1188 

Footnote No. 489, See Hearing Exhibit No. 103 (above) ....................................... 562 

Footnote No. 490, See Hearing Exhibit No. 96 (above) ......................................... 533 

Footnote No. 491, See Attachments (2)......................................................... 1189, 1190 

Footnote No. 492, See Attachments (2)......................................................... 1191, 1192 

Page

XII 

Footnote No. 493, See Attachments (2)......................................................... 1196, 1197 

Footnote No. 495, See Footnote No. 367 (above) SEALED EXHIBIT .................. * 

124. Correspondence between the Permanent Subcommittee on Investigations 

and Frank P. Lowy ......................................................................................... 1198 

125. Correspondence between the Permanent Subcommittee on Investigations 

and Joshua H. Gelbard .................................................................................. 1201 

[*] Retained in the files of the Subcommittee. 

(1) 

TAX HAVEN BANKS 

AND U.S. TAX COMPLIANCE 

THURSDAY, JULY 17, 2008 

U.S. SENATE, PERMANENT SUBCOMMITTEE ON INVESTIGATIONS, OF THE COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, Washington, DC. 

The Subcommittee met, pursuant to notice, at 9:34 a.m., in Room 

SD–106, Dirksen Senate Office Building, Hon. Carl Levin, Chairman of the Subcommittee, presiding. 

Present: Senators Levin and Coleman. 

Also Present: Senator Kerry. 

Staff Present: Elise J. Bean, Staff Director/Chief Counsel; Mary 

D. Robertson, Chief Clerk; Robert L. Roach, Counsel and Chief Investigator; Ross Kirschner, Counsel; Laura Stuber, Counsel; Zack 

Schram, Counsel; Gina Reinhardt, Congressional Fellow; Timothy 

Everett, Intern; Jeffrey Rezmovic, Law Clerk; Lauren Sarkesian, 

Intern; Spencer Walters, Law Clerk; Mark L. Greenblatt, Staff Director and Chief Counsel to the Minority; Michael P. Flowers, 

Counsel to the Minority; Clifford C. Stoddard, Jr., Counsel to the 

Minority; Timothy R. Terry, Counsel to the Minority; Adam 

Pullano, Staff Assistant to the Minority; Kelly Brannigan; Kathy 

Kerrigan (Senator Kerry), and Thomas Caballero, Senate Legal 

Counsel’s Office. 

OPENING STATEMENT OF SENATOR LEVIN 

Senator LEVIN. Good morning, everybody. About 50 tax havens 

operate in the world today. Their twin hallmarks are secrecy and 

tax avoidance. Some tax havens are little known places like Andorra and Vanuatu that few Americans have heard of. Others, like 

Switzerland and Liechtenstein, are notorious for operating behind 

an iron ring of secrecy. Billions and billions of dollars worth of U.S. 

assets find their way into these secrecy tax havens, aided by banks, 

trust companies, accountants, lawyers, and others. Each year, the 

U.S. Treasury loses up to $100 billion in tax revenues from offshore 

tax abuses. Tax havens are engaged in economic warfare against 

the United States and against honest, hard-working American taxpayers. 

Today we will look at two banks that relied on secrecy and deception to hide not just the tax avoidance schemes of their clients, but 

the actions that they themselves took to facilitate U.S. tax evasion. 

The first bank is LGT, a private bank owned by the royal family 

of Liechtenstein. Liechtenstein is a tiny alpine nation whose 35,000 

2 

citizens would fill one-third of a good-sized football stadium. It has 

no airport, but supports 15 banks that together boast of holding 

more than $200 billion in assets. Liechtenstein also boasts of secrecy laws that are more stringent than even those that have made 

Switzerland synonymous with hidden bank accounts. 

The second bank is UBS, a Swiss bank. It is one of the world’s 

largest financial institutions, the world’s largest manager of private 

wealth, and a public company of international renown. Yet, as we 

will hear today, UBS has an estimated 19,000 so-called undeclared 

accounts for U.S. citizens with an estimated $18 billion in assets 

that have been kept secret from the IRS. 

Both LGT and UBS operate behind a wall of secrecy that this 

hearing and our report will show needs to come down. The evidence 

we have been able to obtain breaks through some of that wall of 

secrecy to show how these two banks have employed banking practices that facilitate, and have resulted in, tax evasion by U.S. clients. 

We initiated this investigation into tax haven banks in February 

2008, as a global tax scandal erupted after a former employee of 

LGT provided tax authorities around the world with data on about 

1,400 people with accounts at LGT Bank in Liechtenstein. On February 14, 2008, German tax authorities, having obtained the names 

of 600 to 700 German taxpayers with LGT accounts, executed multiple search warrants and arrested a prominent businessman for 

allegedly using LGT accounts to evade $1.5 million in taxes. Soon 

after, our IRS announced that it had initiated enforcement action 

against about 100 U.S. taxpayers in connection with accounts in 

Liechtenstein. The United Kingdom, Italy, France, Spain, and Australia made similar announcements on the same day. Altogether 

since February, nearly a dozen countries have announced plans to 

investigate taxpayers with Liechtenstein accounts, demonstrating 

not only the worldwide scope of the tax scandal, but also a newfound international determination to fight against tax evasion facilitated by tax haven banks. 

The former LGT employee who exposed LGT’s dirty laundry had 

to go into hiding to avoid arrest by Liechtenstein which has listed 

him as its No. 1 target for arrest. A $10 million reward has been 

placed on his head by unknown parties on the Internet. This Subcommittee obtained about 12,000 pages of LGT documents related 

to U.S. clients from that former LGT employee. We also interviewed him and took his statement by videoconference, a tape of 

which, with precautions taken to obscure identifying details, will be 

presented during this hearing. His revelations are explosive. 

The documents and information that he provided depict a bank 

that is a willing partner, and an aider and abettor, to clients trying 

to evade taxes, dodge creditors, or defy court orders. Internal LGT 

documents and other information show secrecy was a deeply embedded way of life at the LGT bank. LGT used code names for its 

clients and directed its bankers to use pay phones when contacting 

them. A LGT document instructed bankers trying to contact a client as follows: ‘‘CAUTION: Calls may be made only from public 

phone booths, preferably not from a [Liechtenstein] phone booth !!!’’ 

LGT set up secret, shell transfer corporations which clients could 

use to route money into and out of their LGT accounts, in order 

3 

to, in the words of LGT, ‘‘cover the tracks.’’ LGT created elaborate, 

deceptive offshore structures, using foundations, trusts, and corporations, to hide a client’s ownership of assets from tax authorities in other countries. 

Our report presents seven case studies of U.S. clients using LGT 

services. Due to time constraints, we will discuss only four today. 

In preparation for this hearing, the Subcommittee served subpoenas on three of the four LGT clients seeking their personal appearance: Shannon Marsh, William Wu, and Steven Greenfield. 

Two of those individuals—Mr. Marsh and Mr. Wu—are here today. 

The third—Mr. Greenfield—has refused to appear after a subpoena 

was served on him, and we will be seeking enforcement of our subpoena. The fourth—Peter Lowy—left the country despite our request that he appear today. The Subcommittee notified his legal 

counsel that he would be subpoenaed to appear, if necessary. He 

has now agreed to appear before the Subcommittee at a continuation of this hearing a week from tomorrow. 

Later in the hearing, when these individuals are called to give 

testimony, I will describe in more detail what we have learned 

about their Liechtenstein accounts, but for now I will mention each 

case history only briefly. 

Shannon Marsh. Shannon Marsh is a son of the late James 

Albright Marsh, a U.S. citizen from Florida in the construction 

business who formed four Liechtenstein foundations in the 1980s 

and transferred substantial funds to them. Two of these foundations were formed for him by LGT Bank. By 2007, the assets in the 

four foundations had a combined value of $49 million. LGT instructed the Marshes to use the code ‘‘Friends of J.N.’’ when they 

wished to ‘‘get in touch.’’ The Marsh accounts were never disclosed 

to the IRS by LGT Bank. 

William Wu. Mr. Wu is a U.S. citizen who has lived for many 

years with his family in New York. LGT helped Mr. Wu hide ownership of his house in New York by helping him arrange a fake sale 

to an offshore company that he secretly controlled. LGT also helped 

him withdraw substantial funds from his Liechtenstein account, 

ranging from $100,000 to $1.5 million at a time, in ways that made 

the funds difficult to trace. 

Steven Greenfield. Harvey and Steven Greenfield, father and son, 

are New York businessmen who specialize in importing toys. In 

March 2001, in Liechtenstein, LGT Bank held a 5-hour meeting 

with the Greenfields, attended by three LGT private bankers and 

Prince Philipp, Chairman of the LGT Board of Directors and brother to the sovereign of Liechtenstein. The meeting was primarily a 

sales pitch to convince the Greenfields to transfer to LGT Bank 

about $30 million from a Hong Kong bank after ‘‘leaving behind as 

few traces as possible.’’ Again, Mr. Greenfield has refused to appear 

despite service of a subpoena, so we will be pursuing that matter. 

Peter Lowy. Peter Lowy lives in California. His father, with his 

sons’ help, set up a LGT foundation in 1998, after telling the bank 

that he did not want Australian tax authorities to know about the 

assets. LGT took measures to hide the Lowys’ ownership of the assets, including by keeping their name off the formation documents 

for the new foundation, routing incoming assets through an offshore transfer corporation to prevent a direct link to the new founVerDate Aug 31 2005 14:02 Dec 05, 2008 Jkt 044127 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 P:\DOCS\44127.TXT SAFFAIRS PsN: PAT
4 

dation, and using a Delaware corporation headed by Peter Lowy to 

name the beneficiaries. In 2001, the Lowys dissolved the foundation and moved to Switzerland assets totaling about $68 million. 

Mr. Lowy will appear next week to answer questions about these 

matters. 

The importance of these case studies is that they provide an inside look at what goes on behind the wall of secrecy that surrounds 

this Liechtenstein bank. And what does go on behind that wall? 

Banking practices that facilitate tax evasion—conduct that angers 

every honest American who pays taxes. 

We have also managed to pierce some of the layers of Swiss secrecy that for too long have made Switzerland the place to bank for 

people with something to hide. 

In late 2007, the Subcommittee took the deposition of Bradley 

Birkenfeld, who worked for more than 12 years as a private banker 

in Switzerland, including 4 years at the Geneva office of UBS. In 

2008, Mr. Birkenfeld was charged and pled guilty to conspiring 

with a U.S. citizen, Igor Olenicoff, to defraud the IRS of $7.2 million in taxes owed on $200 million of assets hidden in secret accounts in Switzerland and Liechtenstein. In connection with this 

prosecution, the United States also detained, as a material witness, 

a senior UBS private banking official from Switzerland, Martin 

Liechti, then traveling on business in Florida. These enforcement 

actions appear to represent the first time that the United States 

has criminally prosecuted a Swiss banker for helping a U.S. taxpayer evade U.S. taxes. And Mr. Liechti is here today. I want to 

express my appreciation to the Justice Department and to the U.S. 

Attorney for the Southern District of Florida for making him available. 

Our report describes how Mr. Birkenfeld signed up Mr. Olenicoff 

as a client, in part by traveling to California from Switzerland to 

meet him, and opened UBS accounts for him in Switzerland in the 

name of offshore corporations that Mr. Olenicoff controlled to hide 

his ownership of the assets. For a time, Mr. Olenicoff was Mr. 

Birkenfeld’s largest client. 

The details of their tax evasion scheme are sordid enough. But 

what Mr. Birkenfeld told the Subcommittee was that what he did 

as a private banker at UBS was ordinary practice. He told us about 

thousands of Swiss accounts at UBS for U.S. clients holding billions of dollars in assets, all undeclared. He also described the 

pressure placed on the Swiss private bankers to bring new money 

into the bank from the United States, called ‘‘net new money.’’ His 

deposition with us and other documents show that each year, UBS 

assigns each private banker an annual net new money target. A 

January 2007 e-mail sent out by Mr. Liechti to the Swiss bankers 

in the Americas division wished them a happy new year, recounted 

how, in 2002, they had brought in 4 million Swiss francs per banker, how that number had quadrupled in 2 years to 17 million Swiss 

francs per banker in 2006, and then urged them to quadruple their 

efforts again in 2007 to bring in 60 million Swiss francs per banker 

in net new money from the Americas. 

Mr. Birkenfeld told us that Swiss bankers regularly traveled to 

the United States to target U.S. citizens for net new money. He 

told us how these Swiss bankers maintained a low profile, using 

5 

business cards that did not mention ‘‘wealth management,’’ sometimes declaring they were in the United States for non-business 

purposes, and carrying encrypted computers that, allegedly, even 

U.S. Customs agents could not read. 

A Subcommittee analysis of travel records supplied by Customs 

corroborates the testimony. The travel records show that about 20 

UBS Swiss bankers made about 300 trips to the United States 

since 2003, often traveling together to UBS-sponsored functions designed to attract wealthy potential clients. The travel records also 

show that some UBS private banking officials made regular U.S. 

visits, including Mr. Liechti who traveled to the United States up 

to eight times in a year. Mr. Birkenfeld described one Swiss banker 

who saw 30 to 40 clients on each U.S. visit. All this to sell Swiss 

secrecy on U.S. soil. 

Mr. Birkenfeld also described UBS Swiss bankers who presented 

their clients with securities products and helped execute securities 

transactions here in the United States, without a broker-dealer license from the Securities and Exchange Commission. In response 

to Subcommittee inquiries, UBS also acknowledged that, like LGT, 

its bankers had set up foreign corporations to disguise the ownership of accounts by U.S. clients. 

The Subcommittee even obtained a document showing that UBS 

provided its Swiss private bankers with training on how to detect 

surveillance by U.S. customs agents and law enforcement officers 

while traveling here. Think about that: A major international bank 

is training its bankers to detect surveillance by U.S. authorities. 

UBS efforts targeting U.S. clients to open Swiss accounts were, 

in the words of Mr. Birkenfeld, a ‘‘massive machine.’’ And the push 

to open Swiss accounts took place even though UBS had branch 

banking and securities operations in the United States that were 

large enough to accommodate all of its U.S. clients. 

Which brings up a fundamental question. Why would a U.S. taxpayer open a UBS account in Switzerland when it could bank with 

UBS right here in the United States? Why would 19,000 U.S. clients with nearly $18 billion in assets choose to open up accounts 

in Switzerland? It seems plain that part of the answer is that they 

wanted to open undeclared accounts that the IRS would not know 

about. They wanted secrecy. 

And UBS gave them secrecy. In November 2002, UBS sent a letter to all of its U.S. clients to reassure them that their secret Swiss 

accounts were still safely hidden, despite a new Qualified Intermediary program, or QI, going into effect. Here is what that UBS 

letter said in part: 

‘‘Dear client: From our recent conversations we understand that 

you are concerned that UBS’ stance on keeping its U.S. customers’ 

information strictly confidential may have changed. . . . We are 

writing to reassure you that your fear is unjustified and wish to 

outline only some of the reasons why the protection of client data 

can not possibly be compromised. . . . ’’ 

We all know what is going on here. U.S. clients who don’t bank 

with UBS in the United States and instead bank with UBS in 

Switzerland are buying secrecy. And folks who buy secrecy have secrets they don’t want to reveal, such as evading taxes, ducking 

creditors, or defying court orders. But those clients aren’t the only 

6 

1See Exhibit No. 104, which appears in the Appendix on page 564. 

ones relying on secrecy to cloak their actions. Banks in tax havens, 

including the two banks under examination today, are also covering up their own actions—actions that they presumably didn’t 

want to see exposed by media around the world. 

We are putting up a chart that summarizes the Tax Haven Bank 

Secrecy Tricks that we have uncovered during this investigation:1

Banks using code names for clients to disguise their identities; 

banks telling their bankers to use pay phones instead of business 

phones so authorities can’t trace a call back to the bank; banks giving their bankers encrypted computers when they travel so tax authorities can’t read any client information; banks funneling money 

through so-called transfer companies to cover the tracks of the 

funds and make audits difficult; banks opening accounts in the 

names of foreign shell companies to hide the real owners; banks 

setting up fake charitable trusts for the same reason; banks providing their bankers with countersurveillance training. The list 

goes on and on. These tricks are all about deception, all about making it impossible for the IRS to follow the money, to bring tax 

cheats to justice, and to bring back into the U.S. Treasury the tens 

of billions of dollars owed to Uncle Sam. 

UBS has told the Subcommittee that it is changing its ways. It 

has banned travel by its Swiss bankers to the United States. It is 

encouraging U.S. clients to bank with UBS in the United States or 

at a subsidiary in Switzerland called Swiss Financial Advisors that 

requires all U.S. clients to disclose their accounts to the IRS. Liechtenstein tells us they are in negotiations with the United States to 

enter into a tax information exchange agreement and with its European neighbors to expand tax cooperation in connection with an 

anti-fraud agreement. 

Well, I hope that is all true, but count me skeptical for a number 

of reasons. First, we haven’t heard anything from LGT about reforms; it is not even here today, in contrast to UBS that is here 

today. Second, evading U.S. taxes is a billion dollar industry; it’s 

gone on for decades; and the profits are huge, both for the tax 

cheats and for the banks that hold their assets. The documents and 

testimony that we are releasing today disclose a culture of secrecy 

and deception that we are determined to end, despite it being so 

strongly entrenched. 

Tax evasion eats at the fabric of society, not only by starving 

health care, education, and other needed governmnent services of 

resources, but also by undermining trust—making honest folks feel 

that they are being taken advantage of when they pay their fair 

share. 

Our report outlines a number of ways we can fight back to end 

tax haven abuses, and here are a few. 

First, we should support the recent innovative enforcement actions taken by the Justice Department and IRS to prosecute foreign 

bankers who help U.S. taxpayers cheat Uncle Sam and to compel 

foreign banks to disclose the names of their U.S. clients. 

Second, we ought to enact new tools to penalize tax haven banks 

that impede U.S. tax enforcement. Congress should give the Treasury Department authority to bar U.S. financial institutions from 

7 

doing business with those banks, and the IRS should remove those 

banks from the Qualified Intermediary program, the QI program, 

that allows them to avoid disclosing the names of their non-U.S. 

clients to U.S. authorities. 

Third, Congress should create a rebuttable presumption in enforcement proceedings that U.S. taxpayers who form or who send 

assets to or who receive assets from a legal entity in an offshore 

secrecy jurisdiction controls that entity and is, therefore, liable for 

taxation on its assets and income. 

Fourth, Congress ought to change the law to require banks who 

know U.S. clients are behind the accounts opened in the name of 

offshore entities to treat those accounts as U.S. accounts that have 

to be disclosed to the IRS. 

And we can do all that and more by enacting the Stop Tax 

Haven Abuse Act, a bill that I and Senator Coleman introduced 

last year. 

Right now, tax haven banks and tax haven governments dress up 

their secrecy laws and banking practices with phrases like ‘‘financial privacy’’ and ‘‘wealth management.’’ But secrecy breeds tax 

evasion. And secrecy hides not only the wrongdoers, but also those 

who aid and abet the wrongdoing. We are determined to tear down 

those secrecy walls in favor of transparency, cooperation, and tax 

compliance. 

I want to thank my Ranking Member, Senator Coleman, and his 

staff for their support of this investigation and the legislation to 

stop tax haven abuses that we have introduced. 

Senator Coleman. 

OPENING STATEMENT OF SENATOR COLEMAN 

Senator COLEMAN. Thank you, Mr. Chairman. 

This morning, we return to a matter that is important to all 

American taxpayers: The role of foreign banks—particularly those 

in offshore tax havens—in helping a disturbing number of wealthy 

Americans cheat on their taxes. At the outset, I want to express 

my appreciation to Senator Levin for his unwavering commitment 

throughout this effort. This has been a truly bipartisan investigation in every sense of the word. It would not have been possible to 

bring these important problems to light without your leadership, 

Mr. Chairman, and for that I thank you. 

The problem we are confronting today is simple: Tens of thousands of America’s wealthiest citizens are using offshore secrecy jurisdictions to hide trillions of dollars and avoid paying their fair 

share of taxes. The offshore problem remains one of staggering proportions. These tax havens hold an estimated $1.5 trillion in American assets, resulting in lost taxes of roughly $100 billion. That is 

three times the size of the Minnesota State budget general fund— 

lost because of dishonest individuals and entities exploiting the secrecy of foreign countries. 

In doing so, these privileged few are forcing honest American 

taxpayers to bear a disproportionate burden of investing in crucial 

areas like health care, homeland security, and education. That tax 

loss sits like a millstone around the necks of honest American taxpayers, who are struggling with high taxes, ever-increasing gas 

prices, and rising health care costs. 

8 

But these tax cheats are not acting alone. Foreign banks in these 

offshore havens are enthusiastic partners in this deception. Hiding 

behind an impregnable fortress of secrecy laws, these banks have 

partnered with American tax cheats to use offshore tax and secrecy 

havens to conceal ownership of assets and make sham transactions 

seem legitimate, while staying one step ahead of U.S. law enforcement and the IRS. 

Over the course of the last year, the Subcommittee has engaged 

in a broad investigation into two of these banks: LGT Bank in 

Liechtenstein, and UBS AG in Switzerland. Both banks operate 

under strict secrecy laws, yet both banks enabled and promoted felony tax evasion, and sometimes even worse misconduct, like the 

bribery of American officials and others. The audacity and cleverness of the bankers we have examined are matched only by the 

zeal with which their American clients used their services. 

Before we turn to the evidence, it is worthwhile to take a moment and review the relevant laws and rules to understand how 

the banks eagerly manipulated the regulatory and legal landscape 

to assist their tax-cheating clients. The key rules governing these 

foreign banks are found in the Qualified Intermediary program 

(QI). The QI program is intended to encourage foreign banks to assist the IRS collect taxes from overseas accounts by calling for contracts with the individual foreign banks. In short, contracts executed under the QI program require the banks to report to the IRS 

when the accounts held by Americans have income derived from 

U.S. securities and withhold the proper amount of taxes, sending 

that amount back to the United States. 

In one sense, the QI program has been quite effective: The IRS 

has been able to collect substantial taxes that it previously could 

not. But there was a loophole in these QI agreements, and these 

foreign banks drove a Mack truck right through it. Basically, while 

the QI agreements require the banks to reveal American account 

holders with U.S. securities investments, the agreements do not require the reporting of accounts that are held by non-US citizens or 

entities. 

So what did the banks do? They encouraged their American clients to form shell companies and trusts in jurisdictions with strict 

secrecy laws, helped them open accounts in the names of those 

trusts and companies, and then assisted them in shifting millions 

of dollars from accounts in their names to accounts in the names 

of the foreign entities. In doing so, these banks turned a blind eye 

to the fact that there was no legitimate reason for these maneuvers. 

In his opening statement, Senator Levin highlighted the findings 

of our Subcommittee, as set forth in the bipartisan staff report we 

have issued to accompany this hearing. The case studies related to 

LGT are as appalling in their brazenness as they are disturbing in 

their commonality: 

A family falsely hiding nearly $50 million in trusts for decades; 

Another family moving funds from one shell corporation to another to yet another in a chain of transfers that was clearly designed for one reason: To avoid paying taxes; 

A family meeting with the royal family of Liechtenstein with the 

express purpose, in their words, of ‘‘hiding the traces’’; 

9 

The brazen facilitation of bribery here in the United States by 

Marc Rich and his affiliates. 

Sadly, the list goes on and on. What is worse, LGT was not 

alone. UBS engaged in parallel misconduct. In short, soon after 

joining the QI program, UBS undertook a systematic, wide-ranging 

effort to harvest tax cheats from the United States, help them restructure their Swiss accounts to avoid paying taxes on billions of 

dollars, and surreptitiously evade the attention of Federal law enforcement agencies. 

To be clear, our focus is on UBS’ operations out of Switzerland. 

UBS has a large number of personnel based here in the United 

States, including in Minnesota, and they, like us, must be surely 

appalled at what the Subcommittee has uncovered. These people 

are not part of the misconduct we examine today, nor do we suggest in any way that they are involved in these activities. 

Moreover, we should note that UBS has been cooperative with 

the Subcommittee’s investigation and has been responsive to its requests. UBS is also appearing today voluntarily, and not under 

compulsion of subpoena. I find it significant that while UBS did not 

necessarily have to send a knowledgeable witness from Switzerland, it chose to do so, which stands in stark contrast to LGT’s refusal to appear before us today. 

But there is a fundamental question that must be asked of UBS, 

and that is, when you are sending Swiss bankers, 20 UBS bankers 

taking over 300 trips since 2003, somebody in America has to know 

what is going on. Clearly, though this is generated out of Switzerland, this kind of activity in this country cannot simply have occurred without folks here intentionally turning a blind eye. I am 

not sure what my folks in Minnesota know, but I would sure like 

to find out what the folks in America knew about these transactions. 

The results of the Subcommittee’s investigation are striking. The 

evidence reveals that the banks engaged in highly suspicious activities designed to hide the identities of their clients, including, as the 

Chairman noted, using code words, encrypted computers designed 

to thwart U.S. customs officials, shell companies and trusts strewn 

around the world, and techniques to avoid surveillance by law enforcement. Some of these activities sound like the cloak-and-dagger 

deception in a James Bond movie. 

It is bad enough if the banks were simply enabling tax crimes. 

But the problem is far worse and more pervasive than a mere seeno-evil acceptance of tax fraud. Our investigation has found that 

the banks have left their secrecy fortresses and furtively entered 

the United States to recruit and service thousands upon thousands 

of tax cheats. Driven by a desire to service their clients’ desires, regardless of legality, these banks actively promote and cultivate this 

conduct day after day. They didn’t just facilitate this misconduct; 

they orchestrated it. That must stop and it must stop now. 

How do we fix this problem? The Subcommittee has offered a 

number of recommendations. 

First, as the Chairman has noted, Congress should pass the Stop 

Tax Haven Abuse Act, which is comprehensive legislation that Senator Levin and I introduced, along with Senator Obama. It would 

10 

go far to stop offshore tax haven and tax shelter abuses by shining 

a light in the dark world of secrecy jurisdictions. 

We must also change the laws and regulations which permit 

banks in tax havens to fulfill their contractual obligations to the 

IRS even though they are facilitating criminal conduct. 

We must also improve the QI program, by strengthening reporting requirements for QI banks and expanding the audit process. 

We must also bolster our law enforcement activities and increase 

the statute of limitations for activities involving tax havens. 

To be clear, foreign investment is vitally important to the United 

States. Such investments are critical to job growth and opportunity 

expansion and are undeniably necessary for the economic wellbeing of our citizens. Nor is our focus here today on U.S. companies 

investing abroad, which bolsters our competitiveness in the increasingly global economy. To the contrary, our inquiry is focused 

on individual U.S. taxpayers who have cheated the system with the 

active assistance of offshore banks. 

There may indeed be valid reasons for holding accounts offshore, 

such as Americans living and working abroad, or those with families in other countries with political or economic instability. These 

persons, when they file the appropriate documents with the IRS 

and pay their fair share of taxes, have nothing to fear from this 

inquiry. 

I want to close, however, by speaking directly to those who 

should be worried: Those Americans, and their attorneys and financial enablers, who have gone offshore to dodge their taxes, escape 

our courts, or worse. Our message is simple: You are hurting this 

country. Millions of Americans struggle with bills and mortgages, 

pay for gas and health care, educate their children, and care for 

their loved ones. Hundreds of thousands of your fellow Americans 

protect us—both here and at war abroad—making unimaginable 

sacrifices on behalf of this country. By cheating on your taxes, you 

are forcing those people to carry even more weight on their sagging 

shoulders. You, the tax cheats, are not being asked to suffer as 

they are. You, the tax cheats, are not being asked to struggle with 

your daily bills and mortgages and gas prices and medical bills. 

You are simply being asked to pay your fair share to the country 

whose freedoms you so richly enjoy. 

Listen closely to what we have uncovered in this investigation. 

Come forward and stop hiding. In one document, a foreign banker 

advised his American client to stop engaging in certain transactions so that the American authorities would not catch him. He 

said boldly, ‘‘Let sleeping dogs lie.’’ Well, the dogs are no longer 

sleeping. 

Thank you, Mr. Chairman. 

Senator LEVIN. Thank you very much, Senator Coleman. 

And now I would like to welcome our first panel of witnesses to 

today’s hearing: Doug Shulman, the Commissioner of the IRS, and 

Kevin O’Connor, the Associate Attorney General at the Department 

of Justice. 

Commissioner Shulman, first I want to thank you for being here 

today, and this is your first appearance before this Subcommittee. 

Your predecessor, Mark Everson, contributed frequent insights and 

11 

1The prepared statement of Mr. Shulman appears in the Appendix on page 55. 

important context to our hearings. We welcome you. We look forward to your testimony. 

Mr. O’Connor, I believe this is also your first appearance before 

this Subcommittee, and it is important for us to hear from the Department of Justice, and we welcome you. 

We thank you both. We thank your agencies for your efforts to 

go after people who would dodge our tax laws and evade paying 

their taxes. 

Pursuant to Rule VI, all witnesses who testify before the Subcommittee are required to be sworn. So at this time, let me ask you 

both to please stand and raise your right hand. Do you swear that 

the testimony you are about to give will be the truth, the whole 

truth, and nothing but the truth, so help you, God? 

Mr. SHULMAN. I do. 

Mr. O’CONNOR. I do. 

Senator LEVIN. We will be using a timing system today, and one 

minute before the red light comes on, you will see the light change 

from green to yellow, giving you an opportunity to conclude your 

remark. Your entire testimony will be printed in the record. We 

ask that you limit—attempt to limit it, in any event—your oral testimony to no more than 10 minutes. 

Commissioner Shulman, we will have you go first, followed by 

Mr. O’Connor, and then we will turn to questions. Thank you so 

much. Commissioner Shulman. 

TESTIMONY OF HON. DOUGLAS SHULMAN,1 COMMISSIONER, 

INTERNAL REVENUE SERVICE, U.S. DEPARTMENT OF THE 

TREASURY 

Mr. SHULMAN. Thank you, Chairman Levin and Ranking Member Coleman. I want to thank you for inviting me to this Subcommittee hearing. As you said, this is my first opportunity to testify before the Subcommittee. Let me reiterate to you in public 

what I have told you privately. 

This Subcommittee has a long and impressive history of investigating tax secrecy jurisdictions and offshore abuses that undermine the integrity of the Federal tax system and potentially divert 

billions of dollars from the U.S. Treasury. I am looking forward to 

working with you during my 5-year term as IRS Commissioner. 

I have made international issues a strategic priority for the IRS. 

High-net-worth individuals should not be able to shortchange their 

fellow citizens by moving assets or income offshore as a means of 

avoiding U.S. taxation. Frankly, I have been outraged by some of 

the behavior that we have found in our investigations and that you 

have highlighted in your report. I also find the actions of the financial institutions involved in this evasion to be surprising and disappointing. 

We have been particularly active in the international arena in 

the past few months, and more is in the works. Some of these activities I can discuss publicly because they are already part of the 

public record. There are other situations that I cannot discuss because the investigation may be ongoing. Taxpayer privacy laws 

generally prohibit public disclosure of IRS investigations. 

12 

The most notable recent case in the public record involves a 

major Swiss bank. The bank signed a disclosure agreement with 

the United States in 2001 to become a qualified intermediary, or 

QI. Becoming a QI requires a financial institution to, among other 

things, report on the income of U.S. taxpayers that were clients of 

the bank. However, a former employee of the bank, as part of his 

recent guilty plea, stated that a number of the bank’s U.S. clients 

objected to having their information subjected to such reporting. 

The IRS has since requested, via a John Doe summons, that the 

bank turn over account information on any other U.S. client who 

used this Swiss bank to avoid U.S. income taxes. The summons directs the bank to produce records identifying U.S. taxpayers who 

had accounts with the bank in Switzerland between 2002 and 2007 

and elected to have their accounts remain hidden from the IRS. 

On July 1, a Federal judge in Miami approved a Justice Department request to enable the IRS to serve this summons. We are 

working closely with the Justice Department to ensure that we get 

all of the information requested in the summons. 

Speaking more broadly, the IRS has a multifaceted approach to 

combating offshore tax evasion. We are deploying a wide array of 

techniques and resources to uncover unlawful activities. Let me go 

through a few of them. 

One important tool is information reporting. Most U.S. tax returns require that the filer provide information about foreign financial accounts, ownership in foreign entities, and financial statement 

data. In addition, a U.S. citizen with offshore accounts in excess of 

$10,000 must file a foreign bank and financial account (FBAR) report. Information reporting requirements typically come with either 

civil or criminal penalties for noncompliance, and in some cases, 

both. 

Another tool is the QI program, which you, Mr. Chairman, and 

Ranking Member Coleman have both discussed. In laymen’s terms, 

the QI program gives the IRS an important line of sight to the activities of foreign banks and other financial institutions. It also provides detailed information reporting that the IRS, before we instituted the QI program, did not receive. The QI program is critical 

to sound tax administration in a global economy. By bringing foreign financial institutions more directly into the U.S. tax system, 

we can better ensure that U.S. persons are properly paying tax on 

foreign account activity and that foreign persons are subject to the 

proper withholding rates. However, the whole program rests on the 

fact that banks and financial institutions that are part of the program have to abide by their agreement with the U.S. Government. 

The QI program is relatively new, and as with any new and complex program, there will be flaws that must be addressed. In my 

view, we need to shore up the QI program and continuously enhance it. In my written statement, I discuss some of the steps we 

are taking to improve this important program. 

The third tool in our arsenal is international agreements such as 

tax treaties and tax information exchange agreements, under 

which other countries agree to obtain information on behalf of the 

United States for use in U.S. tax matters. We also have a number 

of efforts to share information and strategies with our international 

counterparts, including a Joint International Tax Shelter InformaVerDate Aug 31 2005 14:02 Dec 05, 2008 Jkt 044127 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 P:\DOCS\44127.TXT SAFFAIRS PsN: PAT
13 

tion Center, where we have people from the IRS and other tax administrations collocated to exchange information about specific 

abusive transactions and their promoters and investors. In addition, we meet regularly with revenue commissioners or their counterparts, from nine other countries, to consider and discuss issues 

of global and national tax administration. International dialogue 

and cooperation will only become more important in the years to 

come, and we will work to continually enhance these relationships. 

As you noted, Chairman Levin, in some of the current activities 

that are underway and have been made public, we have been coordinating with our foreign counterparts, and this has been really 

made possible because of the groundwork we have done in the last 

several years to develop relationships, collocate people, etc. 

When investigating offshore tax evasion and specific identities of 

U.S. taxpayers are not known, the IRS generally uses its John Doe 

summons authority. The summons is used to identify individuals, 

groups, or classes of U.S. taxpayers who may be involved in specific 

areas of tax noncompliance and who cannot be identified through 

other means. 

And the final and very important tool that I will mention this 

morning is informants. Informants have been valuable sources of 

information for IRS civil and criminal investigations into offshore 

tax evasion. With the new whistleblower standards that reward informants, we are hopeful that we will get additional input on potential violations. 

Deterrence is one of our most powerful weapons. In this regard, 

I am very proud of the hard work that the IRS and Justice Department investigators have put into these recent cases. As a result of 

their continuing work, I am confident that those who engage in deliberate offshore tax evasion are very concerned right now, as they 

should be. I believe that we owe it to the vast majority of honest 

taxpayers to pursue these cases aggressively, and I am committed 

to do so now and during my 5 years at the IRS. 

I am also equally committed to respecting the rights of U.S. citizens and corporations who engage in legitimate global commerce. 

In closing, I believe that we are efficiently utilizing the tools that 

we have, but there are other ways that Congress can help. First 

and foremost is to approve our 2009 budget and enact the legislative proposals that are included therein. The budget provides key 

enforcement resources that we can use in the area of international 

tax evasion. 

In addition, Congress can provide more time for us to work on 

these cases by extending the current 3-year statute of limitations. 

Because of the complexity of these cases, 3 years is often insufficient to close the case properly. 

Finally, it is important that Congress continue to support and 

strengthen our network of tax treaties. They provide a basis for information sharing, and each time an agreement is renewed, we 

seek more information from our treaty partners. 

Mr. Chairman, thank you again for the opportunity to be here. 

I look forward to working with you and the Members of the Subcommittee during my tenure at the IRS, and I am happy to respond to questions. 

14 

1The prepared statement of Mr. O’Connor appears in the Appendix on page 65. 

Senator LEVIN. Commissioner Shulman, thank you so much. Mr. 

O’Connor. 

TESTIMONY OF HON. KEVIN J. O’CONNOR,1 ASSOCIATE 

ATTORNEY GENERAL, U.S. DEPARTMENT OF JUSTICE 

Mr. O’CONNOR. Thank you, Chairman Levin and Ranking Member Coleman, for the opportunity to appear here this morning to 

discuss the Department of Justice’s efforts, alongside our colleagues 

at the IRS, to combat the use of tax havens and offshore entities 

by U.S. taxpayers to evade income taxes. Let me begin by echoing 

my colleague, Commissioner Shulman, commending this Subcommittee for its longstanding commitment to investigating and 

publicizing abuses of our Federal tax system. Your work—in particular, the report that you issued just today—has brought much 

needed attention to serious misconduct that threatens to undermine the fundamental integrity of our tax system. Really, Commissioner Shulman and I were remarking before that we would be so 

lucky to have many of your Subcommittee staffers in our offices 

based on the thoroughness and diligence of that report, and I commend you and your staffs as well. 

Senator LEVIN. Thank you. We appreciate that, and I know they 

appreciate that, and you’re right, they deserve that kind of a compliment. 

Mr. O’CONNOR. As a result of their work, taxpayers have a greater understanding of their obligations and the consequences of noncompliance, and tax professionals and promoters are on notice that 

their efforts to design, market, or facilitate tax evasion schemes 

will not be tolerated. 

Today I would like to briefly focus my remarks on the Department of Justice’s role in combating the continuing problem of offshore tax evasion. Over the years, as you are well aware, Congress 

has made numerous changes to our tax laws to reflect advances in 

communications and technology. One fundamental concept has, 

however, remained constant: U.S. taxpayers are subject to taxation 

on their worldwide income from whatever source that income is derived. The use of tax haven banks and offshore nominee accounts 

to evade taxes is a direct assault on this basic principle and cannot 

be tolerated. 

Offshore tax schemes, often used by high-wealth individuals, but 

not exclusively, potentially result in the loss of billions of dollars 

a year in U.S. tax revenues. For this reason, the Department, 

alongside with our counterparts at the IRS, have used and will continue to use all of the tools at our disposal to ensure that noncompliance is both detected, and, where appropriate, aggressively 

prosecuted. 

While taxpayers who engage in tax evasion are subject to civil 

and criminal liability for their conduct, we are equally concerned 

about the role played by tax professionals and promoters in designing and implementing these schemes. It is discouraging, as Commissioner Shulman said, to see that some professionals—tax attorneys, accountants, bankers, brokers, corporate service providers, 

and trust administrators, in particular—continue to violate their 

15 

legal and ethical responsibilities by facilitating these illegal tax 

schemes at a substantial profit. Holding these professionals accountable for their misconduct is necessary, and as the examples 

in my written testimony reflect, we are pursuing criminal sanctions 

against such individuals and entities where and when appropriate. 

Our success in prosecuting these cases is as a result of our close 

working relationship with the IRS and with U.S. Attorneys’ Offices 

across the country. For example, lawyers in the Tax Division have 

worked with the IRS to investigate offshore tax evasion by obtaining approval from a court to serve what are known as John Doe 

summonses. As my colleague from the IRS has mentioned, a John 

Doe Summons enables the IRS, with the assistance of the Department of Justice and Federal court approval, to obtain information 

about possible fraud by taxpayers whose identities at that time are 

unknown. 

On the criminal side, the Tax Division serves as the nerve center 

for all of our Federal criminal tax prosecutions. Tax Division attorneys work closely with the IRS Criminal Investigation Special 

Agents to develop and prosecute a wide variety and array of tax 

crimes, including offshore evasion. 

It bears noting in this regard, however, that offshore tax evasion 

cases are, by their nature, international in scope. Investigations requiring international cooperation are both time-consuming, expensive, and often raise complex legal issues such as national sovereignty and bank secrecy laws of the foreign countries in which 

evidence we may seek is located. 

Despite the challenges, U.S. law enforcement agencies and our 

foreign counterparts are engaged in a variety of information-sharing arrangements designed to aid in shutting down illegal and abusive activity and exchanging the information we, both the IRS and 

the Department of Justice, need to do our jobs. 

Critical to every investigation of offshore activity is the ability to 

obtain evidence from a foreign country. In addition to traditional 

letters rogatory, information can be requested through tax treaties 

or tax information exchange agreements in both civil and criminal 

cases, and through Mutual Legal Assistance Treaties—otherwise 

known as MLATs—in criminal cases. 

Unfortunately, we do not have cooperative agreements with 

every country. Moreover, not all cooperative agreements cover both 

civil and criminal matters. On occasion, MLATs exclude outright 

tax crimes altogether, while other MLATs and tax treaties are limited to particular instances in which we can allege specific kinds 

of fraud. 

In such circumstances, however, we will not be deterred. We will 

pursue other formal and informal methods of obtaining the foreign 

evidence we seek. This includes the use of John Doe summonses as 

well as grand jury subpoenas. 

Tax evasion is a chronic drain on the public fisc and is a pernicious obstacle to effective tax administration. If not vigorously investigated and addressed, it threatens to undermine confidence in 

our system of voluntary compliance and self-assessment. We are 

dedicated to ensuring that law-abiding taxpayers have confidence 

that the tax laws are fairly and equally applied, and that those 

who would attempt to engage in tax evasion know that we will 

16 

1See Exhibit No. 104, which appears in the Appendix on page 564. 

deter their schemes, detect their schemes, and hold them accountable for their misconduct. 

Thank you, Mr. Chairman and Ranking Member Coleman, for inviting me and the Department today to discuss our efforts to combat tax evasion. I would be happy to answer questions you may 

have. 

Senator LEVIN. Thank you so much, Mr. O’Connor. 

We will try an 8-minute round here for the first round of questions. 

We put up a chart before that lists some of the secrecy tricks 

that were uncovered during our investigation that these banks 

have used.1 These are actual, established banking practices at LGT 

and UBS, if you can believe it. The purpose of these banking practices is to stop you folks, the prosecutors and the IRS, from being 

able to follow the money and make it more difficult to bring tax 

cheats to justice. 

Just to read a few of them, some of those tricks are funneling 

money through so-called transfer companies to cover the tracks of 

the funds; opening accounts in the name of foreign shell corporations and companies to hide the real owners; using foreign credit 

cards on undeclared accounts; using captive trustees for trusts instead of independent trustees. 

Have you seen these types of practices in your work? And are 

these practices limited to these two banks? Mr. O’Connor. 

Mr. O’CONNOR. Chairman Levin, your staff was kind enough to 

provide me a copy of that chart this morning in advance of the 

hearing. It is fair to say we have seen all of these tactics. I think 

with respect to Mr. Birkenfeld, the one case that has been discussed publicly because of his guilty plea, the vast majority of those 

secrecy tricks were actually employed in that matter. At least Mr. 

Birkenfeld admitted in Federal court in connection with his plea 

agreement that he engaged in those types of tactics. So the short 

answer to your question is yes. 

Senator LEVIN. Do you want to add anything, Commissioner? 

Mr. SHULMAN. All I would add is that anytime someone wants 

to evade paying taxes, they look for complexity. It is the reason 

people go overseas, because things become much more complex 

once you leave our borders and our jurisdiction. You add on top of 

this complex financial arrangements which include all the techniques in your chart, and you’ve got exactly the method by which 

people are looking to evade the U.S. tax laws. 

Senator LEVIN. We have talked about these QI agreements as to 

how they are basically subverted by tactics, some of which are on 

that chart.1 Should we insist that when U.S. clients are the beneficial owners of so-called foreign trusts or companies that they be 

treated as owners of the securities in a foreign bank account instead of owners of the nominal trust or the company that was created for them? 

Mr. SHULMAN. I think the issue you bring up is the absolute 

issue here, which is how we can have a line of sight into the people 

who really benefit from the money coming from these accounts. The 

QI program has brought in a lot of money into the U.S. GovernVerDate Aug 31 2005 14:02 Dec 05, 2008 Jkt 044127 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 P:\DOCS\44127.TXT SAFFAIRS PsN: PAT
17 

ment and has created a line of sight into foreign banks and those 

accounts. 

With that said, we are in the process now of reviewing the QI 

program and have started discussions about tightening it up, so let 

me share with you those discussions. 

Last week, I participated in a conference call with major accounting firms who were responsible for performing audits on the QI 

program. I asked them to come to us with issues, and we shared 

with them the issues we have seen. In addition, we raised the possibility of requiring, as part of their agreement, that they report 

any fraud they see in a foreign bank in the QI program to the IRS, 

which, frankly, is what occurs when a bank hides assets. 

There is also this issue of beneficial ownership. What we are 

going to try to do in this regard is to rework our regulations and 

our QI agreements so that QI banks have to put in additional steps 

of due diligence to make sure they understand who the owner is; 

and where they cannot ascertain who the owner is, default to withholding. And so we could go through it later, and these are still 

being worked on. 

We want to make sure we carve out legitimate businesses, like 

public companies or active businesses in a foreign country, so QI 

banks don’t need to look through there. But if the owner is basically a trust that looks like an individual holder, we want to make 

sure we either obtain their taxpayer identification number or implement automatic withholding. 

And then, finally, there is this whole issue of worldwide income 

that we are taking a hard look at, because one of the techniques 

alleged gets people out of U.S. securities and into foreign securities, 

which are not currently covered under the QI program. 

Senator LEVIN. These banks have accomplished their deception 

here in avoidance of the QI program in a number of ways. The one 

we are going to look at today told their U.S.—here is what they 

told their U.S. clients: We are not going to identify you, and the 

way we are going to avoid identifying you to the IRS is that you 

are going to have to sell your U.S. securities from this account; or 

you have got to reopen your account under the name of a non-U.S. 

entity. 

So they helped them to create that shell company or that trust 

that is then the nominal owner of those securities, rather than 

what they know to be the U.S. taxpayer. 

Would you agree that banks that do that are gaming the QI program? 

Mr. SHULMAN. Absolutely. 

Senator LEVIN. And is there any reason why we should not modify this program to tell banks we will not accept that, and that if 

you want to participate in this program, you must disclose the beneficial owner to us when you know it? 

Mr. SHULMAN. That is the intent of the QI program, and I share 

your anger over people who circumvent the system. 

I want to emphasize, though, at least in my view, that banks 

that don’t meet their obligation should be ashamed of themselves, 

and we should deal with them appropriately. But kicking a bank 

out of the QI program, which is always an option, would mean that 

account holders in that bank will not be subject to U.S. taxation. 

18 

Thus, our goal is to get banks into compliance and to keep them 

in the U.S. tax net, where appropriate. 

Senator LEVIN. And if we can’t get them into compliance, to kick 

them out of the program? 

Mr. SHULMAN. We terminated QI agreements before, and currently have a number of QI agreements that we are looking at 

right now. 

Senator LEVIN. How large a problem would you estimate this offshore tax haven, tax avoidance is? Can you give us any kind of an 

estimate as to what the loss is to the Treasury? 

Mr. SHULMAN. As you know, I started this job 3 months ago. We 

actually have some good research in certain areas of tax evasion. 

Research in general in tax evasion is hard because, as you know, 

when there is tax evasion, people are actually hiding their activities, so it is not the kind of research you get through a census or 

questionnaire. 

The current data we have from around 2001 does not quantify 

this, but I am confident to say that these activities involve thousands of taxpayers and billions of dollars. 

Mr. O’CONNOR. Mr. Chairman, if I might add? 

Senator LEVIN. Please. 

Mr. O’CONNOR. If you just look at the Olenicoff plea, $200 million, and some of the figures thrown around there and realize that 

is just one taxpayer, and then you multiply that by thousands, it 

is an incredibly, significantly large number that I would not even 

want to put a ceiling on. 

Senator LEVIN. You would say it is a significant loss to the 

Treasury? 

Mr. O’CONNOR. Absolutely. 

Senator LEVIN. Would it be safe to say it is in the tens of billions? Could you even go that far? We have come up with an estimate of up to $100 billion, and I know you are not going to want 

to pick any specific figure. But would you be able to say that your 

estimate is it would be in the tens of billions? Is that a safe estimate? 

Mr. O’CONNOR. I am probably utterly unqualified to make such 

an assessment, but it is certainly in the billions. I think I am comfortable saying that. I would defer to Commissioner Shulman, who 

probably is much closer to these figures as the person who—— 

Senator LEVIN. You would rather defer this to a future moment, 

I think. [Laughter.] 

But we will look forward to your estimate. At least, Commissioner Shulman, you would say it is a significant loss to the Treasury. Is that safe? 

Mr. SHULMAN. It is a significant loss. And also let me tell you, 

even in my confirmation hearing, I talked to the Senate Finance 

Committee about why I made international a strategic priority of 

mine coming in. Where there is complexity, there are global capital 

flows, mobile capital, and people and businesses who want to evade 

taxes are going to do it in the complex international arena. And so 

regardless what the number is—and I agree the number is significant—this is an area that we are going to focus on at the IRS. 

Senator LEVIN. Finally, the burden is now on the government to 

prove that an individual controls an offshore corporation, and that 

19 

is very difficult where there are secrecy jurisdictions. Would a presumption that a U.S. taxpayer who forms or who sends assets to 

or who gets assets from a corporation in an offshore secrecy jurisdiction controls that corporation—it would be a rebuttable presumption, but would that be helpful in tax enforcement cases? I do 

not know, maybe, Mr. O’Connor, I should start with you on that. 

I am not sure. Either one of you can give me an answer, Commissioner or Mr. O’Connor. 

Mr. O’CONNOR. Well, I think certainly the more information we 

have as prosecutors, it is always better and the easier we can do 

our jobs and the more efficiently we can do our jobs. I would say 

that about any mechanism. In terms of what is actually in a QI, 

obviously those are agreements negotiated by the IRS, not the Department of Justice. 

Senator LEVIN. I mean a law that created that presumption so 

that would have to be disclosed, it would be a rebuttable presumption, but it puts the burden on people who use these offshore tax 

havens to come forward and to disclose the fact that they have either assets in that tax haven or have assets, income from companies that are in those tax havens. 

Mr. O’CONNOR. Yes, I think I could just say that the Department 

has a formal response for handling inquiries about legislation. I, as 

I sit here today, cannot see a reason to oppose that. 

Senator LEVIN. All right. Do you have a comment on that at this 

time? 

Mr. SHULMAN. My comment is that the idea of getting a line of 

sight to the people who own and control these accounts is the 

whole game. I actually think some of the activities that are in your 

report and that have been made public show that we are actually 

doing a pretty good job right now of getting some of these lines of 

sight. 

Our preference would be to modify the regs in the QI program 

so we can see through first, and then come back later to things like 

presumptions because they are tools that can obviously ensnare a 

whole wide range of people who may or may not be involved in evasion. 

Senator LEVIN. Which is why we make it rebuttable. Senator 

Coleman. 

Senator COLEMAN. Thank you, Mr. Chairman. 

The Chairman talked about U.S. clients and this issue of beneficial owners. In other words, you create a trust, the beneficial 

owner is the client, but you use that as a way to shield the identity 

of the client. 

Even with secrecy jurisdictions, either to Mr. O’Connor or Mr. 

Shulman, is it fair to say that they still have to comply with the 

know-your-client obligations that we impose on banks? 

Mr. SHULMAN. Yes, in order to enter the QI program, a piece of 

the diligence is to have acceptable know-your-customer rules. And 

so people who are evading this are generally doing it on purpose. 

Senator COLEMAN. And that is what we call the ‘‘gap,’’ one of my 

frustrations. On the one hand, banks have to know their customer, 

so they know who they are dealing with. Then you have the QI program. If they have had their customers unload U.S. securities, they 

got the assets, they have their customers set up beneficial trusts 

20 

which should be identified, but they still know the customer because the banks retain that information. And yet when QI comes, 

they are allowed simply to put a blinder on and to respond just to 

QI, even though they know that there is another path in there. 

And what I am frustrated about is up until this hearing, we have 

folks auditing QI. They may, in fact, see fraud. They may see this 

other stuff. But they do not report on it. 

What has been the justification up until now for folks who are 

auditing, seeing fraud, seeing other trails, and not pursuing them? 

What has the rationale been all along? 

Mr. SHULMAN. Like I said, I am 3 months into this job. We are 

now in the process of closing down a loophole in the program. I 

think that the intent you articulated is just that, and I think banks 

who circumvent that intent should be ashamed of themselves. They 

know that the purpose of signing up for the QI program is to provide us with a line of sight into U.S. taxpayers who have a tax obligation, and they either withhold or report that income to us. And 

so, dancing around a set of technicalities is not an excuse. We are 

going to make sure we tighten up those technicalities so they are 

harder to dance around, and we will keep working with this Subcommittee if we find we cannot do that through administrative 

remedies and regulations. 

And so I cannot tell you what the purpose was before. I think 

the purpose was always to make sure we could see through and get 

the information. People have found some ways around that, and we 

are going to try to remedy that. 

Senator COLEMAN. And I hope we do. My point with the know 

your customer (KYC) rules is that the information is there. Banks 

know who these folks are, and they have been able to segregate out 

their KYC obligations and to kind of disassociate KYC from QI and 

just respond in a narrow sense to the QI, process that information 

that even our own auditors did not break through. So, I ask for a 

little bit of common sense here. And I know that we want folks to 

participate in QI. We are getting access to information that we did 

not have. On the other hand, there is a charade being played here. 

There is a game being played with terrible consequences. I am not 

seeing any bars to simply coming in and telling auditors to go down 

that trail. If there is fraud, you check it out. And to the banks, we 

know you have KYC obligations; if you do this, you have a problem. 

And we talk about what the reaction to that problem is. But, to me 

it seems pretty clear. You have this huge gap that there does not 

seem to be a reason for. 

Mr. O’Connor, one of the things that you talked about were these 

Mutual Legal Assistance Treaties (MLATs) that we have with 

other countries. So if you are doing an international case, we have 

this MLAT, but you have noted that they sometimes exclude tax 

crimes. I have not looked through this, but do they exclude tax 

crimes when we have MLATs with tax havens? 

Mr. O’CONNOR. Well, not surprisingly, obviously MLATs are the 

product not of legislation or dictation, but of negotiation. And at 

the end of the day, we try to negotiate the most favorable terms 

possible with foreign sovereigns. But we cannot dictate necessarily 

what they will give and not give us. 

21 

To no one’s surprise, the countries that tend to carve out, if you 

will, tax crimes tend to be those with bank secrecy laws. So it is 

an obstacle to us, and it is something we are very well aware of, 

and we are almost in daily communication trying to, if you will, 

loosen those terms to get the information we need. 

Senator COLEMAN. This would come back to perhaps another 

area of oversight, Mr. Chairman. We are giving these countries access to the world’s largest economy. We are giving them access to 

American securities. There is a huge benefit for being able to tap 

into the American economy. Even in the UBS notes, they talk 

about there are 200-and-something billionaires in America. This is 

a big market. This is still where, in spite of our challenges, it is 

where the money is. And I would think that we would utilize that 

leverage. 

So I would hope we would do a review of that and say for the 

luxury of participating in this market, this economy, and to be able 

to do business, we have to close this down. As I said, you can drive 

a Mack truck through the holes in this system. And there is a lot 

of money, Mr. Chairman, that is just not going down the drain, but 

it is staying in people’s pockets. 

So I see the MLATs, and it seems to me that the exclusion is 

something that we really have to take a look at, and I hope we 

would do that. 

Mr. O’CONNOR. If I may, Senator, we are, and I think in fairness, 

while the MLAT with a country, say, carves out tax cases except 

where there is an organized crime element, that is not our sole avenue to pursue evidence. So while the MLAT may not be as favorable to us as we would like, we do have a double taxation treaty. 

There is also what is called the IMAT, which is their own law enforcement assistance regulations in Switzerland. So there are other 

avenues we can pursue even if the MLAT has a carve-out for tax 

offenses, complete carve-out or sometimes defines tax offenses very 

narrowly. For example, in some countries, simple tax evasion is not 

a crime. It is only a civil liability. Whereas, in the United States 

it is a crime. 

So we find that each country is different, but we are very creative in exploring different avenues. If we run into a dead end with 

a MLAT, we will pursue those documents through the tax treaty. 

And again, as Commissioner Shulman said, if we have to go all the 

way down to using a grand jury subpoena or a John Doe summons, 

we will do that as well. 

Senator COLEMAN. Commissioner, just one other area of a gap in 

the QI program. It is my understanding—does the QI program involve folks who have assets in U.S. securities, their securities? 

Mr. SHULMAN. Correct. 

Senator COLEMAN. So that one of the things that we see is you 

get clients of both UBS and LGT who sold—if they sell of their U.S. 

securities, then they escape any QI obligations. Is that a fair statement? 

Mr. SHULMAN. If you sell off your U.S. securities, yes. 

Senator COLEMAN. And so what about expanding banks’ QI reporting obligations on U.S. persons—I am talking about U.S. citizens—beyond those for simply U.S. citizens who hold securities? 

Have you looked at that expansion of QI? 

22 

Mr. SHULMAN. Yes, when I talk about worldwide income and 

mention that—and I did not go into it deeper—that is one thing we 

are looking at. 

Senator COLEMAN. I would hope we would pursue that. Thank 

you, Commissioner. 

Thank you, Mr. Chairman. 

Senator LEVIN. Thank you very much, Senator Coleman. 

We welcome Senator Kerry here, and we are going to excuse this 

panel unless you have questions of them. 

Senator KERRY. Mr. Chairman, I don’t want—— 

Senator LEVIN. We were going to move to the second panel. 

Senator KERRY. I might have just two questions, if that is possible. 

Senator LEVIN. Please. 

Senator KERRY. Could I just begin by saying, first of all, thank 

you for the courtesy of allowing a non-Permanent Subcommittee 

Member to be part of this. I really appreciate that. I know that 

happens occasionally around here in various committees, and I am 

very grateful to you for your courtesy. 

And, second, I would like to say thank you to you and Senator 

Coleman for doing this. I see that some of the chairs are empty 

here, but I must say to you this is a topic that people really need 

to understand, and its larger implications. And I am very respectful of the work that this Subcommittee has done. It has done a terrific job, though I know there are some folks who dispute some aspects of the report, and that will have an opportunity to be able 

to be aired here. 

But when I served on the Banking Committee back in 1986, I became aware of some of this and became interested in it through a 

bank called BCCI, which became infamous because not only did it 

have money from Noriega and drug trafficking, but it has money 

from Osama bin Laden, which is one of the first times we observed 

his name. And that secrecy process really opened up a window for 

many of us, arms trafficking that was illicit and otherwise. And I 

remember visiting with the governor of the Bank of England in the 

course of trying to get at this and ran into resistance in certain 

quarters that were willing to protect the secrecy and the flow of 

funds in that way. 

And so that is when we developed some of the MLAT apparatus, 

which I have heard referred to. I did hear both of the testimonies, 

though I was not here. And we also passed some amendments in 

the Banking Committee that came to be known as the Kerry 

amendments, which required transparency and reporting. And, ultimately, the $10,000 transfer requirement and other things became pro forma. 

Listening to the Administration—and we created our financial 

group down at the Treasury, and we have gone through a process 

of this. But it strikes me that we are woefully behind the curve and 

that the focus on this has been sort of significantly sporadic, to be 

honest with you. And I want you to address that a little bit. 

There is an infamous building in the Cayman Islands that I believe houses some 15,000 or so brass plates that are telephone 

numbers and fax machines, which are used, everybody knows, to 

move huge sums of money in and out of the financial system. And 

23 

with the commingling of these funds that takes place with multiple 

transfers, ultimately accountability is really just absent. 

Why are known financial tax evasion/wealth-hiding entities still 

able to access the largest financial systems in the world and, until 

recently, the most secure in our own, willy-nilly? Just why has 

there not been a greater push for cross-country international transparency and accountability? Because I heard you in your testimony 

mention we are trying to get some of these others countries to cooperate. It depends on the level of their cooperation. We are still 

struggling with something that is just fundamental to the integrity 

of every government’s ability to be able to run itself and provide 

a fairness to their populations. And it seems to me the effort necessary to do this other than when Senator Levin and Senator Coleman have a moment of accountability is just not forthcoming. 

Can you address that? 

Mr. O’CONNOR. Well, I would be happy to speak on behalf of the 

Department of Justice. I think you are 100 percent correct about 

the scope of the problem, but I have had the pleasure of working 

with our Tax Division and to see even a case like the Birkenfeld 

case, the complexities involved in chasing through foreign accounts 

and foreign entities, it is incredible. And they are working incredibly hard with U.S. Attorneys’ Offices across the country to try to 

ferret out these cases, both the taxpayers—and there are obviously 

thousands of them—as well as the promoters. 

Of course, there is always going to be an issue. For example, we 

have one individual under indictment now who is in a country for 

which we do not have an extradition treaty. So you do run into 

road blocks in these investigations that are not made by Department of Justice or others, but it is just a simple sovereignty issue. 

And the folks in the Tax Division have assured me—and I am comfortable with that—that they are doing all that they possibly can 

to hold people accountable both here in the United States but 

abroad as well. And whether it is using material witness statutes 

to detain people, whether it is being creative in how we go about 

getting documentation that is not here in the United States, we are 

availing ourselves of all the avenues available to us. 

Senator KERRY. All the evidence available, but not all the evidence that could be available. I mean, don’t the G–8 fundamentally 

have the financial clout in the use of their system to demand greater transparency and accountability? 

Mr. O’CONNOR. Senator, I think they do, and in fairness to the 

folks who negotiate these treaties, I would imagine every time we 

ask for something, the countries ask for something in return. And 

I would imagine if you are in the State Department or in our Office 

of International Affairs negotiating MLATs, and every time we ask 

for more information, there is a counter request to us that we have 

to weigh equally. And we may have reasons in that circumstance 

to not agree to everything they want, which the end result might 

be we don’t get everything we want. 

Again, I am not privy to, I do not participate in those negotiations, but I know that they can oftentimes reach dead ends. 

Senator KERRY. Well, doesn’t the IRS have a very clear sense of 

the level of lost revenue to the country as a consequence of these 

practices? 

24 

Mr. SHULMAN. We talked a little bit about this before, Senator, 

and let me, if I could, just respond to your earlier question, and at 

least give you my perspective on it. I just started my term. I am 

going to be here for 5 years. We are going to make this a major 

focus. 

What I said before is really the notion that once you leave the 

United States, our tools become harder to use, and it takes longer 

to use them from a tax administration standpoint, evasion tactics 

are easier to execute when you get outside of the United States. 

You layer on that the notion that capital markets have become 

global, and the obvious place to hide assets. 

We have never had a study directly on the leakage from the U.S. 

Treasury from global tax evasion, but I am comfortable saying it 

is in the billions of dollars, and it is something that we are going 

to focus on. 

I think one of the keys and one thing that I know is happening 

now—and it has been happening in my 3 months here because I 

have been involved in conversations—is that the OECD has a Tax 

Administrator Forum that sets standards of transparency that the 

United States has been active in. Just in the last couple of weeks, 

I think the G–8 actually asked that there be a broader OECD directive around transparency. We now house people together with 

folks from the governments of the U.K., Australia, Canada, and 

Japan to look at tax evasion. And we have now coordinated efforts 

with those countries and others, around some of these tax haven 

and tax evasion cases that you have been reading about recently. 

And we have hundreds of cases open. 

In response to your question of whether we are behind the curve, 

I would say every regulatory entity in the United States is going 

to need to pay attention to global capital flows, and that we are always going to be struggling to get ahead of the curve where there 

is complexity. We need to focus on both U.S. citizens, who frankly 

are evading their tax obligations and shortchanging their citizens, 

as well as on the supply side, which this Subcommittee is talking 

about today, the banks, the promoters, the lawyers, the accountants—anyone else involved in making it possible to evade tax obligations. I just think we need to have continued focus. 

Senator KERRY. Well, my time is up. I really want to thank the 

Chairman. I would just say those efforts I referred to were 1986 

and 1991. It is now 2008. And I will tell you, the American taxpayer has enough to be angry about in terms of what is happening 

to their wallet today and the sense of unfairness that is institutionalized in the system. But if we cannot get at this with greater 

energy and create a system that is fair, and they are picking up 

the burden for a whole bunch of folks who are avoiding it and taking it overseas, we have a serious long-term problem because it undermines—and all you have to do is look at other countries in Europe that have difficulties in terms of the legitimacy of their tax 

structures to see what begins to happen. Our underground economy is already growing enormously, and everybody knows it. And 

this is one of the contributing factors to that. 

So, Mr. Chairman, I congratulate you again. I think this is really 

important stuff in terms of the integrity of our governance, and I 

think it is terrific you are pursuing it. 

25 

Senator LEVIN. Thank you, Senator Kerry. 

Let me mention that I think we both would fully agree with you 

that there is a role for much stronger regulation and enforcement. 

But there is also a role here for legislation, and as I mentioned in 

my opening statement, I have introduced with Senator Coleman 

and Senator Obama a bill which will really take on these tax havens head on. The way we do that, one of the ways we do it in that 

bill, is to create a rebuttable presumption that in enforcement proceedings, a U.S. taxpayer who forms a legal entity in an offshore 

secrecy jurisdiction, which were enumerated by the Treasury Department, or who sends assets to an entity in a tax haven jurisdiction, or who receives assets from an entity in a tax haven jurisdiction is presumptively liable for that income and for tax on those assets. 

It is the way to get at this thing. It puts the onus on taxpayers. 

They are not going to be able to go to that little building there that 

has tens of thousands of nameplates of phony corporations which 

allow people to avoid paying taxes because they cannot do it without violating our tax law. When they send in their tax return, 

under our bill they would have to disclose that they are sending assets to an entity in a tax haven. And if they do not do it, they 

would be violating our laws. Right now they do not violate our laws 

per se by just simply sending money to a tax haven. It is only if 

they do not report it under certain circumstances. 

We want to create a rebuttable presumption that they are taxable on that income. They can rebut it. But we have to do that if 

we are going to take on that building in the Caymans and places 

like that all around the world, and these banks which facilitate and 

aid and abet our taxpayers. That is the way we think we can directly do it legislatively. But we need all the regulatory enforcement. 

Senator KERRY. The only thing I would say to that, Mr. Chairman—and I applaud it, and I think you have to move in that direction. But I know, because I have been through this with some of 

these folks, what you are going to hear from some of them, and 

that is that in a global marketplace, where capital is competing for 

the return on investment and where there is a voracious appetite 

for deals and for who is moving their wealth where and how, some 

people are going to say if you make it so onerous only in one jurisdiction, those folks just are not going to bother, and they will go 

take their capital—— 

Senator LEVIN. We are not talking about foreign taxpayers. We 

are talking about U.S. taxpayers. 

Senator KERRY. I understand that, but it is critical for the U.S. 

taxpayer to be able to feel they are competing on a playing field 

where they can have the ability to compete. And if that comparable 

cost of capital gets skewered, which is why the international piece 

is so critical here, that you have got to have the transparency and 

openness and have the larger financial structure, now global, not 

just controlled by New York as it used to be, but London, Singapore, Hong Kong, a vast array of centers of finance, you are going 

to have to think carefully about the implications. That is all I am 

saying. 

26 

1See Exhibit No. 92, which appears in the Appendix on page 518. 

Senator LEVIN. I could not agree with you more. Senator Coleman. 

Senator COLEMAN. Thank you. 

Mr. O’Connor, if you could look at the exhibit book to your left, 

Exhibit No. 92,1 which purports to be information that comes from 

UBS, it was used at UBS workshops, training for some of their client advisors. It was given to us by Mr. Birkenfeld. I think he delivered that, and I will be asking the UBS folks about this. But if you 

look at Case 4—which the Chairman mentioned in his opening 

statement—and it gives a case study, and it says, ‘‘After passing 

the immigration desk during your trip to the USA/Canada, you are 

intercepted by the authorities. By checking your Palm, they find all 

your client meetings. Fortunately, you stored only very short remarks of the different meetings and no names.’’ 

Then it goes on to say, ‘‘You are staying at a hotel. You are being 

observed.’’ And what they are reflecting is being observed by authorities, and that you are then intercepted by an FBI agent, and 

he is looking for information about one of your clients, explains to 

you your client is involved in illegal activities. 

Then they ask, ‘‘What are the signs indicating something is going 

on?’’ In other words, this purports to be directions to folks coming 

in to do business here—and we are going to find out that they are 

not registered securities folks, that many of them that came, that 

on their entry documents saying they were here for personal reasons, not for business reasons were in fact here solely for the business of inducing and abetting tax evasion. 

Can you tell me in your experience whether—is this standard 

training that American businesses give to their staff or that even 

other international—I am trying to understand where this fits in. 

Mr. O’CONNOR. Well, if it is standard training, God help us because, again, in fairness, I would want to see what UBS would 

have to say about it. But it seems to me it is clearly a way to evade 

the QI requirements, the deemed sales provision of the QI programs, as well as our securities laws that would require them to 

register as investment advisors. And, as I have seen the Subcommittee’s report about filing false declarations with customs, the 

lengths that apparently we are going to—and, again, I referred to 

Mr. Birkenfeld’s plea where he confirms a lot of this. It is, frankly, 

very troubling, and that is why we charged that case as a 371 conspiracy. It was not charged as an evasion case. It is one thing for 

a U.S. taxpayer to be creative and create shell corporations. It is 

a whole different ball of wax when a bank is enabling it and encouraging it. And that is what Mr. Birkenfeld has admitted to here. 

It was not just a taxpayer trying to save money by not paying their 

lawful taxes. It was a conspiracy. 

Senator COLEMAN. If you were looking at pursuing some action 

against the entity, would it be fair to say that this kind of information at least appears on the surface to be enabling the kind of illegal conduct that we are talking about? 

Mr. O’CONNOR. Again, I have to be very careful with an ongoing 

investigation, but in a hypothetical manner, obviously this is documentation that raises a lot more questions than it answers. 

27 

1See Exhibit No. 5.a., which appears in the Appendix on page 213. 

Senator COLEMAN. Thank you, Mr. O’Connor. 

Thank you, Mr. Chairman. 

Senator LEVIN. Thank you, Senator Coleman. And we will again 

thank you both and excuse you. 

Mr. SHULMAN. Thank you. 

Senator LEVIN. Before we seat the next panel, we are going to 

have a tape recording, so the second panel is going to be deferred 

until we have a presentation of a statement by and questions of a 

man named Heinrich Kieber. 

In 2007 and 2008, Mr. Kieber, a former employee of LGT provided tax authorities around the world with records on people who 

had accounts at LGT. He freely gave to this Subcommittee about 

12,000 pages of documents related to U.S. persons who had LGT 

accounts. 

Mr. Kieber spent 2 years reviewing the LGT documents. He also 

spoke with LGT officers and employees. As a result, he gained a 

familiarity with the operations and practices of LGT. During a recorded interview with Subcommittee staff, he provided information 

on LGT practices that helped U.S. citizens hide their assets from 

U.S. tax authorities. Many of the practices that he outlined apply 

to the case histories that are featured in the next panel. 

This taped interview along with the documents provided to the 

Subcommittee by Mr. Kieber provide insight into the practices of 

LGT. 

This man is now in a witness protection program. His current location and name are unknown to the Subcommittee. In order to 

avoid any breach in the security surrounding his condition or 

whereabouts, we will not discuss any aspects of the interview other 

than the content. There is a transcript of this interview at Exhibit 

No. 5.a.1

So now if we could play that interview, we would appreciate it. 

[Interview played.] 

[The transcript of the interview follows:] 

MR. ROACH: Good morning, sir. My name is Bob Roach. I am counsel for the 

Democratic staff of the Permanent Subcommittee on Investigations. With me is my 

colleague, Mike Flowers, who is counsel for the Republican staff of the Subcommittee. 

MR. FLOWERS: Good morning, sir. 

CONFIDENTIAL WITNESS: Good morning. 

MR. ROACH: Thank you for joining us. 

I understand you have a statement to make after which we will ask you a few 

questions about the banking and trust operations of the LGT Group. Please proceed. 

CONFIDENTIAL WITNESS: Good morning. 

I swear that the testimony I am about to give will be the truth, the whole truth, 

and nothing but the truth so help me God. 

In 2000, the LGT Trust was evaluating the so-called ‘‘paperless office.’’ A project 

to scan every document of each client’s legal entity and index them electronically, 

encoding an internal ‘‘bak track’’ code, a b-a-k. The project requires to hire over 20 

new staff members. Based on my education and skills, I, then named Heinrich 

Kieber, worked—started to work at the LGT Trust in Vaduz in October 2000, and 

I worked there for more than 2 years until the date 2002. 

The LGT Group in Liechtenstein is a provider of a vast range of financial services. 

The key business of the LGT Group consists of the LGT Bank and the LGT Trust 

services. Both are independent, commercial companies, and both use autonomous 

computer data storage systems. 

The core trade of the LGT Trust, with head office in Vaduz and several branches 

in Switzerland, is selling and managing Liechtenstein legal entities such as foundaVerDate Aug 31 2005 14:02 Dec 05, 2008 Jkt 044127 PO 00000 Frm 00041 Fmt 6633 Sfmt 6633 P:\DOCS\44127.TXT SAFFAIRS PsN: PAT
28 

tions or establishments. They cater for clients from many different countries including the USA. Generally, the client transfers his/her bank assets, such as securities 

and cash accounts and often also the nonbank assets, such as real estate, expensive 

paintings, patents, rights, etc., into the ownership of a selected one or more legal 

entity. 

The client becomes then the beneficial owner of the legal entity. Every single legal 

entity from Liechtenstein has to pay on average a worldwide matchless flat tax rate 

of only $1000 Swiss francs per year, regardless of the millions of different type of 

assets they own and income they gain. 

The LGT Trust, back in the year 2002, had over 3,500 active legal entities under 

management, with the combined total bank assets of around 7.2 billion Swiss francs 

of which about 6 were invested at the LGT Bank and the rest in other Liechtenstein 

banks or Swiss banks. Back then, the LGT Bank had around 50 to 60 billion Swiss 

francs in their books. Today they hold over 100 billion Swiss francs. The real value 

of the nonbank assets are never recorded in the books. 

The first couple of months I was in charge of the correct handling of all clients’ 

legal entities’ files to make sure that they are scanned properly and that not one 

of the very sensitive documents where all the data concerning the beneficial owners 

are recorded is lost in the process. Because of the nature of my job, I had access 

to all documents of all legal entities, active ones and the inactive ones. 

The biggest task of the second stage was the proper indexing of all scanned documents. To be able to index the documents, we had to read every single one on our 

screens. It was then when I began to realize the very questionable business the LGT 

was often involved in and the dubious clients they were serving, the kind of business that goes beyond just facilitating massive tax evasion. Going through thousands of documents, I got very—I got the very clear picture of the highly sophisticated and sometimes surprisingly simple tricks and methods used to (a) help any 

clients to bring his or her bank assets to Liechtenstein and nonbank assets under 

the control of the one or more selective legal entity; (b) help any clients to keep his 

or her assets out of the reach of the taxman and people who may have a legal right 

to it or interest in it; (c) get around the laws of Liechtenstein and other countries; 

(d)—and (d)—avoid the attention of international law enforcement agencies and the 

international media. 

Liechtenstein has implemented real tough new compliance laws in January 2001. 

In addition, in July 2002, they signed a mutual assistance treaty with the United 

States of America. This treaty was designed to protect the international financial 

markets against terror, organized and economic crimes. However, the business practices of LGT undermines those reforms that Liechtenstein enacted. The LGT deliberately ignores the basic principles of the know-your-customer rules. For sure, I can 

frankly declare that in the vast majority of all legal entities, LGT does not have a 

clue about the real sources of their clients’ huge wealth they manage, as it has been 

verified in the files I delivered to the U.S. Government. 

The final part of my job was to conduct training programs for all of the 85 staff 

members of the LGT Trust, including CEO, members of the company’s board—and 

members of the company’s board. When I was teaching the CEO or a member of 

the board or a trust client advisor, I confronted them about the LGT’s questionable 

practices that I have seen in many files. Sometimes I always raised this topic with 

foundations’ bank account managers from the LGT Bank. All these discussions were 

about files with strong indication to corruption, links to dictators, or business deals 

to avoid a U.S. embargo, for example. The answer was always the same: None of 

your business. Just stick to your designated job. 

I obtained copies of the data of every legal entity and, furthermore, copies of vast 

internal documents before I left the company. All documents provided are authentic, 

original copies and have not been in any way changed or manipulated. 

MR. ROACH: Thank you, sir. 

CONFIDENTIAL WITNESS: That’s my statement. 

MR. ROACH: Thank you, sir. I’d now like to ask you a few questions. First of 

all, in your statement you referred to tricks that LGT used to help clients bring 

their assets into the bank, including—would you mind commenting on that, including the use of shell companies to move funds internationally. 

CONFIDENTIAL WITNESS: Yes. There are several methods in use, depending on 

the type of assets the client wants to transfer into his or her legal entity in Liechtenstein. For bank assets, the LGT Group establishes, indirectly manages, and ultimately owns a number of legal entities, so called ‘‘special purpose vehicles,’’ SPV. 

For the purpose of high-grade camouflage, there are two types of SPVs. Type A: big 

bank accounts around the world; and Type B: Which do not have any bank accounts 

but own and control Type A. To protect the LGT Group, those types used are never 

29 

from Liechtenstein. The LGT uses only SPV registered in Panama, in the British 

Virgin Islands, or sometimes even in Nigeria. 

In practical terms, for a U.S. client, the LGT will transfer the bank’s assets out 

of the United States through a chain of several Type A SPVs. Firstly, always into 

a country, for example, Canada, which from the IRS point of view is not suspicious. 

Next, through a series of other countries and therefore different jurisdictions. Preferably countries with very weak or, better, non-existing compliance laws. Before 

reaching Liechtenstein, it will run through a Swiss bank, for example the Banca del 

Gottardo in Lugano. This bank, in turn, has reciprocal rights to use the LGT Bank 

for its own customers. 

For an additional layer of concealment, either the Swiss bank or the LGT Bank 

often perform a fake cash-out transaction to make it look like the monies have been 

paid out in cash over the counter where in fact they have been transferred into the 

concentration account of the LGT Bank and, at the same time, an equal amount has 

been credited into the client’s legal entity’s bank account. After one or two years 

in use, the SPVs are put into liquidation, then deleted, and new ones established. 

The only purpose of all this is to make it extremely complicated for law enforcement agencies to follow the trail, as each step serves as a filter to hide the track 

of the client’s money. For any bank or trust company in Liechtenstein, the matter 

of SPVs is commercially very sensitive material. The better sys—sorry. The better 

the system put in place, actually the less it will be detected. There’s a lot of effort 

put into general research and checks of any possible legal implications, so that the 

LGT Group can always be many steps ahead of the tax authorities. 

All of the clients’ trust advisors and bank account managers of the LGT Group 

get regular in-house training in relation to the latest tricks and methods used so 

they can keep their knowledge up to date and can offer it to any existing or future 

customers. 

MR. FLOWERS: Thank you, sir. 

Sir, you mentioned during your statement that LGT helped clients to keep their 

assets out of reach of tax agencies or persons with legal claims on those assets. 

Could you please explain how that was accomplished? 

CONFIDENTIAL WITNESS: Yes. What happens, the LGT strongly recommends 

to all clients to follow instructions such as, firstly, not to tell anybody concerning 

the legal entity to their lawyers, to other family members or relatives who are not 

part of the pool of beneficial owners, to friends or business partners. The reason is, 

any human relationship can go wrong and the client may end up in a situation 

where blackmailing is possible. Secondly, not to call the LGT Group from home— 

not from home, not from work. Use public phones instead. As Liechtenstein has an 

own country code number, the IRS may use the same plan as the Italian tax police 

did some years ago. They ordered the state-run phone company to record over a certain period the caller’s i.d.; the time, date, and number dialed from a big city in 

Italy to Liechtenstein, to a Liechtenstein number. When the number called did not 

match a phone number—sorry—did match a phone number registered to a bank, 

trust company, or a lawyer, the tax police of Italy conducted a special assessment 

of the Italian callers. Thirdly, a third recommendation, only make calls in emergency to the nominated cell phone numbers of the clients’ trust advisors. The LGT 

Trust only uses cell phone numbers from Switzerland or Austria. Again, because of 

the existence of a Liechtenstein-own country code number. When calling, the clients 

should always use the code words agreed and never state their own names or name 

of the legal entities. In addition, the LGT Group itself does not send any mail to 

their customers out of—from Liechtenstein. If at all, mail gets sent out via Swiss 

or Austrian post office to avoid the attention of any tax enforcement agency around 

the world looking for mail coming from Liechtenstein. In addition, any documents 

sent out are specially prepared in the way that the name of the bank, the client’s 

name, or the legal entities’ name is not revealed. The LGT Group does not call the 

clients at home or at work or on her or his phone—cell phones and does not communicate with their clients via email. The fact that all the LGT Trust’s clients do not 

need their assets hidden in legal entities for their daily living helps very much to 

avoid detection and to keep the personal contact between the parties to a minimum, 

on average once per year. 

MR. ROACH: Thank you. 

You said that LGT used methods to allow it to get around compliance with the 

laws of Liechtenstein and other countries. How did LGT do that? 

CONFIDENTIAL WITNESS: Yes, they’re very sophisticated in that way. The 

know-your-customer rules necessitate a lot of up-to-date documentation concerning 

the client’s identity and the true source of assets. In addition, a profile of every client has to be created, and any movement outside the set profile has to be reported 

to a preferably independent government entity, for example, to the financial intelVerDate Aug 31 2005 14:02 Dec 05, 2008 Jkt 044127 PO 00000 Frm 00043 Fmt 6633 Sfmt 6633 P:\DOCS\44127.TXT SAFFAIRS PsN: PAT
30 

ligence unit. The LGT not only fails to keep the basic documentation up to date, 

often there is no clear indication of the beneficial owner or the source of the monies 

at all. Furthermore, they, the LGT Trust, predetermine the threshold of a client’s 

profile in such an unrealistic way that it would—that it will not trigger the compulsive report even so when according to compliance law, the transaction is regarded 

as more than suspicious. 

MR. FLOWERS: Thank you, sir. 

Sir, based on your experiences while working at LGT, did LGT ever assist U.S. 

persons in repatriating their assets back to the United States in a manner that 

would have reduced the attentions of the United States Government? 

CONFIDENTIAL WITNESS: Yes, there are several tricks in use, and I recall one. 

Then, at times, actually the LGT Trust would adjust the legal entities’ documents 

to designate a new beneficial owner who will cause or result in the lowest tax obligation or, if possible, a zero tax obligation. Often this means creating a—new trust 

documents and changing the name of the real beneficial owner into the name of a 

person or relative who has recently died or, in some cases, is unfortunately in the 

process of dying. When the assets are transferred back to the United States, the real 

beneficial owners explain to the IRS that they have just inherited a large amount 

which was only discovered in recent times. 

MR. ROACH: Now, in your statement, you also said that LGT sought to avoid the 

attention of international law enforcement and the media. How did LGT do that? 

CONFIDENTIAL WITNESS: After some major scandals in the past 15 years, in 

an effort to avoid bad and further damage to their reputation, many powerful financial key players in Liechtenstein established smaller banks or trust companies 

whose names nobody recognizes. They have transferred their risky group of clients 

into those new banks or trust companies. In that way, if the risky clients are exposed in a scandal overseas, the larger well-known banks or trust companies are 

out of trouble and the media spotlight. The LGT Trust, but not so much the LGT 

Bank, did not accept new clients from Russia, for example, but would refer them 

to such smaller trust companies. 

MR. FLOWERS: Sir, you made references in your statement to LGT’s role in assisting in corruptive—or corruption, acts of corruption including breaking embargoes, for example. Could you please elaborate on that? 

CONFIDENTIAL WITNESS: Yeah. The words I say here is that one set of documents indicate its pride in government officials in another country—in other countries including the United States. The LGT Bank introduced the client to the LGT 

Trust. The LGT Trust did accept the client but refused to nominate staff onto a new 

Panama company where such payments should be done in the future. At the end, 

in this file, the payments continued to be facilitated through the LGT Bank. 

And there’s another file which has a very strong indication to—of corruption in a third world country. A head of a social government department owns over $5 million U.S. dollars with no explanation in the files whatever in regard to the source 

of the vast amount. 

MR. ROACH: In an answer to a previous question, you identified some problems 

with LGT’s know-your-customer program. What about LGT’s compliance with the 

qualified intermediary program? 

CONFIDENTIAL WITNESS: Yeah, I strongly believe that they are violating this 

one too. The IRS implemented the qualified intermediary stages QI to be able to 

collect the withholding tax on interest and dividends on U.S. securities through foreign intermediaries. The LGT Group realized quickly that without the QI stages, 

the banking secrecy for their U.S. clients cannot be sustained, because only as a QI 

the LGT Group can avoid having to report the underlying beneficial owners to the 

IRS. The IRS approved the QI stages to Liechtenstein as a country and to the LGT 

Group as a foreign intermediary in early 2001, as both were able to persuade the 

IRS that Liechtenstein’s know-your-customer rules were top standard. All U.S. clients from the LGT Group with U.S. securities in the bank portfolios have been informed about the QI regulations. These clients had two options: Get out of the U.S. 

security—sell them or keep them. The clients wanting to keep the U.S. securities 

had great fears that the IRS may eventually find out who the ultimate beneficial 

owners are, for instance, through the external auditors’ working paper the IRS can 

request to examine. 

To reduce the panic, the LGT came up with the solutions: (a) to transfer all U.S. 

securities held by a legal entity of a U.S. tax person into a newly established Panama corporation. To add a further layer of secrecy between the foundation and that 

Panama corporation, another offshore company will own the Panama corporation. 

The LGT’s argument for the Panama corporation solution was that the IRS regards 

it as a per se corporation; (b) having added enough offshore companies in between 

the U.S. client as a beneficial owner and the entity holding the U.S. securities, the 

31 

1 Exhibit No. 5.b., which appears in the Appendix on page 222. 

LGT Trust declares the whole structure as being a non-U.S. status. This should 

keep the client out of trouble and taxes. 

MR. ROACH: Thank you very much, sir. We appreciate your comments. 

This concludes our questions. 

MR. FLOWERS: Thank you, sir. 

CONFIDENTIAL WITNESS: Thank you very much. 

Senator LEVIN. After Germany and other nations began to act on 

the information provided by Mr. Kieber, Liechtenstein put out an 

international arrest warrant for Mr. Kieber and posted his picture 

on the government’s website, and this is a chart of that website.1

Even today it is on the website, and Mr. Kieber has been listed by 

Liechtenstein as their number one target for arrest. 

This is what the message on that arrest warrant reads. This is 

a translation: ‘‘Information on the whereabouts of Heinrich Kieber 

should be passed on to the national police force of the Principality 

of Liechtenstein or the closest police station. Kieber is being sought 

under an international arrest warrant. Liechtenstein law enforcement authorities seek Kieber’s prompt delivery/extradition. The 

legal basis: Warrant issued by the principality’s county court on 2/ 

9/08 for the alleged transfer (passing on) of company business secrets for use abroad and for data theft.’’ 

Liechtenstein is obviously aggressive in pursuing persons who release information about their banking practices in violation of their 

secrecy laws. They have not been particularly aggressive at all in 

combating banks that facilitate tax evasion. And while the government of Liechtenstein told the Subcommittee that it has now initiated an investigation into LGT, when the Subcommittee asked the 

chief compliance officer of LGT Group about the investigation, he 

was unaware of it. 

We will now call panel two. Mr. Marsh and Mr. Wu, if you would 

please be seated. 

[Pause.] 

Senator LEVIN. Let me now welcome our second panel of witnesses for today’s hearing: Shannon Marsh of Fort Lauderdale, 

Florida, and William Wu, of Forest Hills, New York. We appreciate 

your traveling here today. 

Pursuant to Rule VI, all witnesses who appear before the Subcommittee are required to be sworn. And at this time, I would ask 

both of you to please stand and raise your right hand. Do you 

swear that any testimony that you will give before this Subcommittee will be the truth, the whole truth, and nothing but the 

truth, so help you, God? 

Mr. MARSH. I do. 

Mr. WU. I do. 

TESTIMONY OF SHANNON MARSH, FORT LAUDERDALE, 

FLORIDA, ACCOMPANIED BY SHARON KEGERREIS, ESQ. 

Senator LEVIN. Our investigation disclosed that Shannon Marsh 

is the son of the late James Albright Marsh who formed four Liechtenstein foundations in the mid-1980s, as shown in a chart which 

we will put up, and transferred substantial sums to those foundaVerDate Aug 31 2005 14:02 Dec 05, 2008 Jkt 044127 PO 00000 Frm 00045 Fmt 6633 Sfmt 6601 P:\DOCS\44127.TXT SAFFAIRS PsN: PAT
32 

1See Exhibit No. 1, which appears in the Appendix on page 209. 

2See Exhibit No. 7, which appears in the Appendix on page 224. 

3See Exhibit No. 2, which appears in the Appendix on page 210. 

tions.1 In 1985, for example, LGT documents show that he depos- ited $3.3 million in cash into just one LGT foundation. That is Exhibit No. 7.2 By 2007, the assets in the four foundations had a com- bined value of more than $49 million. 

Shannon Marsh, who is here today, has been involved with the 

LGT foundations since the beginning. LGT’s documents indicate 

that he traveled to Liechtenstein, served as a foundation protector 

with control over the foundations’ activities, and signed a so-called 

letter of wishes to provide instructions for distributing foundation 

assets that he would receive. The Marshes are in settlement discussions with the IRS. 

Mr. Marsh, do you have any opening remarks? 

Ms. KEGERREIS. No, Your Honor, we don’t. 

Senator LEVIN. Mr. Marsh, have you ever spoken to anyone at 

LGT Bank in Liechtenstein? 

Mr. MARSH. On the advice of counsel, I hereby invoke my right 

to remain silent under the Fifth Amendment of the U.S. Constitution. 

Senator LEVIN. And, Mr. Marsh, do you have any corrections to 

what I have just said about the Marsh foundations and your activities at LGT to ensure that we have the facts right? 

Mr. MARSH. On the advice of counsel, I hereby invoke my right 

to remain silent under the Fifth Amendment of the U.S. Constitution. 

Senator LEVIN. Mr. Marsh, you have been asked specific questions about matters of interest to this Subcommittee, and in response to each question, you have asserted your Fifth Amendment 

privilege. Is it your intention to assert your Fifth Amendment 

privilege to any question that might be directed to you by the Subcommittee today? 

Mr. MARSH. Yes, it is, sir. 

Senator LEVIN. Given the fact that you intend to assert a Fifth 

Amendment right against self-incrimination to all questions asked 

of you by this Subcommittee, you are excused. You are free to 

leave. 

Ms. KEGERREIS. Thank you, Chairman Levin. 

Senator LEVIN. Thank you. 

Mr. MARSH. Thank you. 

TESTIMONY OF WILLIAM WU, FOREST HILLS, NEW YORK, 

ACCOMPANIED BY HENRY KLINGEMAN, ESQ. 

Senator LEVIN. Our investigation disclosed that William S. Wu 

has lived for many years with his family in New York. LGT helped 

Mr. Wu establish a Liechtenstein foundation in 1996 and a second 

one in 2006. LGT documents indicate that these foundations were 

used to conceal certain Wu ownership interests. For example, in 

1997, 3 months after forming his first foundation, Mr. Wu pretended to sell his home in New York to what appeared to be an 

unrelated party from Hong Kong. In fact, as you can see from the 

chart which we have put up,3 the buyer was a British Virgin Islands company with a Hong Kong address, and it was wholly 

33 

1See Exhibit No. 120, which appears in the Appendix on page 681. 

2See Exhibit No. 3, which appears in the Appendix on page 211. 

3See Exhibit No. 54, which appears in the Appendix on page 367. 

owned by a Bahamian corporation, which was in turn wholly 

owned by Mr. Wu’s Liechtenstein foundation. These layers of ownership were designed to hide Mr. Wu’s ownership of the home that 

he lived in and likely shield him from taxes at the same time. 

LGT documents also show that Mr. Wu transferred substantial 

sums to his foundation and over the years withdrew substantial 

amounts ranging from $100,000 to $1.5 million at a time. In one 

instance, LGT arranged for Mr. Wu to withdraw $100,000 using an 

HSBC bank check drawn on a LGT correspondent account, which 

made the funds difficult to trace. By 2006, Mr. Wu’s first foundation had been dissolved while his second foundation had assets in 

excess of $4.6 million. 

Mr. Wu, do you have an opening statement? 

Mr. WU. No, sir. 

Senator LEVIN. Have you ever spoken to anyone at LGT Bank in 

Liechtenstein? 

Mr. WU. Senator, I decline to answer the question based on my 

right to remain silent under the Fifth Amendment to the U.S. Constitution. 

Senator LEVIN. And, Mr. Wu, do you have any corrections to 

what I have just said about your foundations and your role in them 

in order to ensure that we have the facts correct? 

Mr. WU. No, sir.1 And, Senator, I intend to give the same answer 

to any questions posed to me. 

Senator LEVIN. You have been asked specific questions about 

matters of interest to this Subcommittee, and in response to the 

questions, you have asserted your Fifth Amendment privilege. Is it 

your intention to assert your Fifth Amendment privilege to any 

question that might be directed to you by the Subcommittee today? 

Mr. WU. Yes, sir. 

Senator LEVIN. Given the fact that you are asserting a Fifth 

Amendment right against self-incrimination to all questions asked 

of you by this Subcommittee, Mr. Wu, you are excused. 

Mr. WU. Thank you. 

Senator LEVIN. Thank you. 

Now, the third witness who was subpoenaed for this panel was 

Steven Greenfield. Harvey Greenfield, Steven Greenfield’s father, 

and Steven Greenfield are New York businessmen. In 1992, LGT 

helped Harvey Greenfield establish a Liechtenstein foundation for 

which he is the sole primary beneficiary. Steven Greenfield holds 

power of attorney. As shown in the Greenfield foundation chart,2

the Greenfields’ foundation used two British Virgin Islands corporations as conduits to transfer funds, which at the end of 2001 

had a combined value of $2.2 million. 

A LGT memorandum, which is Exhibit No. 54,3 describing the 

2001 meeting in Liechtenstein with Prince Philipp states the following: ‘‘The Bank of Bermuda has indicated to the client that it 

would like to end the business relationship with him as a U.S. citizen. Due to these circumstances, the client is now on the search 

for a safe haven for his offshore assets. The bank indicates strong 

interest in receiving the US$30 million. The clients are very careful 

34 

1Subsequent to the adjournment of the hearing, Mr. Steven Greenfield agreed to appear before the Permanent Subcommittee on Investigations at the July 25 hearing. Senator Levin’s 

longer statement was presented at that hearing. However, the correspondence referred to by 

Senator Levin is included as Exhibit No. 121, which appears in the appendix on page 683. 2See Exhibit No. 122, which appears in the Appendix on page 699. 

and eager to dissolve the trust with the Bank of Bermuda, leaving 

behind as few traces as possible.’’ 

The Subcommittee subpoenaed Mr. Greenfield to testify at today’s hearing. LGT documents indicate that he has information related to the Subcommittee’s investigation into tax haven financial 

institutions, their use of offshore entities and accounts for U.S. clients, and the impact of these activities on U.S. tax compliance. 

Mr. Greenfield’s counsel informed the Subcommittee by letter 

that Mr. Greenfield would assert his Fifth Amendment rights in response to any questions and requested that he be excused from appearing at this hearing. The Subcommittee informed Mr. Greenfield’s counsel by letter that his absence was not excused and that 

he was required to attend the hearing and answer Subcommittee 

questions or assert appropriate privileges in response to particular 

questions. Our letter assured the lawyer that any assertion or constitutional rights would be respected, but that his client needed to 

make any assertions personally at the hearing. That exchange of 

correspondence will be included in today’s hearing record, as well 

as a longer statement of mine.1

Senator LEVIN. Mr. Greenfield has ignored the Subcommittee’s 

subpoena and directive and has chosen not to appear today. There 

are both civil and criminal sanctions that can be sought by the 

Subcommittee for his failure to appear, and we will at the appropriate time make a decision as to how to proceed with respect to 

Mr. Greenfield. 

The fourth witness who was to be on this panel was Peter Lowy. 

On July 10, 2008, Mr. Lowy was asked to appear at today’s hearing. His attorney was informed that Mr. Lowy would be formally 

subpoenaed if he did not agree to appear voluntarily. A subpoena 

was signed. 

On July 11, 2008, Mr. Lowy’s attorney was asked if he was authorized to accept service of the subpoena. He replied that he 

would check with his client and respond by Monday, July 14. On 

Monday, Mr. Lowy’s attorney notified the Subcommittee that Mr. 

Lowy was out of the country. Yesterday, Mr. Lowy’s attorney provided a letter stating that Mr. Lowy would appear before the Subcommittee for a hearing on July 25, one week from tomorrow. The 

letter will be entered into the record, as well as the other documents referred to, and we will look forward to his appearance at 

that hearing.2

Senator LEVIN. Senator Coleman, before we proceed now to our 

next panel, I am wondering if I might turn to you for any comments that you might have. 

Senator COLEMAN. Mr. Chairman, I simply want to say for the 

record that I associate myself with the comments from the Chairman and will work with the Chairman on following up and pursuing these matters. 

35 

Senator LEVIN. I want to thank you, Senator Coleman, again for 

your work on this matter, for the great work also of your staff. 

They have been essential. 

Senator COLEMAN. It has been a very good bipartisan investigation, Mr. Chairman. 

Senator LEVIN. Now, the next panel is Martin Liechti—and I 

hope I am pronouncing your name correctly, Mr. Liechti—the head 

of the Wealth Management Americas, which is part of the Wealth 

Management Business Bank Division of UBS. In this capacity, Mr. 

Liechti oversees, among other things, the activities of UBS private 

bankers in Switzerland who serve U.S. clients, and his offices are 

located in Zurich, Switzerland. 

Pursuant to Rule VI, all witnesses who testify before the Subcommittee are required to be sworn. And at this time, I would ask 

you, Mr. Liechti, to please stand and raise your right hand. Do you 

solemnly swear that any testimony that you will give before this 

Subcommittee will be the truth, the whole truth, and nothing but 

the truth, so help you, God? 

Mr. LIECHTI. Yes, I do. 

TESTIMONY OF MARTIN LIECHTI, HEAD, UBS WEALTH MANAGEMENT AMERICAS, ZURICH, SWITZERLAND, ACCOMPANIED BY DAVID M. ZORNOW, ESQUIRE 

Senator LEVIN. Do you have any opening remarks, Mr. Liechti? 

Mr. ZORNOW. Mr. Chairman, we do not have an opening statement. 

Senator LEVIN. Are you, Mr. Liechti, involved in setting and implementing policies that govern the practices of UBS private bankers in Switzerland who recruit and serve clients from the United 

States? 

Mr. LIECHTI. Mr. Chairman, on advice of my counsel, I assert my 

rights under the Fifth Amendment to the U.S. Constitution and respectfully decline to answer your question. 

Senator LEVIN. Mr. Liechti, as part of your responsibilities, do 

you travel to the United States? 

Mr. LIECHTI. Mr. Chairman, on the advice of my counsel, I assert 

my rights under the Fifth Amendment to the U.S. Constitution, 

and I respectfully decline to answer your question. 

Senator LEVIN. Mr. Liechti, you have been asked specific questions about matters of interest to this Subcommittee. In response 

to each question, you have asserted your Fifth Amendment privilege. Is it your intention to assert your Fifth Amendment privilege 

to any question that might be directed to you by the Subcommittee 

today? 

Mr. LIECHTI. Yes, I do. 

Senator LEVIN. Given the fact that you are asserting your Fifth 

Amendment right against self-incrimination to all questions asked 

of you by this Subcommittee, you are excused. 

Mr. ZORNOW. Thank you, Mr. Chairman. 

Mr. LIECHTI. Thank you. 

Senator LEVIN. Thank you. We will now move to our final panel 

and call as our final witness today Mark Branson, the Chief Financial Officer of UBS Global Wealth Management and Business 

Banking of Zurich, Switzerland. 

36 

Mr. Branson, I want to thank you for traveling here today. We 

look forward to your testimony. 

The Subcommittee also extended an invitation to the LGT Group 

in Liechtenstein. We do not have the authority to compel its attendance. We, nonetheless, had hoped that LGT would send a representative to answer questions and to provide us with the bank’s 

perspective. LGT chose not to appear. LGT did send its Senior 

Compliance Officer to be interviewed by the Subcommittee in private last week and provided limited information in response to our 

requests. We obviously had hoped that LGT would be more open 

and forthcoming to enable the Subcommittee to gain a better understanding of its interaction with U.S. clients. However, we do not 

have subpoena capability over LGT, and they decided not to appear. 

We are very pleased that you appeared today, Mr. Branson, and 

we know that in doing so you are undertaking to answer some 

questions which you have heard a great deal about already. 

Pursuant to Rule VI, all witnesses who testify before the Subcommittee are required to be sworn. And at this time, I would ask 

you to please stand and raise your right hand. Do you solemnly 

swear that the testimony you will give before this Subcommittee 

today will be the truth, the whole truth, and nothing but the truth, 

so help you, God? 

Mr. BRANSON. Yes, I do. 

Senator LEVIN. Thank you. You may proceed. Do you have an 

opening statement, Mr. Branson? 

Mr. BRANSON. I do. 

Senator LEVIN. That is fine. Thank you. 

TESTIMONY OF MARK BRANSON, CHIEF FINANCIAL OFFICER, 

UBS GLOBAL WEALTH MANAGEMENT AND BUSINESS BANKING, MEMBER, UBS GROUP MANAGING BOARD, ZURICH, 

SWITZERLAND 

Mr. BRANSON. Thank you, Chairman Levin and Senator Coleman. My name is Mark Branson of UBS. I am the Chief Financial 

Officer of our Global Wealth Management and Swiss Businesses located in Zurich. I have been with UBS since 1997, and in my current position for 5 months. Prior to this, I was the Chief Executive 

Officer of UBS in Japan. I am now responsible for finance and for 

risk control, including the financial reporting of our performance 

and the maintenance of a strong compliance framework for our 

wealth management business worldwide. 

Mr. Chairman, I have now had the chance to review your Subcommittee’s staff report. I am here to make absolutely clear that 

UBS genuinely regrets any compliance failures that may have occurred. We will take responsibility for them. We will not seek to 

minimize them. On behalf of UBS, I am apologizing. I am committing to you that we will take the actions necessary to see that this 

does not happen again. 

First, we have decided to exit entirely the business in question. 

That means that UBS will no longer provide offshore banking or 

securities services to U.S. residents through our bank branches. 

Such services will only be provided to residents of this country 

through companies licensed in the United States. While we are 

37 

winding down this business, there will be no new accounts opened, 

and Swiss-based client advisors will not be permitted to travel to 

the United States for the purpose of meeting with U.S. clients. 

Second, we are working with the U.S. Government to identify 

those names of U.S. clients who may have engaged in tax fraud. 

Client identity is generally protected from disclosure under Swiss 

law, but such privacy protections do not apply when disclosure of 

client names is requested in connection with an investigation of tax 

fraud and where the requests are presented to the Swiss Government through established legal channels. We will fully support and 

assist that process. 

Mr. Chairman, I have worked in this organization in many different divisions and many different locations over the past 11 

years. What I have experienced is a firm which not only puts an 

enormous emphasis on compliance—compliance with law, compliance with regulation, compliance with internal policy—not only 

that but also acts as a partner to governments seeking the assistance of the financial system. We have been a recognized partner to 

the U.S. Government in its efforts to stop the flow of money that 

supports terrorism, illegal drug trade, or organized crime. And we 

have constructed a best-in-class system for reconciling the multiple 

sanction rules imposed by the United States, the United Nations, 

the European Union, and other countries. This system has won direct praise from senior officials in the U.S. Treasury Department. 

And these are just two examples. 

Like many international financial institutions with clients 

around the globe invested in U.S. securities, UBS has entered into 

a Qualified Intermediary (QI) agreement with the Internal Revenue Service. We entered this agreement with the IRS effective 

January 1, 2001. The QI agreement established a reporting and 

withholding regime by which UBS would help the U.S. Treasury 

collect more taxes. 

Chairman Levin, I know that you and Senator Coleman object to 

banks providing cross-border services to U.S. clients with accounts 

that do not require the filing of a Form W–9 with the IRS. But, 

respectfully, this cross-border business was and is entirely legal in 

both Switzerland and the United States. And, indeed, the QI expressly contemplates that U.S. citizens could access bank accounts 

in Switzerland and other countries without providing a Form W– 

9 as long as they held no U.S. securities. Unless or until those 

rules are changed, that is the framework with which we and other 

banks must comply. 

In 2000, UBS adopted detailed procedures and policies to implement the QI agreement, and we worked hard to comply. For example, we undertook a comprehensive process to identify the accounts 

of U.S. persons which contained assets that could generate U.S. 

source income. Then, consistent with the QI agreement, UBS systematically communicated with all of these U.S. persons, advising 

them that they must either provide UBS with Form W–9, and 

thereby disclose to the IRS their relationship to the account, or 

must agree to sell all of the U.S. securities in their accounts. If 

those clients did not respond by taking one of those two options, 

we administered forced sales of the U.S. securities in those accounts. Notwithstanding this effort, we now know that our compliVerDate Aug 31 2005 14:02 Dec 05, 2008 Jkt 044127 PO 00000 Frm 00051 Fmt 6633 Sfmt 6601 P:\DOCS\44127.TXT SAFFAIRS PsN: PAT
38 

ance system had failures, and misconduct appears to have occurred. 

As the Subcommittee is aware, the U.S. Department of Justice 

has been conducting an investigation of UBS’ business of servicing 

U.S. clients from Switzerland. Last year, in order to respond to 

U.S. investigations, UBS launched a comprehensive internal investigation into our cross-border business with U.S. customers. These 

still ongoing investigations suggest that misconduct occurred, 

which we find unacceptable. We did have detailed written policies 

that prohibited our employees from engaging in some of the conduct that our internal investigation has uncovered, such as assisting in the creation of sham offshore companies to defraud tax authorities. While our own review is not complete, it is apparent now 

that our controls and our supervision were inadequate. We are 

committed to taking both corrective and disciplinary measures. 

Mr. Chairman, as you know, we have nearly 32,000 U.S. employees out of some 80,000 employees around the world. They are all 

understandably alarmed by the reports of misconduct that they 

have been seeing. They want to know that kind of misconduct does 

not belong in UBS and that the firm’s ethics match their own. I 

am here today to tell you and to tell them that, no, that kind of 

misconduct does not belong in UBS; and, further, that by exiting 

this business, we have taken a major step designed to ensure that 

this misconduct will not be repeated and that this matter can be 

properly resolved. 

Thank you for the opportunity, and I will be pleased to answer 

your questions. 

Senator LEVIN. Thank you very much, Mr. Branson, for not only 

coming today but for the steps which your bank is now taking. If 

anybody ever suggests that congressional oversight does not have 

an impact, I hope they will read today’s hearing. We have put a 

lot of time into this investigation, and it has obviously already paid 

off and was worthwhile. We just want to clarify a few things, however, one being—you say you have read the report, you have read 

the stories of UBS’ undeclared accounts and encrypted computers 

and the shell companies that you mentioned that were created, the 

anonymous wire transfers, the disguised business trips, the 

countersurveillance training, the requirement that foreign credit 

cards be used. 

Do you have any corrections that you want to make in those factual statements? 

Mr. BRANSON. I think obviously it is a very detailed, very thorough report, which raises obviously very legitimate concerns. I 

think there may well be some areas of factual record within the report that we may challenge, but points of detail, especially in terms 

of the record of growth in the business which you reference in the 

document, is something which doesn’t actually correspond to our 

understanding of the growth in the business over that period, 

maybe some other details. 

Senator LEVIN. Would you give to the Subcommittee for the 

record—not today, obviously, but for the record, would you provide 

us with any factual statements that are in the report that you disagree with? 

Mr. BRANSON. I am sure we can provide that. 

39 

1See Exhibit No. 92, which appears in the Appendix on page 518. 

Senator LEVIN. Could you provide that within the next couple 

weeks? 

Mr. BRANSON. Yes. 

Senator LEVIN. Thank you. Would you agree that the purpose of 

the QI agreement is not just a technical compliance but is a compliance with the point and the intent of that agreement so that if a 

bank that agrees to provide information to the IRS of the presence 

of a client in that bank from the United States, and then takes 

steps to help that client cover up the U.S. identity of that client 

so that it appears that the deposit comes from some foreign entity 

rather than from the beneficial owner, that violates the purpose 

and intent and spirit of the QI agreement? 

Mr. BRANSON. I would agree that the creation of any kind of 

sham offshore entities to conceal the identity of the client from the 

IRS would be a violation of the QI agreement. 

Senator LEVIN. If you would take a look at Exhibit No. 92,1 this 

is a cross-border workshop that UBS held for its bankers, and just 

take a look at Case 4, if you would. I am not going to go through 

all these, obviously, because of the position that you are now taking, which is a very welcome one, at UBS. But take a look at Case 

4. These are all troubling because, obviously, this is training to 

help your bankers avoid surveillance. But there is that one sentence in the first paragraph there about, ‘‘After passing the immigration desk during your trip to the USA/Canada, you are intercepted by the authorities. By checking your Palm, they find all 

your client meetings.’’ And then it says the following: ‘‘Fortunately, 

you stored only very short remarks of the different meetings and 

no names.’’ 

Would you agree that is very troubling? 

Mr. BRANSON. I think this and the other case studies in this kind 

of training document have to be seen in the context of the legal 

framework under which these client advisors are operating, and 

clearly that is all of the applicable legal frameworks relevant to 

their business activities, obviously in this case specifically the legal 

frameworks of Switzerland, the legal frameworks of the United 

States. 

The legal framework of Switzerland, as it relates to bank-client 

confidentiality, clearly prohibits the disclosure of clients’ names or 

identities or their relationship to the bank except in circumstances 

of criminal activity, tax fraud, etc., as we have heard today. 

So any client advisor, whether they be in Switzerland or abroad, 

has an enormously strong duty under the law not to disclose the 

names of their clients. 

Senator LEVIN. Now, this is not disclosure. 

Mr. BRANSON. Well, under Swiss law—— 

Senator LEVIN. Can you not keep a record of it? 

Mr. BRANSON. The names of a client—the link of a name of a client and the relationship to UBS would count as the disclosure of 

that client’s name—it is not the disclosure of the assets in the account. Simply the disclosure of that client relationship is against 

Swiss law and has severe sanctions, and that is what this training 

40 

is designed to talk about: Are there difficult situations in which you 

may find yourself because of that legal framework? 

Senator LEVIN. Disclosure is one thing, but putting it in your 

own Palm, is that disclosure under your law? 

Mr. BRANSON. Yes. 

Senator LEVIN. That would be disclosure, putting it into your 

own record? 

Mr. BRANSON. If that became available to other parties. 

Senator LEVIN. Of course. 

Mr. BRANSON. Yes. 

Senator LEVIN. That is not what it says here. 

Mr. BRANSON. Putting it into your Palm would not be, but 

that—— 

Senator LEVIN. It says here, ‘‘Fortunately, you only stored very 

short remarks.’’ It doesn’t say ‘‘disclosed.’’ It says ‘‘stored.’’ 

Mr. BRANSON. Yes. 

Senator LEVIN. And no names. 

Mr. BRANSON. I think this kind of—as I understand—obviously, 

I am not privy to the details of this training, but as I understand 

this kind of case study, this is talking about data protection, and 

I think in many different circumstances, data protection through 

lost Palms, lost BlackBerrys, lost mobile phones is one of the acute 

concerns of anybody in the services industry, especially the financial services industry. And I do believe that is exactly what this is 

referring to. 

Senator LEVIN. You have testified that you were going to address 

the current 19,000 accounts, approximately. 

Mr. BRANSON. Yes. 

Senator LEVIN. Can you just give us a little more detail as to 

what your intent is, as to how you are going to handle that and 

see to it that any wrongdoing in those accounts will be disclosed 

and taken care of and shared with the IRS? Can you give us that 

again? 

Mr. BRANSON. So in terms of—— 

Senator LEVIN. The existing accounts. 

Mr. BRANSON. Existing accounts and any possible misconduct 

that may have occurred within UBS, we have an enormously comprehensive internal investigation into that, and obviously at the 

same time cooperating with the investigations of the U.S. Government into that potential misconduct. There are no final conclusions 

from what is an ongoing investigation. The preliminary conclusions, I think we have shared some of them with you here today. 

That investigation and that process which I referenced of working 

between the different governments and their authorities on the disclosure of client names where tax fraud is suspected, that is an ongoing process. We are supporting and we are assisting that process, 

and we expect it to bring results. 

Senator LEVIN. Are you going to be cooperating with the IRS 

now? 

Mr. BRANSON. Yes, we are. 

Senator LEVIN. In looking at these 19,000 names? 

Mr. BRANSON. We will be cooperating with the IRS on their summons. 

41 

1See Exhibit No. 88, which appears in the Appendix on page 502. 

Senator LEVIN. Will you take a look at Exhibit 88?1

You have made reference to this notice to U.S. customers in your 

statement, and you said to the customers that you are going to 

need to do something here if you have U.S. securities in your account. ‘‘Should a customer choose not to execute such a form, the 

client is barred from investments in U.S. securities. But under no 

circumstances will his or her identity be revealed.’’ 

Now, as I understand what you are saying to your U.S. customers, it is that you must either have these securities shifted to 

a different entity or you must get rid of these securities, you must 

sell them. And that is what you call ‘‘forced’’—— 

Mr. BRANSON. ‘‘Forced sales’’ of U.S. securities, yes. 

Senator LEVIN. U.S. securities. And you said under no circumstances will the identity be revealed. In other words, you would 

not maintain an account that continued to have U.S. securities in 

it without a W–9 form. 

Mr. BRANSON. That’s correct. 

Senator LEVIN. But we know from the work that this investigation has carried out that the other option which was utilized was 

the creation of these sham companies, these other entities in whose 

name the securities would then be held and deposited. But the secrecy drive here is perhaps reflected as dramatically in that one 

line, I think, as anything else that we have seen. 

We have had a lot of folks who have asserted their rights under 

the Constitution today, and others did not appear at all. UBS, to 

its credit, not only appeared but you have taken responsibility for 

your actions, and you have changed your business and your business practices. And I just hope that LGT will take notice. I hope 

that other Swiss banks and other tax haven banks will take notice 

as well. UBS is the largest private bank in the world today, I believe, and by changing its stance, I hope that it will start a trend 

which will clean up the offshore community and stop tax haven 

banks from facilitating U.S. tax evasion. 

So before I call on Senator Coleman, I want to thank you, Mr. 

Branson, and I want to thank UBS for your cooperation with this 

Subcommittee’s investigation. Senator Coleman. 

Senator COLEMAN. Thank you, Mr. Chairman. I also hope that 

others take notice and respond accordingly. I do have some questions. 

If I can get back to that Case 4, the study there, we are talking 

about data protection from law enforcement. That is what this is 

focused on. And what troubles me—and it is more a comment than 

a question. If you read this, Mr. Chairman and Mr. Branson, it 

talks about you begin to observe, you notice that some doubt if all 

the hotel employees are working for the hotel; in other words, you 

are being observed by law enforcement. And rather than saying at 

that point, let UBS—let them call the Justice Department, what is 

the problem here, you are directing your people to figure out a way 

to limit any and all cooperation with law enforcement. I mean, this 

to me ties in with—when you look at the other stuff, you look at 

folks coming into the country and putting on their entry forms here 

‘‘For personal business,’’ when it appears they were here for solicVerDate Aug 31 2005 14:02 Dec 05, 2008 Jkt 044127 PO 00000 Frm 00055 Fmt 6633 Sfmt 6601 P:\DOCS\44127.TXT SAFFAIRS PsN: PAT
42 

iting clients. You put it all together, and it is not a very comforting 

scenario. I just wanted to make that comment. 

UBS has great presence in Minnesota, good community citizens. 

What I am trying to understand is you have 20 client advisors coming in, over 300 trips, they are taking clients from American—from 

folks here. They are taking assets. I presume it is competitive. Everyone wants to build up their portfolio. 

Who in the United States was aware that these client advisors 

from Switzerland were coming in for the purpose of soliciting business in violation of U.S. securities law? 

Mr. BRANSON. I have no knowledge that anyone in the United 

States was aware. 

Senator COLEMAN. Wouldn’t anybody have asked the question, 

‘‘What are you doing here?’’ 

Mr. BRANSON. It may well be that they are not in the same geographic location, so I have no knowledge that anybody in the U.S. 

knew of specific visits. 

Senator COLEMAN. I find that troubling and really difficult to 

comprehend. If somebody has a UBS guy coming—if I am a UBS 

guy probably looking to build our portfolios, and somebody is coming in talking to a high-net-worth individual, I think I have to figure out what they are doing. I think I got to know what they are 

doing. And that piece has never been resolved, and I appreciate the 

steps you are taking now. I hope as you look internally that if you 

are really going to clean house that you raise those questions because they certainly are troubling. 

Let me just ask other questions about things that I am still a little unsure of or troubled by as I sit here. 

You have indicated that UBS attorneys advised the Subcommittee while some travel was permitted to the United States 

after November 2007, mainly if it had been previously planned, 

they told us in no event did any travel occur after January 2008. 

Our staff has reviewed data from the Department of Homeland 

Security that shows from January 2008 to April 2008, many of the 

same UBS bankers in the Wealth Management Unit that we have 

talked about before came to America 12 times. Six of those trips 

were listed as being for non-business purposes. 

Are you aware of folks in 2008 involved in the Wealth Management Unit coming to the United States and continuing to do business here? 

Mr. BRANSON. Obviously, what you refer to is data that we don’t 

have access to, and obviously, to the extent that we could get access to that, then we can clear up these questions. There may be 

a number of reasons why that travel either was because it genuinely was for leisure purpose, because it was for business travel 

unconnected with clients, maybe because some of those client advisors are no longer within that unit. So there may be a number of 

reasons why that does not indicate a pattern which is inconsistent 

with that travel ban. If there was a pattern inconsistent with that 

travel ban that is shown by that data, I am sure we would take 

the appropriate action. It is completely inconsistent with our—— 

Senator COLEMAN. But you are confident that your travel ban 

has been communicated and understood by UBS employees in Switzerland and the United States? 

43 

Mr. BRANSON. Absolutely confident, yes. 

Senator COLEMAN. All right. And based on your knowledge of the 

program and the practices we described here today, is there anything that we described here today that you believe is different 

than other banks in Switzerland that fall into UBS’ classes in 

terms of size. I am trying to figure out is it your sense that this 

has been the standard practice, the stuff we have seen here, or was 

UBS the exception? 

Mr. BRANSON. It is really impossible for me to generalize across 

other industry or competitors. Sorry, I just really would not have 

that experience or knowledge. 

Senator COLEMAN. It is certainly a competitive industry. You 

have an identified class of individuals that you are going after. I 

think I saw in one of the UBS documents, 222 billionaires being 

part of the universe. 

Mr. BRANSON. I mean, certainly the business that we were in, as 

we pointed out, was a legal, legitimate business, so we certainly 

were not the only people in that business. That is for sure. 

Senator COLEMAN. One of the things that was talked about today 

was the gap between the know-your-client obligations and the QI 

obligations. We have been proposing changes to the QI agreement, 

which include strengthening audit provisions, requiring UBS to report all American client accounts, not just those containing U.S. securities. That is not the law today. And requiring UBS to apply 

what it learns through know your client (KYC), to its QI obligations, what would UBS do in response to those changes? 

Mr. BRANSON. Well, I guess, as I said, we are exiting the business. It, to some extent, would become a moot point under that. 

But I think your point is well made that there is a—under the QI 

agreement, the QI definition of ‘‘beneficial ownership’’ and the KYC 

definition of ‘‘beneficial ownership’’ are not the same. I think that 

is something that you pointed out to Commissioner Shulman this 

morning as being an ambiguity, if you like, of the QI agreement 

set-up. It sounds as though he is going to be addressing that ambiguity, which obviously the more clarity there is in the rules, the 

easier it is to not slip into gray areas. 

Senator COLEMAN. Mr. Branson, based on your coming forward 

with a pretty full apology, with a commitment to exit the business, 

to restructure how UBS operates, I had a lot of questions about 

why you were doing the things that you are doing. I think it is 

pretty clear. You are doing it to develop customer relations with 

American clients in violation of U.S. securities law and other statutes. Let’s look to the future. 

Again, I appreciate your coming forward. I still remain somewhat 

troubled by the fact that the scope of this activity and the limited 

number of folks that you were dealing with to me would have to 

have raised questions beyond folks just coming from Switzerland. 

So I do hope that you look very closely and aggressively at that if 

you are in the process of cleaning house. 

Thank you, Mr. Chairman. 

Senator LEVIN. Thank you. 

We have your commitment here this morning and your promise 

to cooperate with the U.S. tax authorities, and we assume that also 

44 

would include a commitment to cooperate with the SEC, the American Securities and Exchange Commission. 

Mr. BRANSON. It does. 

Senator LEVIN. Relative to any possible security violation. 

Mr. BRANSON. It does. 

Senator LEVIN. We cannot reach all the banks. We obviously 

have reached yours, and that represents progress. The way we 

have to reach other banks, I am afraid, is going to have to be 

through our laws, our regulations. We cannot get them all in front 

of us to do what you have done today here. So we are going to continue that effort. We hope that what you have now decided to do 

will reverberate throughout that tax haven community. We are determined that we are going to end these abuses which cost so much 

money to the American Treasury, which are so unfair to the American taxpayer, and we are going to continue that process a week 

from tomorrow, on July 25. And we will adjourn until then. 

Thank you again, Mr. Branson. 

Mr. BRANSON. Thank you. 

[Whereupon, at 12:10 p.m., the Subcommittee was adjourned.] 

(45) 

TAX HAVEN BANKS 

AND U.S. TAX COMPLIANCE 

FRIDAY, JULY 25, 2008 

U.S. SENATE, PERMANENT SUBCOMMITTEE ON INVESTIGATIONS, OF THE COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, Washington, DC. 

The Subcommittee met, pursuant to notice, at 10:05 a.m., in 

Room SD–106, Dirksen Senate Office Building, Hon. Carl Levin, 

Chairman of the Subcommittee, presiding. 

Present: Senators Levin and Coleman. 

Staff Present: Elise J. Bean, Staff Director/Chief Counsel; Mary 

D. Robertson, Chief Clerk; Robert L. Roach, Counsel and Chief Investigator; Ross Kirschner, Counsel; Zack Schram, Counsel; Gina 

Reinhardt, Congressional Fellow; Timothy Everett, Intern; Jeffrey 

Rezmovic, Law Clerk; Lauren Sarkesian, Intern; Spencer Walters, 

Law Clerk; Mark L. Greenblatt, Staff Director and Chief Counsel 

to the Minority; Michael P. Flowers, Counsel to the Minority; Adam 

Pullano, Staff Assistant to the Minority; Erica Flint, Staff Assistant to the Minority; Kelly Brannigan; and Thomas Caballero, Senate Legal Counsel’s Office. 

OPENING STATEMENT OF SENATOR LEVIN 

Senator LEVIN. The Subcommittee will come to order. Sorry that 

we had to delay the opening because of two roll call votes on the 

Senate floor. 

Last Thursday, the Subcommittee broke through the wall of secrecy that surrounds tax haven banks to expose how UBS AG of 

Switzerland and LGT Bank of Liechtenstein, from 2000 to 2007, 

used an array of secrecy tricks to help U.S. clients hide assets from 

Uncle Sam. The hearing showed, for example, how UBS opened 

Swiss accounts for 19,000 U.S. clients with nearly $18 billion in assets and did not report any of those accounts to the Internal Revenue Service. The hearing also presented multiple case histories of 

U.S. clients who used LGT accounts to stash millions of dollars in 

Liechtenstein. A former LGT employee, now in hiding for disclosing 

LGT client information, provided videotaped testimony describing a 

long list of secrecy tricks and deceptive practices used by LGT to 

hide client funds. 

UBS, to its credit, announced at the hearing last week that it 

would take responsibility for its actions. It apologized for past compliance failures, promised to close all 19,000 Swiss accounts unless 

the U.S. account holder agreed to disclose the account to the IRS, 

46 

1See Exhibit No. 122, which appears in the Appendix on page 699. Exhibit includes July 18, 

2008, letter identifying matters the Subcommittee requested Mr. Lowry to address at the July 

25, 2008, hearing. 2 Communications between the Subcommittee and counsel for Mr. Greenfield that took place 

during the period between July 18 and July 24 are included as part of Exhibit No. 121, which 

appears in the Appendix on page 683. 

and announced it would no longer offer undeclared offshore accounts for U.S. clients. UBS also indicated that it was prepared to 

cooperate with the John Doe summons served on the bank by the 

IRS seeking the names of U.S. clients with undeclared accounts, 

pending negotiations between the U.S. and Swiss Governments on 

how it should comply. I hope our governmnent will accept nothing 

less than all 19,000 client names. 

UBS’ surprise stance at the hearing provides a dramatic example 

of how congressional oversight can help stop offshore abuses. UBS 

is now apparently the subject of criticism in Switzerland for agreeing to cooperate with U.S. tax enforcement efforts and disclose client names. This criticism shows how cynical Swiss secrecy has become. It is used today not only to protect account holders’ privacy, 

but to hide wrongdoing by both account holders and the banks that 

help them. The United States is losing perhaps $100 billion in tax 

revenues each year due to offshore tax abuses. Swiss bankers 

should be stopped not only from aiding and abetting such lawlessness, but from profiting from it. If UBS lives up to its promises, 

it is prepared to trade in bank secrecy for transparency, the rule 

of law, and tax cooperation. The rest of the banking industry in 

Switzerland and elsewhere should follow its lead. 

In contrast to UBS, three other witnesses invited to appear at 

last week’s hearing were notably absent. LGT, which is not subject 

to the Subcommittee’s subpoena power, did not show. Though LGT 

met privately with Subcommittee investigators, the bank chose not 

to discuss and defend its practices at an open hearing, perhaps because those practices are not defensible. LGT issued a statement 

before the hearing that its practices have changed from those described in the Subcommittee report. Count me skeptical that LGT 

has stopped selling secrecy to its clients. 

Another scheduled witness, Peter Lowy, was not in the country 

last week despite being notified of the hearing. Following our notice 

to him of the Subcommittee’s intention to subpoena him, he determined to appear today.1 The final witness, Steven Greenfield, 

failed to comply with a Subcommittee subpoena that was served on 

him requiring his attendance at the hearing last week. The Subcommittee announced at the hearing that it was considering initiating contempt-of-Congress proceedings with respect to Mr. Greenfield. Prior to doing so, the Subcommittee offered him a final opportunity to appear today.2

Our objective today is to take testimony from Mr. Greenfield and 

Mr. Lowy to complete the Subcommittee’s hearing record. Both 

men were involved with the formation of Liechtenstein foundations 

with the help of LGT. Their foundations then opened LGT accounts 

with millions of dollars in assets. In both cases, LGT took measures 

to hide their ownership interests in those accounts. Both cases are 

now under scrutiny by the IRS. 

The Greenfield and Lowy case histories unfold like spy novels, 

with secret meetings, hidden funds, shell corporations, captive 

47 

1See Exhibit No. 3, which appears in the Appendix on page 211. 

2See Exhibit No. 54, which appears in the Appendix on page 367. 

foundations, and complex offshore transactions spanning the globe 

from the United States to Liechtenstein, Switzerland, the British 

Virgin Islands, Australia, and Hong Kong. What they have in common is that LGT bank officials acted as willing partners to move 

a lot of money into their bank while obscuring the ownership and 

origin of the funds. 

The first case history being examined today involves Harvey and 

Steven Greenfield, father and son, two New York businessmen who 

specialize in importing toys. Internal LGT documents show that, in 

1992, LGT helped Harvey Greenfield establish a Liechtenstein 

foundation, for which he is the sole primary beneficiary and for 

which Steven Greenfield held power of attorney. As shown in this 

chart which we are putting up, which is Exhibit 3,1 the Greenfield 

foundation used two British Virgin Island corporations that they 

controlled as conduits to transfer funds which, at the end of 2001, 

had a combined value of about $2.2 million. 

In March 2001, LGT records show that LGT held a 5-hour meeting at its Liechtenstein offices attended by the Greenfields, three 

LGT private bankers, and Prince Philipp, Chairman of the Board 

of the LGT Group and brother to the reigning sovereign in Liechtenstein. The meeting was primarily a sales pitch to convince the 

Greenfields to transfer another $30 million to their LGT foundation 

from a Bank of Bermuda account in Hong Kong. 

A LGT memorandum describing the meeting, Hearing Exhibit 

54,2 states in part the following: 

‘‘Bank of Bermuda has indicated to the client that it would like 

to end the business relationship with him as a U.S. citizen. Due to 

these circumstances, the client is now on the search for a safe 

haven for his offshore assets. . . . The Bank . . . indicate[d] strong 

interest in receiving the U.S. $30 million. . . . The clients are very 

careful and eager to dissolve the Trust with the Bank of Bermuda 

leaving behind as few traces as possible.’’ 

So LGT pitched itself as a ‘‘safe haven’’ for the Greenfields’ offshore assets and offered specific suggestions for how the Greenfields could move their $30 million from Hong Kong ‘‘leaving behind as few traces as possible.’’ One LGT suggestion was to transfer the $30 million through the two BVI corporations that the 

Greenfields controlled to channel assets into their Liechtenstein 

foundation. The documents we obtained stop in 2001; we do not 

know whether the $30 million transfer actually took place. 

The Lowy case history illustrates additional LGT secrecy practices. LGT documents disclose that Frank Lowy was an existing client of LGT when he asked, in 1996, about setting up a new foundation to conceal assets from Australian tax authorities. 

LGT documents describe three meetings held between LGT and 

the Lowys, in Sydney, Los Angeles, and London, to discuss the 

structure, funding, and investment portfolio of a new foundation. 

According to a LGT memorandum, the Los Angeles meeting took 

place in January 1997 and was attended by LGT representatives, 

Frank Lowy, and his sons David and Peter Lowy. 

48 

1See Exhibit No. 114, which appears in the Appendix on page 629. 

LGT actually formed Luperla Foundation in April 1997. To hide 

the Lowys’ ownership interest, LGT employed a number of secrecy 

tricks. 

First, LGT did not include the Lowy name in any of the official 

Luperla documents. Although internal LGT documents state that 

Frank Lowy and his sons were the intended beneficiaries of 

Luperla, the only name on the foundation documents was that of 

their attorney, Joshua H. Gelbard. 

Second, funds from other Lowy-related entities were not directly 

transferred into the Luperla account. Instead, LGT routed the 

funds through a British Virgin Islands transfer corporation, called 

Sewell Services Inc., to hide the trail of funds. 

Third, LGT and the Lowys designed a unique mechanism to hide 

the fact that the Lowys were the beneficiaries of the Luperla Foundation. The key to the plan was a Delaware corporation named 

Beverly Park Corporation, which the Lowys controlled. 

Beverly Park was formed in January 1997, the same month the 

Lowys met with LGT in Los Angeles. Beverly Park has a complex 

ownership chain that ultimately ends with the Frank Lowy Family 

Trust. Beverly Park’s President and Director since its inception is 

Peter Lowy. The key Luperla provision states that the foundation’s 

beneficiaries would be named by the last company in which Beverly 

Park held stock. That meant that Luperla had no official beneficiaries at the time it was formed or in the following years, except, 

of course, for the financial beneficiaries that were named in the 

documents of LGT. This ingenious set-up allowed the Lowys to 

deny with a straight face that they were foundation beneficiaries, 

while controlling the Delaware corporation that would eventually 

be used to name those beneficiaries. 

This chart which we are putting up, which is Exhibit 114,1 shows 

how the Luperla Foundation was initially funded and what happened to those funds 4 years later. First, the hidden money trail 

into Luperla, that is the top half of the chart. The trail starts with 

$54 million in Lowy funds whose origin is unclear. One LGT document states that the $54 million ‘‘originate[d] from a relatively 

complex transaction, with the goal of bringing shares listed in the 

stock market back into the [Lowy] family’s possession, which was 

successfully completed.’’ Another LGT document reports that the 

funds ‘‘stem[med] from a credit financing of the LGT Bank in 

Liechtenstein that at the time was carried out through a company 

called Crofton.’’ In any event, at some point, the $54 million made 

its way into a LGT account that had been opened in the name of 

Crofton, a company which LGT documents indicate was under the 

control of the Lowys. In May 1997, the $54 million was moved from the Crofton account at LGT to the LGT account opened in the name of Sewell 

Services, the BVI transfer corporation that LGT had established. 

From there, the $54 million was immediately transferred to the 

LGT account for Luperla. 

Additional transfers through Sewell Services added to the 

Luperla account over time and by 2001, 4 years later, the Luperla 

account had grown to $68 million. At that point, the Lowys apparVerDate Aug 31 2005 14:02 Dec 05, 2008 Jkt 044127 PO 00000 Frm 00062 Fmt 6601 Sfmt 6601 P:\DOCS\44127.TXT SAFFAIRS PsN: PAT
49 

1See Exhibit Nos. 48 thru 50, which appear in the Appendix on pages 342–352. 

2See Exhibit Nos. 50 and 112, which appear in the Appendix on pages 352 and 601 respectively. 3See Exhibit No. 48 which appears in the Appendix on page 342. 

4See Exhibit No. 110, which appears in the Appendix on page 599. 

ently decided to dissolve Luperla and move its funds to Switzerland. That gets us into the bottom half of the chart which shows 

the hidden instructions that led to the transfer of Luperla’s funds 

to Switzerland. 

To transfer the $68 million and dissolve their foundation, 

Luperla’s beneficiaries had to be named. As explained earlier, the 

process for naming those beneficiaries had to start with Beverly 

Park, the Delaware corporation whose President was Peter Lowy. 

In the summer of 2001, Beverly Park secretly acquired the stock 

of a British Virgin Islands shell company called Lonas Ltd. Lonas 

Ltd. had been formed in July 2001; the Lowy attorney, Joshua 

Gelbard, was appointed Lonas’ sole director. This information 

about Lonas is described in several LGT documents, including Exhibits 48 through 50,1 even though Beverly Park’s own corporate 

minutes never mention its acquisition of this British Virgin Islands 

company. 

On December 13, 2001, Beverly Park gave Mr. Gelbard a letter 

authorizing him to act on its behalf, even though he was not an officer, director, or employee of the company. A copy of this letter as 

well as other original documents related to Beverly Park were provided to Peter Lowy on the same day and then passed on to LGT, 

as shown in Exhibits 50 and 112.2 Over the next week, Mr. 

Gelbard worked with LGT to provide the information needed for 

Lonas Ltd. to name the recipients of Luperla’s assets and to obtain 

the transfer of the funds of the foundation. On December 13, 2001, 

Mr. Gelbard provided a handwritten certification to LGT that Beverly Park did ‘‘not hold shares of any corporation’’ after Lonas Ltd. 

That was the signal that Lonas was then empowered to name the 

foundation’s beneficiaries the recipients of its assets. Mr. Gelbard 

also, on the same day, provided written instructions to LGT for 

‘‘the disbursement of all assets of the foundation.’’ Those documents 

are described in Exhibit 48.3

LGT documents show that even after receiving these instructions 

from Mr. Gelbard to transfer Luperla funds, LGT continued to view 

the Lowys as the true parties behind the foundation. For example, 

Exhibit 50 shows that after receiving instructions from Mr. 

Gelbard to transfer the $68 million to two accounts at a Swiss 

bank, LGT twice telephoned David Lowy to confirm the instructions. LGT even took the precaution of recording one of those telephone calls. 

After David Lowy authorized the transfer of the funds, on December 20, 2001, as shown in Exhibit 110, 4 LGT emptied the 

Luperla account, transferring all $68 million in two transfers to 

Bank Jacob Safra in Geneva. 

Frank Lowy has said publicly that the funds were ‘‘distributed 

for charitable purposes . . . some years ago,’’ but he has refused 

the Subcommittee’s request to name the charities involved or identify the dates and amounts of the donations. He has also declined 

50 

the Subcommittee’s invitation to supply additional information 

about Luperla Foundation or LGT Bank. 

In 2007, the Lowys were contacted by the IRS with inquiries 

about Beverly Park. In submissions to the IRS, Beverly Park 

claimed that it ‘‘did not and does not own any entities,’’ despite the 

LGT documents showing that it had owned Lonas Ltd. 

Today’s hearing provides another opportunity to examine LGT’s 

actions to help its clients hide assets. We hope our two witnesses, 

Steven Greenfield and Peter Lowy, will shed additional light on 

LGT’s actions. 

The United States was not, of course, the only country victimized 

by LGT. LGT has apparently assisted people from dozens of countries in every corner of the globe to evade taxes. While the IRS is 

investigating 147 U.S. taxpayers with LGT accounts, British tax 

authorities recently announced they are on the trail of 300 million 

pounds in unpaid taxes on 1 billion pounds hidden in Liechtenstein. In Germany, over 500 people have admitted so far to failing to pay taxes on funds in a LGT account, and hundreds more 

are under investigation. LGT still promotes itself as ‘‘the Wealth 

and Asset Management Group of the Princely House of Liechtenstein.’’ It is ironic that a princely bank is the source of this 

international tax scandal. 

But we can do more than simply shake our heads at that bank’s 

conduct. We can take action to stop offshore tax abuses, starting 

with enactment of S. 681—the Stop Tax Haven Abuse Act. Yesterday, our colleagues on the Senate Finance Committee held a hearing on how over 18,500 companies—as many as half from the 

United States—claim to have offices at a single building, the 

Ugland House in the Cayman Islands. It sounds like the Finance 

Committee is as fed up as we are with tax haven tricks, and it is 

time to join together this year to stop tax haven abuses. 

Before I call on our witnesses, I would like to turn to Senator 

Coleman. I want to thank him again for his ongoing support of this 

investigation and invite his opening remarks. 

OPENING STATEMENT OF SENATOR COLEMAN 

Senator COLEMAN. Thank you, Senator Levin, and I will have 

more abbreviated remarks today than we had last week. 

A week ago, this Subcommittee held a hearing on abuses in offshore tax havens. We found a series of masquerades and maneuvers that were shocking in their audacity. Today, as the Chairman 

noted, we continue that inquiry. At the outset, it is important to 

note the reasons for today’s session. 

While last week’s hearing was standing room only for those in 

the audience, just as notable were the empty chairs at the witness 

table. Mr. Greenfield was subpoenaed to appear before this Subcommittee last week, but he chose to defy the Subcommittee’s subpoena and not attend the hearing. Mr. Lowy left the United States 

on a red-eye flight to Australia just before the U.S. Marshals Service could track him down and serve him with the Subcommittee 

subpoena. The third witness, LGT Global, also refused to appear 

even though it enjoys wide-ranging access to U.S. financial markets. 

51 

These actions stand in stark contrast to those who had the guts, 

the good sense, and the respect for this Subcommittee, to appear 

and answer for the conduct we have uncovered. We rightly gave 

credit to UBS for appearing as it did, for the candor with which 

it dealt with our Members and our investigators, and for its willingness to take both responsibility for past actions as well as a 

commitment to a principled path for how it would deal with these 

matters in the future. As the Chairman noted, UBS is prepared to 

trade in bank secrecy for transparency, the rule of law, and tax cooperation. We also recognize the actions of Mr. Marsh and Mr. Wu 

for appearing before us, for at a minimum they did not compound 

their apparent disregard for their tax obligations with disrespect 

for this process. And we now appreciate that Mr. Greenfield has, 

at long last, recognized the need to comply with the requests of this 

Subcommittee. And we also appreciate that Mr. Lowy returned 

from Australia to appear before us today. What we seek here today 

is what we ask of any person or entity that we engage with: A 

measure of candor and respect for the law. 

I want to note that, at the end of the day, the tax-cheating 

schemes we have uncovered by the Subcommittee’s investigation 

demonstrate one simple, undeniable fact: The actions of a few to 

scam their way out of tax obligations hurt all Americans. A privileged few believe they are entitled to shirk their obligations and 

heap their tax liability on the sagging shoulders of other Americans 

to make up for what they avoid. 

As Senator Levin noted last week, we cannot get to all the banks 

or all the tax cheats. But we can move the ball forward by uncovering this misconduct bit by bit, one by one. Make no mistake: Today’s hearing demonstrates forcefully that we will not relent in our 

pursuit of those who continue to mock our justice, our courts, and 

our tax system. 

We will continue our efforts to ferret out those who avoid paying 

their fair share to the country whose freedoms they so richly enjoy. 

In holding this hearing today, we impart that message, upholding 

the traditions and integrity of the Subcommittee and, most importantly, ensuring that those who try to take advantage of the American people do not rest easy. 

Thank you, Mr. Chairman. 

Senator LEVIN. Thank you, Senator Coleman. Today’s hearing is 

a continuation of the Subcommittee’s hearing held last week on 

July 17. The purpose of today’s hearing is to take testimony from 

two witnesses who were invited to testify last week but did not appear at that hearing. Our witnesses today are Steven Greenfield of 

New York City, and Peter Lowy of Beverly Hills, California. 

Pursuant to Rule VI, all witnesses who testify before the Subcommittee are required to be sworn. 

TESTIMONY OF STEVEN GREENFIELD, NEW YORK, NEW YORK 

Senator LEVIN. We first will call on Mr. Greenfield, if you would 

come forward, please, and raise your right hand. Do you swear that 

the testimony that you will give before this Subcommittee will be 

the truth, the whole truth, and nothing but the truth, so help you, 

God? 

Mr. GREENFIELD. Yes. 

52 

Senator LEVIN. Thank you, Mr. Greenfield, do you have opening 

remarks? 

Mr. GREENFIELD. No. 

Senator LEVIN. And have you ever spoken to anyone at LGT 

Bank in Liechtenstein? 

Mr. GREENFIELD. Mr. Chairman, I respectfully assert my rights 

under the Fifth American of the U.S. Constitution and decline to 

answer. 

Senator LEVIN. Mr. Greenfield, do you have any corrections to 

the statement of facts in my opening statement or the case history 

in the report released by the Subcommittee last week? 

Mr. GREENFIELD. Mr. Chairman, I respectfully assert my rights 

under the Fifth American of the U.S. Constitution and decline to 

answer. 

Senator LEVIN. Mr. Greenfield, you have been asked specific 

questions about matters of interest to this Subcommittee. In response to these questions, you have asserted your Fifth Amendment privilege. Is it your intention to assert your Fifth Amendment 

privilege to any question that might be directed to you by the Subcommittee today? 

Mr. GREENFIELD. Yes. 

Senator LEVIN. Given the fact that you intend to assert a Fifth 

Amendment right against self-incrimination to all questions asked 

of you by this Subcommittee, you are excused. Thank you for coming today. 

Mr. GREENFIELD. Thank you. 

TESTIMONY OF PETER S. LOWY, BEVERLY HILLS, CALIFORNIA, 

ACCOMPANIED BY ROBERT BENNETT, ESQ. 

Senator LEVIN. Our second witness is Peter S. Lowy, who is the 

Chief Executive Officer of the Westfield Group in the United States 

and a Group Managing Director of the Parent Company, Westfield 

Group in Australia. 

Mr. Lowy, would you come forward, please, and raise your right 

hand. Mr. Lowy, do you swear that any testimony you will give before this Subcommittee will be the truth, the whole truth, and 

nothing but the truth, so help you, God? 

Mr. LOWY. I do. 

Mr. BENNETT. Mr. Chairman, my name is Robert Bennett, and 

I am counsel to Mr. Lowy. And I know Mr. Lowy is here. Could 

I just make one observation? 

Senator LEVIN. Not now. Perhaps you can make it afterwards. 

Mr. BENNETT. All right. I will do it after he finishes? 

Senator LEVIN. That would be fine. 

Mr. BENNETT. Thank you, Mr. Chairman. 

Senator LEVIN. Mr. Lowy, do you have any opening remarks? 

Mr. LOWY. No, sir. 

Senator LEVIN. Mr. Lowy, have you ever spoken to anyone at 

LGT Bank in Liechtenstein? 

Mr. LOWY. Senator, I am sorry and mean no disrespect, but on 

the advice of my counsel, I assert my rights under the Fifth 

Amendment to the U.S. Constitution and decline to answer your 

question. 

53 

1See Exhibit No. 122, for correspondence between Mr. Lowy’s attorney and the Subcommittee 

on this matter, which appears in the Appendix on page 699. 

Senator LEVIN. Mr. Lowy, do you have any corrections to the 

statement of facts in my opening statement or the case history in 

the report released by the Subcommittee last week? 

Mr. LOWY. Senator, on the advice of my counsel, I assert my 

Fifth Amendment rights and decline to answer the question. 

Senator LEVIN. Mr. Lowy, you have been asked specific questions 

about matters of interest to this Subcommittee. In response to each 

question, you have asserted your Fifth Amendment privilege. Is it 

your intention to assert your Fifth Amendment privilege to any 

question that might be directed to you by the Subcommittee today? 

Mr. LOWY. Yes, sir. 

Senator LEVIN. Given the fact that you intend to assert a Fifth 

Amendment right against self-incrimination to all questions asked 

of you by this Subcommittee, you are excused. 

Mr. LOWY. Thank you. 

Senator LEVIN. Thank you for coming. 

Now, as to what your intentions are, Mr. Bennett, do you have 

a statement for the record that you can give to us? 

Mr. BENNETT. Yes. I just want to make one correction that I feel 

is very important. 

Senator LEVIN. We are not going to have you testify in lieu of 

your client. 

Mr. BENNETT. Well, I am not going to correct the facts. The Subcommittee has made a mistake in—— 

Senator LEVIN. Then you will have to submit that then, and 

we—— 

Mr. BENNETT. Then I will, and I—— 

Senator LEVIN. We will receive that, but we are not going to have 

you substitute yourself—— 

Mr. BENNETT. That is fine. I will deal with it outside this room, 

then. 

Senator LEVIN. I am sure you will anyway. 

Mr. BENNETT. I will, Senator. 

Senator LEVIN. We expected that. We have already had you folks 

talk to the press instead of talking to us, so we are not the least 

bit surprised that you will do it outside this room. But we are not 

going to have you take the place of your client. 

Mr. BENNETT. That is fine. But I do think the Subcommittee 

should be accurate—— 

Senator LEVIN. Thank you. 

Mr. BENNETT [continuing]. In its statements. 

Senator LEVIN. We all agree we should be accurate, and if there 

are any inaccuracies, that should be under oath by your client and 

not by his lawyer trying to testify in lieu—— 

Mr. BENNETT. The error is made by a Subcommittee member.1

Senator LEVIN. We stand adjourned. 

[Whereupon, at 10:31 a.m., the Subcommittee was adjourned.] 

(55) 

A P P E N D I X 


44127.001
56 


44127.002
57 


44127.003
58 


44127.004
59 


44127.005
60 


44127.006
61 


44127.007
62 


44127.008
63 


44127.009
64 


44127.010
65 


44127.011
66 


44127.012
67 


44127.013
68 


44127.014
69 


44127.015
70 


44127.016
71 


44127.017
72 


44127.018
73 


44127.019
74 


44127.020
75 


44127.021
76 


44127.022
77 


44127.023
78 


44127.024
79 


44127.025
80 


44127.026
81 


44127.027
82 


44127.028
83 


44127.029
84 


44127.030
85 


44127.031
86 


44127.032
87 


44127.033
88 


44127.034
89 


44127.035
90 


44127.036
91 


44127.037
92 


44127.038
93 


44127.039
94 


44127.040
95 


44127.041
96 


44127.042
97 


44127.043
98 


44127.044
99 


44127.045
100 


44127.046
101 


44127.047
102 


44127.048
103 


44127.049
104 


44127.050
105 


44127.051
106 


44127.052
107 


44127.053
108 


44127.054
109 


44127.055
110 


44127.056
111 


44127.057
112 


44127.058
113 


44127.059
114 


44127.060
115 


44127.061
116 


44127.062
117 


44127.063
118 


44127.064
119 


44127.065
120 


44127.066
121 


44127.067
122 


44127.068
123 


44127.069
124 


44127.070
125 


44127.071
126 


44127.072
127 


44127.073
128 


44127.074
129 


44127.075
130 


44127.076
131 


44127.077
132 


44127.078
133 


44127.079
134 


44127.080
135 


44127.081
136 


44127.082
137 


44127.083
138 


44127.084
139 


44127.085
140 


44127.086
141 


44127.087
142 


44127.088
143 


44127.089
144 


44127.090
145 


44127.091
146 


44127.092
147 


44127.093
148 


44127.094
149 


44127.095
150 


44127.096
151 


44127.097
152 


44127.098
153 


44127.099
154 


44127.100
155 


44127.101
156 


44127.102
157 


44127.103
158 


44127.104
159 


44127.105
160 


44127.106
161 


44127.107
162 


44127.108
163 


44127.109
164 


44127.110
165 


44127.111
166 


44127.112
167 


44127.113
168 


44127.114
169 


44127.115
170 


44127.116
171 


44127.117
172 


44127.118
173 


44127.119
174 


44127.120
175 


44127.121
176 


44127.122
177 


44127.123
178 


44127.124
179 


44127.125
180 


44127.126
181 


44127.127
182 


44127.128
183 


44127.129
184 


44127.130
185 


44127.131
186 


44127.132
187 


44127.133
188 


44127.134
189 


44127.135
190 


44127.136
191 


44127.137
192 


44127.138
193 


44127.139
194 


44127.140
195 


44127.141
196 


44127.142
197 


44127.143
198 


44127.144
199 


44127.145
200 


44127.146
201 


44127.147
202 


44127.148
203 


44127.149
204 


44127.150
205 


44127.151
206 


44127.152
207 


44127.153
208 


44127.154
209 


44127.155
210 


44127.156
211 


44127.157
212 


44127.158
213 


44127.159
214 


44127.160
215 


44127.161
216 


44127.162
217 


44127.163
218 


44127.164
219 


44127.165
220 


44127.166
221 


44127.167
222 


44127.168
223 


44127.169
224 


44127.170
225 


44127.171
226 


44127.172
227 


44127.173
228 


44127.174
229 


44127.175
230 


44127.176
231 


44127.177
232 


44127.178
233 


44127.179
234 


44127.180
235 


44127.181
236 


44127.182
237 


44127.183
238 


44127.184
239 


44127.185
240 


44127.186
241 


44127.187
242 


44127.188
243 


44127.189
244 


44127.190
245 


44127.191
246 


44127.192
247 


44127.193
248 


44127.194
249 


44127.195
250 


44127.196
251 


44127.197
252 


44127.198
253 


44127.199
254 


44127.200
255 


44127.201
256 


44127.202
257 


44127.203
258 


44127.204
259 


44127.205
260 


44127.206
261 


44127.207
262 


44127.208
263 


44127.209
264 


44127.210
265 


44127.211
266 


44127.212
267 


44127.213
268 


44127.214
269 


44127.215
270 


44127.216
271 


44127.217
272 


44127.218
273 


44127.219
274 


44127.220
275 


44127.221
276 


44127.222
277 


44127.223
278 


44127.224
279 


44127.225
280 


44127.226
281 


44127.227
282 


44127.228
283 


44127.229
284 


44127.230
285 


44127.231
286 


44127.232
287 


44127.233
288 


44127.234
289 


44127.235
290 


44127.236
291 


44127.237
292 


44127.238
293 


44127.239
294 


44127.240
295 


44127.241
296 


44127.242
297 


44127.243
298 


44127.244
299 


44127.245
300 


44127.246
301 


44127.247
302 


44127.248
303 


44127.249
304 


44127.250
305 


44127.251
306 


44127.252
307 


44127.253
308 


44127.254
309 


44127.255
310 


44127.256
311 


44127.257
312 


44127.258
313 


44127.259
314 


44127.260
315 


44127.261
316 


44127.262
317 


44127.263
318 


44127.264
319 


44127.265
320 


44127.266
321 


44127.267
322 


44127.268
323 


44127.269
324 


44127.270
325 


44127.271
326 


44127.272
327 


44127.273
328 


44127.274
329 


44127.275
330 


44127.276
331 


44127.277
332 


44127.278
333 


44127.279
334 


44127.280
335 


44127.281
336 


44127.282
337 


44127.283
338 


44127.284
339 


44127.285
340 


44127.286
341 


44127.287
342 


44127.288
343 


44127.289
344 


44127.290
345 


44127.291
346 


44127.292
347 


44127.293
348 


44127.294
349 


44127.295
350 


44127.296
351 


44127.297
352 


44127.298
353 


44127.299
354 


44127.300
355 


44127.301
356 


44127.302
357 


44127.303
358 


44127.304
359 


44127.305
360 


44127.306
361 


44127.307
362 


44127.308
363 


44127.309
364 


44127.310
365 


44127.311
366 


44127.312
367 


44127.313
368 


44127.314
369 


44127.315
370 


44127.316
371 


44127.317
372 


44127.318
373 


44127.319
374 


44127.320
375 


44127.321
376 


44127.322
377 


44127.323
378 


44127.324
379 


44127.325
380 


44127.326
381 


44127.327
382 


44127.328
383 


44127.329
384 


44127.330
385 


44127.331
386 


44127.332
387 


44127.333
388 


44127.334
389 


44127.335
390 


44127.336
391 


44127.337
392 


44127.338
393 


44127.339
394 


44127.340
395 


44127.341
396 


44127.342
397 


44127.343
398 


44127.344
399 


44127.345
400 


44127.346
401 


44127.347
402 


44127.348
403 


44127.349
404 


44127.350
405 


44127.351
406 


44127.352
407 


44127.353
408 


44127.354
409 


44127.355
410 


44127.356
411 


44127.357
412 


44127.358
413 


44127.359
414 


44127.360
415 


44127.361
416 


44127.362
417 


44127.363
418 


44127.364
419 


44127.365
420 


44127.366
421 


44127.367
422 


44127.368
423 


44127.369
424 


44127.370
425 


44127.371
426 


44127.372
427 


44127.373
428 


44127.374
429 


44127.375
430 


44127.376
431 


44127.377
432 


44127.378
433 


44127.379
434 


44127.380
435 


44127.381
436 


44127.382
437 


44127.383
438 


44127.384
439 


44127.385
440 


44127.386
441 


44127.387
442 


44127.388
443 


44127.389
444 


44127.390
445 


44127.391
446 


44127.392
447 


44127.393
448 


44127.394
449 


44127.395
450 


44127.396
451 


44127.397
452 


44127.398
453 


44127.399
454 


44127.400
455 


44127.401
456 


44127.402
457 


44127.403
458 


44127.404
459 


44127.405
460 


44127.406
461 


44127.407
462 


44127.408
463 


44127.409
464 


44127.410
465 


44127.411
466 


44127.412
467 


44127.413
468 


44127.414
469 


44127.415
470 


44127.416
471 


44127.417
472 


44127.418
473 


44127.419
474 


44127.420
475 


44127.421
476 


44127.422
477 


44127.423
478 


44127.424
479 


44127.425
480 


44127.426
481 


44127.427
482 


44127.428
483 


44127.429
484 


44127.430
485 


44127.431
486 


44127.432
487 


44127.433
488 


44127.434
489 


44127.435
490 


44127.436
491 


44127.437
492 


44127.438
493 


44127.439
494 


44127.440
495 


44127.441
496 


44127.442
497 


44127.443
498 


44127.444
499 


44127.445
500 


44127.446
501 


44127.447
502 


44127.448
503 


44127.449
504 


44127.450
505 


44127.451
506 


44127.452
507 


44127.453
508 


44127.454
509 


44127.455
510 


44127.456
511 


44127.457
512 


44127.458
513 


44127.459
514 


44127.460
515 


44127.461
516 


44127.462
517 


44127.463
518 


44127.464
519 


44127.465
520 


44127.466
521 


44127.467
522 


44127.468
523 


44127.469
524 


44127.470
525 


44127.471
526 


44127.472
527 


44127.473
528 


44127.474
529 


44127.475
530 


44127.476
531 


44127.477
532 


44127.478
533 


44127.479
534 


44127.480
535 


44127.481
536 


44127.482
537 


44127.483
538 


44127.484
539 


44127.485
540 


44127.486
541 


44127.487
542 


44127.488
543 


44127.489
544 


44127.490
545 


44127.491
546 


44127.492
547 


44127.493
548 


44127.494
549 


44127.495
550 


44127.496
551 


44127.497
552 


44127.498
553 


44127.499
554 


44127.500
555 


44127.501
556 


44127.502
557 


44127.503
558 


44127.504
559 


44127.505
560 


44127.506
561 


44127.507
562 


44127.508
563 


44127.509
564 


44127.510
565 


44127.511
566 


44127.512
567 


44127.513
568 


44127.514
569 


44127.515
570 


44127.516
571 


44127.517
572 


44127.518
573 


44127.519
574 


44127.520
575 


44127.521
576 


44127.522
577 


44127.523
578 


44127.524
579 


44127.525
580 


44127.526
581 


44127.527
582 


44127.528
583 


44127.529
584 


44127.530
585 


44127.531
586 


44127.532
587 


44127.533
588 


44127.534
589 


44127.535
590 


44127.536
591 


44127.537
592 


44127.538
593 


44127.539
594 


44127.540
595 


44127.541
596 


44127.542
597 


44127.543
598 


44127.544
599 


44127.545
600 


44127.546
601 


44127.547
602 


44127.548
603 


44127.549
604 


44127.550
605 


44127.551
606 


44127.552
607 


44127.553
608 


44127.554
609 


44127.555
610 


44127.556
611 


44127.557
612 


44127.558
613 


44127.559
614 


44127.560
615 


44127.561
616 


44127.562
617 


44127.563
618 


44127.564
619 


44127.565
620 


44127.566
621 


44127.567
622 


44127.568
623 


44127.569
624 


44127.570
625 


44127.571
626 


44127.572
627 


44127.573
628 


44127.574
629 


44127.575
630 


44127.576
631 


44127.577
632 


44127.578
633 


44127.579
634 


44127.580
635 


44127.581
636 


44127.582
637 


44127.583
638 


44127.584
639 


44127.585
640 


44127.586
641 


44127.587
642 


44127.588
643 


44127.589
644 


44127.590
645 


44127.591
646 


44127.592
647 


44127.593
648 


44127.594
649 


44127.595
650 


44127.596
651 


44127.597
652 


44127.598
653 


44127.599
654 


44127.600
655 


44127.601
656 


44127.602
657 


44127.603
658 


44127.604
659 


44127.605
660 


44127.606
661 


44127.607
662 


44127.608
663 


44127.609
664 


44127.610
665 


44127.611
666 


44127.612
667 


44127.613
668 


44127.614
669 


44127.615
670 


44127.616
671 


44127.617
672 


44127.618
673 


44127.619
674 


44127.620
675 


44127.621
676 


44127.622
677 


44127.623
678 


44127.624
679 


44127.625
680 


44127.626
681 


44127.627
682 


44127.628
683 


44127.629
684 


44127.630
685 


44127.631
686 


44127.632
687 


44127.633
688 


44127.634
689 


44127.635
690 


44127.647
691 


44127.648
692 


44127.649
693 


44127.650
694 


44127.651
695 


44127.652
696 


44127.653
697 


44127.654
698 


44127.655
699 


44127.664
700 


44127.665
701 


44127.666
702 


44127.667
703 


44127.668
704 


44127.669
705 


44127.670
706 


44127.671
707 


44127.672
708 


44127.676
709 


44127.677
710 


44127.678
711 


44127.679
712 


44127.680
713 


44127.681
714 


44127.682
715 


44127.683
716 


44127.684
717 


44127.685
718 


44127.686
719 


44127.687
720 


44127.688
721 


44127.689
722 


44127.690
723 


44127.691
724 


44127.692
725 


44127.693
726 


44127.694
727 


44127.695
728 


44127.696
729 


44127.697
730 


44127.698
731 


44127.699
732 


44127.700
733 


44127.701
734 


44127.702
735 


44127.703
736 


44127.704
737 


44127.705
738 


44127.706
739 


44127.707
740 


44127.708
741 


44127.709
742 


44127.710
743 


44127.711
744 


44127.712
745 


44127.713
746 


44127.714
747 


44127.715
748 


44127.716
749 


44127.717
750 


44127.718
751 


44127.719
752 


44127.720
753 


44127.721
754 


44127.722
755 


44127.723
756 


44127.724
757 


44127.725
758 


44127.726
759 


44127.727
760 


44127.728
761 


44127.729
762 


44127.730
763 


44127.731
764 


44127.732
765 


44127.733
766 


44127.734
767 


44127.735
768 


44127.736
769 


44127.737
770 


44127.738
771 


44127.739
772 


44127.740
773 


44127.741
774 


44127.742
775 


44127.743
776 


44127.744
777 


44127.745
778 


44127.746
779 


44127.747
780 


44127.748
781 


44127.749
782 


44127.750
783 


44127.751
784 


44127.752
785 


44127.753
786 


44127.754
787 


44127.755
788 


44127.756
789 


44127.757
790 


44127.758
791 


44127.759
792 


44127.760
793 


44127.761
794 


44127.762
795 


44127.763
796 


44127.764
797 


44127.765
798 


44127.766
799 


44127.767
800 


44127.768
801 


44127.769
802 


44127.770
803 


44127.771
804 


44127.772
805 


44127.773
806 


44127.774
807 


44127.775
808 


44127.776
809 


44127.777
810 


44127.778
811 


44127.779
812 


44127.780
813 


44127.781
814 


44127.782
815 


44127.783
816 


44127.784
817 


44127.785
818 


44127.786
819 


44127.787
820 


44127.788
821 


44127.789
822 


44127.790
823 


44127.791
824 


44127.792
825 


44127.793
826 


44127.794
827 


44127.795
828 


44127.796
829 


44127.797
830 


44127.798
831 


44127.799
832 


44127.800
833 


44127.801
834 


44127.802
835 


44127.803
836 


44127.804
837 


44127.805
838 


44127.806
839 


44127.807
840 


44127.808
841 


44127.809
842 


44127.810
843 


44127.811
844 


44127.812
845 


44127.813
846 


44127.814
847 


44127.815
848 


44127.816
849 


44127.817
850 


44127.818
851 


44127.819
852 


44127.820
853 


44127.821
854 


44127.822
855 


44127.823
856 


44127.824
857 


44127.825
858 


44127.826
859 


44127.827
860 


44127.828
861 


44127.829
862 


44127.830
863 


44127.831
864 


44127.832
865 


44127.833
866 


44127.834
867 


44127.835
868 


44127.836
869 


44127.837
870 


44127.838
871 


44127.839
872 


44127.840
873 


44127.841
874 


44127.842
875 


44127.843
876 


44127.844
877 


44127.845
878 


44127.846
879 


44127.847
880 


44127.848
881 


44127.849
882 


44127.850
883 


44127.851
884 


44127.852
885 


44127.853
886 


44127.854
887 


44127.855
888 


44127.856
889 


44127.857
890 


44127.858
891 


44127.859
892 


44127.860
893 


44127.861
894 


44127.862
895 


44127.863
896 


44127.864
897 


44127.865
898 


44127.866
899 


44127.867
900 


44127.868
901 


44127.869
902 


44127.870
903 


44127.871
904 


44127.872
905 


44127.873
906 


44127.874
907 


44127.875
908 


44127.876
909 


44127.877
910 


44127.878
911 


44127.879
912 


44127.880
913 


44127.881
914 


44127.882
915 


44127.883
916 


44127.884
917 


44127.885
918 


44127.886
919 


44127.887
920 


44127.888
921 


44127.889
922 


44127.890
923 


44127.891
924 


44127.892
925 


44127.893
926 


44127.894
927 


44127.895
928 


44127.896
929 


44127.897
930 


44127.898
931 


44127.899
932 


44127.900
933 


44127.901
934 


44127.902
935 


44127.903
936 


44127.904
937 


44127.905
938 


44127.906
939 


44127.907
940 


44127.908
941 


44127.909
942 


44127.910
943 


44127.911
944 


44127.912
945 


44127.913
946 


44127.914
947 


44127.915
948 


44127.916
949 


44127.917
950 


44127.918
951 


44127.919
952 


44127.920
953 


44127.921
954 


44127.922
955 


44127.923
956 


44127.924
957 


44127.925
958 


44127.926
959 


44127.927
960 


44127.928
961 


44127.929
962 


44127.930
963 


44127.931
964 


44127.932
965 


44127.933
966 


44127.934
967 


44127.935
968 


44127.936
969 


44127.937
970 


44127.938
971 


44127.939
972 


44127.940
973 


44127.941
974 


44127.942
975 


44127.943
976 


44127.944
977 


44127.945
978 


44127.946
979 


44127.947
980 


44127.948
981 


44127.949
982 


44127.950
983 


44127.951
984 


44127.952
985 


44127.953
986 


44127.954
987 


44127.955
988 


44127.956
989 


44127.957
990 


44127.958
991 


44127.959
992 


44127.960
993 


44127.961
994 


44127.962
995 


44127.963
996 


44127.964
997 


44127.965
998 


44127.966
999 


44127.967
1000 


44127.968
1001 


44127.969
1002 


44127.970
1003 


44127.971
1004 


44127.972
1005 


44127.973
1006 


44127.974
1007 


44127.975
1008 


44127.976
1009 


44127.977
1010 


44127.978
1011 


44127.979
1012 


44127.980
1013 


44127.981
1014 


44127.982
1015 


44127.983
1016 


44127.984
1017 


44127.985
1018 


44127.986
1019 


44127.987
1020 


44127.988
1021 


44127.989
1022 


44127.990
1023 


44127.991
1024 


44127.992
1025 


44127.993
1026 


44127.994
1027 


44127.995
1028 


44127.996
1029 


44127.997
1030 


44127.998
1031 


44127.999
1032 


441271.000
1033 


441271.001
1034 


441271.002
1035 


441271.003
1036 


441271.004
1037 


441271.005
1038 


441271.006
1039 


441271.007
1040 


441271.008
1041 


441271.009
1042 


441271.010
1043 


441271.011
1044 


441271.012
1045 


441271.013
1046 


441271.014
1047 


441271.015
1048 


441271.016
1049 


441271.017
1050 


441271.018
1051 


441271.019
1052 


441271.020
1053 


441271.021
1054 


441271.022
1055 


441271.023
1056 


441271.024
1057 


441271.025
1058 


441271.026
1059 


441271.027
1060 


441271.028
1061 


441271.029
1062 


441271.030
1063 


441271.031
1064 


441271.032
1065 


441271.033
1066 


441271.034
1067 


441271.035
1068 


441271.036
1069 


441271.037
1070 


441271.038
1071 


441271.039
1072 


441271.040
1073 


441271.041
1074 


441271.042
1075 


441271.043
1076 


441271.044
1077 


441271.045
1078 


441271.046
1079 


441271.047
1080 


441271.048
1081 


441271.049
1082 


441271.050
1083 


441271.051
1084 


441271.052
1085 


441271.053
1086 


441271.054
1087 


441271.055
1088 


441271.056
1089 


441271.057
1090 


441271.058
1091 


441271.059
1092 


441271.060
1093 


441271.061
1094 


441271.062
1095 


441271.063
1096 


441271.064
1097 


441271.065
1098 


441271.066
1099 


441271.067
1100 


441271.068
1101 


441271.069
1102 


441271.070
1103 


441271.071
1104 


441271.072
1105 


441271.073
1106 


441271.074
1107 


441271.075
1108 


441271.076
1109 


441271.077
1110 


441271.078
1111 


441271.079
1112 


441271.080
1113 


441271.081
1114 


441271.082
1115 


441271.083
1116 


441271.084
1117 


441271.085
1118 


441271.086
1119 


441271.087
1120 


441271.088
1121 


441271.089
1122 


441271.090
1123 


441271.091
1124 


441271.092
1125 


441271.093
1126 


441271.094
1127 


441271.095
1128 


441271.096
1129 


441271.097
1130 


441271.098
1131 


441271.099
1132 


441271.100
1133 


441271.101
1134 


441271.102
1135 


441271.103
1136 


441271.104
1137 


441271.105
1138 


441271.106
1139 


441271.107
1140 


441271.108
1141 


441271.109
1142 


441271.110
1143 


441271.111
1144 


441271.112
1145 


441271.113
1146 


441271.114
1147 


441271.115
1148 


441271.116
1149 


441271.117
1150 


441271.118
1151 


441271.119
1152 


441271.120
1153 


441271.121
1154 


441271.122
1155 


441271.123
1156 


441271.124
1157 


441271.125
1158 


441271.126
1159 


441271.127
1160 


441271.128
1161 


441271.129
1162 


441271.130
1163 


441271.131
1164 


441271.132
1165 


441271.133
1166 


441271.134
1167 


441271.135
1168 


441271.136
1169 


441271.137
1170 


441271.138
1171 


441271.139
1172 


441271.140
1173 


441271.141
1174 


441271.142
1175 


441271.143
1176 


441271.144
1177 


441271.145
1178 


441271.146
1179 


441271.147
1180 


441271.148
1181 


441271.149
1182 


441271.150
1183 


441271.151
1184 


441271.152
1185 


441271.153
1186 


441271.154
1187 


441271.155
1188 


441271.156
1189 


441271.157
1190 


441271.158
1191 


441271.159
1192 


441271.160
1193 


441271.161
1194 


441271.162
1195 


441271.163
1196 


441271.164
1197 


441271.165
1198 


441271.166
1199 


441271.167
1200 


441271.168
1201 


441271.169
1202 

Æ 


441271.170