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From: mikehunt27/8/2008 4:24:45 PM
   of 178
 
UBS Liechtenstein Adviser Had Scandal-Tainted Clients (Update2)
2008-07-08 00:34:02.610 (New York)



By Ryan J. Donmoyer and David Voreacos
July 7 (Bloomberg) -- Mario Staggl, a Liechtenstein
investment adviser indicted in a tax-evasion probe of UBS AG,
has for years helped scandal-tainted clients manage money
stashed around the world.
Staggl told German prosecutors he set up companies for a
consultant in South Africa who later pleaded guilty to trying to
help Libya obtain nuclear bomb-making equipment and provided
similar services to an engineer being tried in Germany on
related charges. He helped manage offshore assets for the family
of a London politician accused by U.K. authorities of hiding
money to avoid $80 million in penalties, U.S. records show.
``He appears to help people move money and conceal the
ownership, source or location of it,'' said Gregory Baldwin, a
former Miami federal prosecutor, after reviewing Staggl's
record.
U.S. prosecutors in May charged that Staggl and former UBS
banker Bradley Birkenfeld helped California billionaire Igor
Olenicoff and other clients evade taxes. Olenicoff pleaded
guilty to filing a false tax return. Birkenfeld pleaded guilty
last month, saying UBS helped U.S. customers hide $20 billion.
After Staggl missed a May court appearance in Fort
Lauderdale, Florida, U.S. authorities declared him a fugitive,
even though he is living and working openly in Liechtenstein, a
62-square-mile principality famous for bank secrecy.
The U.S. Senate's Permanent Subcommittee on Investigations
has scheduled a hearing for July 17 to probe Liechtenstein's
role in helping Americans evade taxes by hiding assets. The
hearing will focus on Staggl and Heinrich Kieber, a former
employee of LGT Group who sold information on that bank's
customers to German authorities for as much as 5 million euros.

Home in Schaan

Staggl didn't return calls to his home and office and
didn't reply to e-mails seeking comment. No one answered a knock
on the door at his home, a two-story structure in the
municipality of Schaan surrounded by thick, green hedges and
boasting a view of the Swiss Alps. A small stone-paved driveway,
with a large ``S'' laid out in white rock, leads up to a two-car
garage.
At his office, a modest red brick building on a road
between Schaan and the Autobahn, a receptionist said Staggl was
in a meeting and wouldn't talk to reporters. His lawyer, Andreas
Schurti, escorted a reporter out of his Vaduz office.
``Usually where there's smoke, there's fire,'' Schurti
said. ``Not here. We have a lot of smoke but no fire.''
In a 2005 interview with German prosecutors in a
Liechtenstein court, Staggl said he had 150 to 200 clients and
held executive positions in 200 companies established for
customers in tax havens such as Liechtenstein and the British
Virgin Islands. He acknowledged in that interview that ``the
structure of the foundations and companies at issue are part of
my classic daily business.''

Arrange Shipments

German authorities were questioning Staggl about his
connections with two men who were later accused of trying to
arrange shipments of uranium-enrichment equipment to Libya. Both
were allegedly part of a black market in atom bomb technology
headed by scientist Abdul Qadeer Khan, the so-called father of
Pakistan's nuclear bomb.
One Staggl client, Gotthard Lerch, is fighting charges in a
German court for alleged arms and export violations. Staggl told
the Germans he managed seven offshore companies for Lerch,
according to a court summary of the interview. Swiss corporation
records listed Staggl as a director of Lerch's consulting firm.
He told German authorities that while his family exchanged
Christmas cards with Lerch, he didn't maintain a ``close
friendship-like relationship'' with the man.
Staggl said he also managed assets for Gerhard Wisser, a
friend of Lerch's who pleaded guilty last year in South Africa
to helping Khan's network procure equipment needed to make
weapons-grade uranium.

A Divorce

Wisser was considering a divorce and ``wanted to protect
himself from an asset point of view,'' Staggl told German
prosecutors according to the court summary. Wisser was given an
18-year jail sentence, suspended on the condition that he
cooperate with investigators, and forfeited $5 million of
alleged criminal gains.
Staggl also helped manage a British Virgin Islands company
that held assets for the family of Dame Shirley Porter, daughter
of Tesco Plc supermarket founder Jack Cohen, according to U.S.
Securities and Exchange Commission filings.
Porter, now 77, was accused of trying to strengthen the
Conservative Party's electoral fortunes in the 1980s by selling
more than 600 public housing units, replacing Labour Party-
leaning renters with Tory-friendly homeowners. At the time, she
headed the city council in Westminster, a section of London that
includes Westminster Abbey and Buckingham Palace.

Council's Actions

Porter, who said the council's actions were within its
authority, was ordered to repay Westminster's losses from the
``homes for votes'' incident. With interest, Porter's payment
grew by 2004 to 44 million pounds, or $80 million under exchange
rates at the time.
After Britain's House of Lords in December 2001 upheld the
penalties, Porter said she had only 300,000 pounds and couldn't
pay.
British authorities searched for assets and found that she
had ``transferred the majority of her remaining assets to her
husband and/or offshore trusts by the late 1990s,'' according to
a 2007 government auditor's report.
Staggl was a director at Zollikon Investments SA, in
Tortola, British Virgin Islands, which held Porter family assets
during the British proceedings, according to SEC filings.
Zollikon controlled notes issued to Porter's husband in
connection with a $12 million loan to Telos Corp., an Ashburn,
Virginia-based defense contractor. Porter's son, John Porter,
bought a controlling interest in Telos in 1993 with money
provided by his parents, filings show.

Interest Payments

Zollikon received quarterly interest payments from Telos on
the notes, and Staggl signed papers for a refinancing of Telos
debt that transferred $1 million to Zollikon in December 2002.
U.K. Land Registry records show Zollikon also paid $2.7 million
for Shirley Porter's London flat.
In April 2004, Porter settled the Westminster dispute for
about $22 million.
``Everybody knew she wasn't telling the truth -- now we
know how she hid the money, and the sort of people she used to
help her,'' said Paul Dimoldenberg, a Labour Party member of the
Westminster council.
Porter didn't respond to calls, a letter and visits to her
London apartment. John Porter said in an e-mail that he had
never ``met or dealt with Mr. Staggl in any way.''

--With reporting by Robert Hutton in London and Joshua Gallu in
Schaan, Liechtenstein. Editors: Bob Drummond, Bill Arthur.

To contact the reporters on this story:
Ryan J. Donmoyer in Washington at +1-202-624-1887 or
rdonmoyer@bloomberg.net
David Voreacos in Newark, New Jersey at +1-973-286-0016 or
dvoreacos@bloomberg.net

To contact the editor responsible for this story:
Michael Forsythe at +1-202-624-1940 or
mforsythe@bloomberg.net
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