Billionaire Igor Olenicoff, who lives in Laguna Beach and oversees Newport Beach-based Olen Properties, lost his bid in federal court to blame Swiss bankers for his guilty plea to felony tax evasion.
In a 28-page decision tossing Olenicoff's suit against Zurich-based UBS AG, Judge Andrew J. Guilford of the U.S. District Court in Santa Ana writes that "two wrongs don't make a right."
The judge explained the billionaire admitting he failed to disclose off-shore accounts and UBS admitting to tax fraud do not give Olenicoff the right to sue the bank.
The 69-year-old pleaded guilty in December 2007 to failing to declare accounts in the Bahamas, England, Liechtenstein and Switzerland from 1998 to 2004 and of filing a false tax return in 2002. Federal Judge Cormac Carney in Santa Ana sentenced him to two years probation and 120 hours of community service, and the billionaire was forced to pony up $52 million in back taxes, interest and penalties.
In February 2009, UBS AG agreed to pay the U.S. $780 million to resolves to tax fraud case. Finding that fine unfair considering the Swiss bank's wealth relative to his own, Olenicoff sued on grounds UBS AG bankers gave him bad advice about sheltering his money.
"They pay $780 million; that's lunch money for them, right?" Olenicoff told a Bloomberg reporter in June 2009. "But there's nobody being penalized for this. I have been--and I paid. There will be 52,000 Americans that will be somehow affected by their fraud. The bank needs to be exposed and needs to pay for its wrongdoing."
Olenicoff vowed to donate any money he received from the suit to charity, but Judge Guilford found UBS AG does not owe the billionaire anything.
"To defend itself, UBS is forced to strenuously insist that its prior guilty plea only admitted to assisting willing clients with tax fraud, not forcing unsuspecting clients into tax evasion," Guilford writes. "While its argument is ironic, UBS is right. Even assuming that UBS gave Olenicoff fraudulent tax advice, that makes UBS a co-conspirator, not a defendant in this litigation."
Ironically, by admitting he was guilty, Olenicoff essentially let UBS off the hook when it came to the billionaire's later allegations against the bank.
"Olenicoff has already sworn that he was not an innocent dupe," Guilford notes. "He even received a sentence reduction for assuming responsibility for his tax fraud. It is directly inconsistent for him to now claim that he unwittingly relied on UBS' counsel. If Olenicoff wanted to claim he was misled by UBS, he had the option of pleading not guilty in the criminal proceedings. He plead guilty instead. Thus, his tax evasion claims against UBS are now barred. Olenicoff may not avoid the consequences of his own plea by getting UBS to indemnify him for his criminal acts."
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