One operates an estimated $63 billion portfolio of 118 shopping centers and malls in the U.S., United Kingdom, Australia and New Zealand.
Another manufactures and markets toys through a company with an estimated $35 million in annual sales and corporate offices in New York City, Holland, Hong Kong and Taiwan.
And a third is a Florida-based construction contractor who reportedly amassed more than $49 million in family assets.
Along with wealth and success, the three have something else in common, a Senate report set for release Thursday says: All were clients of an overseas bank whose financial practices "can facilitate, and have resulted in, tax evasion by their U.S. clients."
The report asserts that Swiss banking giant UBS and LGT, a large bank in the tiny European principality of Liechtenstein, actively helped wealthy American clients evade federal taxes. Since 2001, the banks collectively held thousands of U.S. client accounts with billions of dollars in assets that weren't reported to the IRS, according to the report by the Senate Permanent Subcommittee on Investigations.
Starting in 2001, many foreign banks, including UBS and LGT, agreed to a new federal requirement to report and withhold U.S. taxes on assets in accounts held by American clients. The Senate investigation found that instead of complying, the banks actively helped those clients structure their accounts to avoid reporting billions of dollars in assets. Clients were sometimes told to use code words when communicating with the banks and to avoid bringing account records into the U.S., investigators found.
The assertions come amid intensifying investigations fueled in part by internal records and information given to tax authorities in the U.S. and other countries by former employees of the Switzerland and Liechtenstein institutions. The probes pit tax-enforcement laws in the U.S. and other nations against the secrecy that banks in Switzerland and Liechtenstein have long marketed to their clients.
The Senate panel's case studies of some of the banks' clients, compiled in part from documents and assistance provided by the former employees, "pierces the veil of secrecy" that has long protected the banks and their wealthy clients, said Sen. Carl Levin, D-Mich., who chairs the subcommittee.
"The documents show there's such a pattern of activity here that the top executives of these banks had to not only be aware of these practices but had to have approved these practices," Levin said.
UBS declined to comment in advance of the hearing, which is scheduled to include appearances by two of the bank's executives. "We don't want to pre-empt our testimony," said UBS spokeswoman Karina Byrne.
LGT declined to testify. But the bank said it cooperated by assigning a senior executive to participate in a July 11 interview with Senate staffers and provide requested documents and answers "to the extent permitted under Liechtenstein laws."
In all, American individuals and corporations evade roughly $100 billion in federal taxes annually by placing assets in foreign banks, the subcommittee reported.
19,000 undisclosed accounts
UBS has an estimated 19,000 U.S. clients with a combined $17.9 billion in accounts "that have not been disclosed to U.S. tax authorities," according to estimates given to the Senate panel by the bank and Bradley Birkenfeld, a former UBS banker.
He told the subcommittee roughly 80 UBS bankers traveled to the U.S. four to six times per year to pitch the bank's secretive services to well-heeled clients at such upscale events as Miami's annual Art Basel fair.
"It's really, "Where do the rich people hang out, go and talk to them,' " Birkenfeld told the Senate staffers.
Many U.S. clients were motivated by "tax evasion," Birkenfeld told Senate investigators, adding that both sides "clearly understood" no U.S. taxes would be paid on the overseas accounts.
The bankers used encrypted computers, devised codes for their clients' identities, told Customs agents the trips were for vacations, not business, and advised clients to place jewelry, paintings and other assets in Swiss safe deposit boxes, Birkenfeld testified in June, when he pleaded guilty to helping California billionaire Igor Olenicoff evade $7.2 million in U.S. taxes.
Separately, the Senate panel reported that in 2001 and 2002 LGT's trust office in Liechtenstein managed roughly $7 billion in assets and more than 3,000 offshore entities for clients, including an unknown number of Americans.
Former LGT computer technician Heinrich Kieber helped tax investigators around the world flesh out those statistics by handing over data on approximately 1,400 of the bank's clients. In February, German authorities used the information to open tax probes of several individuals and arrest at least one businessman.
Kieber is in hiding as Liechtenstein authorities seek him on charges of violating secrecy laws. He took part in a pre-hearing interview with Senate investigators — who didn't identify him by name in the report.
Subcommittee investigators also obtained more than 12,000 pages of internal LGT documents from the mid-1990s through 2002 regarding some of the bank's clients with connections to the United States.
Some of them "appear to have used the accounts to hide assets and dodge U.S. taxes," the subcommittee said. Case studies released by the panel include:
•The Lowy family largely controls the Westfield Group, the self-described "world's largest listed retail property group by equity market capitalization." Frank Lowy, an Australian citizen the report said was once forced to pay a large settlement to that country's tax authorities, is the company's main shareholder and chairman. Three sons hold Westfield positions, including Peter Lowy, an American citizen who heads the firm's U.S. operations.
According to the Senate report, the Lowys had several offshore entities, including the Luperla Foundation, an LGT-created vehicle that in 2001 held about $68 million in assets. A Delaware corporation called Beverly Park was given authority to name Luperla's beneficiaries.
LGT records examined by Senate investigators showed the Frank Lowy Family Trust controlled Beverly Park through three other entities. Moreover, Beverly Park's address was the Westfield Group's U.S. headquarters in California.
IRS investigators contacted the Lowys about Beverly Park last year as part of an ongoing investigation, the subcommittee reported. Family members and Beverly Park officers told the IRS the corporation had no ties to any foreign entities, the Senate report said.
Although the subcommittee listed Peter Lowy as a witness for today's hearing, he is not expected to testify.
"The Lowy family has done nothing improper," said Robert Bennett, a Washington lawyer who represents them. "We have not yet had the chance to thoroughly review the report, but any process that results in a report being issued before the subjects of the report have any meaningful opportunity to respond is grossly unfair, deeply flawed and unreliable."
•Harvey Greenfield and his son, Steven, are New York-based businessmen in the toy industry. Harvey Greenfield is CEO of Commonwealth Toy and Novelty, an international manufacturer of stuffed animals and dolls with offices in New York, Holland, Taiwan and Hong Kong. Steven Greenfield is the former president of the company, which has $35 million in annual sales, according to an Experian Business Report estimate.
According to the Senate panel, the Greenfields control the Maverick Foundation, an LGT-created entity that in 2001 held assets of roughly $2.2 million.
Internal LGT records obtained by the subcommittee show the Greenfields attended a March 2001 meeting with bank officials, including the brother of Liechtenstein's reigning prince, after a separate bank in Bermuda decided to end its own business with the family.
"The client is now on the search for a safe haven for his offshore assets," stated an LGT memo, which also said the Greenfields wanted to end ties with the Bermuda bank with "as few traces as possible."
LGT officials pitched the Greenfields about transferring $30 million to the Liechtenstein bank. It is unclear whether the transaction ever took place. But the Senate report said an attorney for the Greenfields told subcommittee investigators the family is negotiating with the IRS "over tax liability issues related to Liechtenstein."
The Greenfields did not respond to telephone messages left by USA TODAY.
•Until his death in 2006, James Albright Marsh was a successful construction contractor who lived in Florida with his six children. So successful that LGT helped him create four Liechtenstein foundations that by 2007 held assets "with a combined value of more than $49 million," the Senate panel reported.
Marsh and two of his sons, Kerry and Shannon, had a "strong measure of control" over the foundations, which, in turn were safeguarded by "strong secrecy protections," the report stated.
LGT's advice to client
In 2001, LGT agreed to participate in a new U.S. program that required overseas banks to report information about accounts that held U.S. securities. But the Lichtenstein bank did not report the Marsh-controlled foundations, subcommittee investigators found. Instead, the bank advised the family patriarch to divest U.S. securities from the foundations.
The IRS apparently learned of the Marsh accounts from documents provided by Kieber, the former LGT employee, the subcommittee reported. After the IRS began an investigation last year, the family paid about $2.9 million in back taxes and interest, the Senate report said.
The family requested a waiver of any penalties in part on grounds that Marsh's sons either did not know they were beneficiaries or didn't know the accounts had to be reported to the IRS.
Questioning that assertion, the subcommittee said LGT records show the sons "were aware of and had participated in the affairs of the LGT foundations."
The subcommittee listed Shannon Marsh as a witness for today's hearing, but he is not expected to appear. He did not respond to a USA TODAY message left at his home.
In a pre-hearing briefing, Levin and Sen. Norm Coleman, R-Minn., the subcommittee's ranking minority member, said the investigation findings underscore the need for their proposed legislation to strengthen reporting of foreign accounts held by Americans and penalize tax haven banks that impede U.S. tax enforcement.
"I would hope that this report would be a call to action," said Coleman.