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Age : 86
Public asset : 11,724,289,612 USD
Linked companies : Estee Lauder Companies Inc
Biography : Founder of Alzheimers Drug Discovery Foundation, Leonard Alan Lauder is Co-Chairman for The Breast C

Suit Claims Tax-Evasion Schemes -- WSJ

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05/10/2019 | 02:50am EDT

By James V. Grimaldi

A convicted banker who collected the largest-ever whistleblower payout for reporting tax cheats accused actor Kevin Costner and an heir to the Estée Lauder cosmetics empire of tax evasion.

In a lawsuit filed Thursday, Bradley Birkenfeld, who worked for UBS Group AG in Switzerland, alleges that Mr. Costner, an Academy Award-winning actor and director, and Leonard Lauder, chairman emeritus of the Estée Lauder Cos., were among thousands of Americans who held secret, numbered Swiss bank accounts for the purpose of evading U.S. taxes.

The suit, which wasn't filed under the Whistleblower Protection Act, also alleges that Estée Lauder, the eponymous founder of the company, held a Swiss account to evade taxes; she died in 2004.

Mr. Birkenfeld had referenced these tax-evasion allegations in a planned book, but said the assertions were removed when lawyers for Mr. Costner and Mr. Lauder told Mr. Birkenfeld's publishing house that they were false.

In the suit, Mr. Birkenfeld claims the "censorship" prompted by the lawyers' actions diminished the market for the book and delayed its publication. He seeks at least $75,000 in damages.

A spokesman for Mr. Costner said: "Kevin Costner has never had an account with UBS, nor has he ever had an offshore account of any kind."

Mr. Lauder, the billionaire son of Estée Lauder, said he legally declared the account to U.S. tax authorities, according to a letter from Mr. Lauder's attorney to Mr. Birkenfeld's publisher quoted in the lawsuit.

"This case has no merit as we have previously demonstrated" to the publisher, said an Estée Lauder Cos. spokeswoman, Alexandra Trower, commenting on behalf of Mr. Lauder.

The allegations demonstrate the lingering reverberations of Mr. Birkenfeld's revelations made more than a decade ago, which resulted in one of the largest tax-evasion investigations in U.S. history.

Mr. Birkenfeld in 2012 was awarded a record $104 million whistleblower payout. He earlier agreed to plead guilty to one count of conspiring with UBS clients to evade taxes and served 31 months in federal prison.

UBS said it had no comment on Mr. Birkenfeld's lawsuit or its allegations.

The suit, filed in a Miami federal court, accuses Messrs. Costner and Lauder of negligent misrepresentation and interference with his book.

After their lawyers contacted his publisher, Greenleaf Book Group Press, the suit alleges, the company destroyed tens of thousands of books, required Mr. Birkenfeld to shoulder the expense of hiring an additional literary attorney to vet the altered manuscript, and had him increase his literary insurance coverage to $3 million from $1 million.

The book, "Lucifer's Banker," was published without mentioning Messrs. Costner or Lauder. Greenleaf General Counsel Sujan Trivedi said the publisher had no comment.

In the suit, Mr. Birkenfeld contends that the "censorship caused by Defendants' tortious falsehoods substantially diminished the newsworthiness and global sales of Lucifer's Banker," among other claims.

Mr. Birkenfeld began cooperating with U.S. authorities in 2007, while still at UBS, and provided prosecutors with detailed descriptions of the bank's efforts to enable tax evasion.

His allegations against UBS lifted the veil of Swiss bank secrecy that for decades had allowed wealthy people world-wide to evade taxes.

The information led to UBS in 2009 agreeing to turn over the names of more than 4,000 account holders who were U.S. taxpayers and pay $780 million to resolve a criminal case involving secret offshore accounts. In the settlement, UBS admitted to the allegations the government laid out in its case against Mr. Birkenfeld.

Since then, more than 33,000 U.S. taxpayers have confessed to holding undeclared overseas accounts and paid more than $5 billion in taxes and penalties.

At issue in the book was a paragraph that read, according to the suit: "I gave [my attorneys] client names and account holdings that made their eyes pop," including Mr. Costner, Leonard and Estée Lauder, Russian billionaire Igor Olenicoff, adult-film stars and prominent physicians.

In 2007, Mr. Olenicoff pleaded guilty to tax evasion. At his sentencing, he said he received bad financial advice from accountants, bankers and lawyers and also blamed his own thoughtlessness, saying he didn't intend to defraud the government.

Mr. Birkenfeld says he told various government agencies and bodies, including the Justice Department, Internal Revenue Service and the Senate's Permanent Subcommittee on Investigations, about the Costner and Lauder accounts in 2007. The suit quotes from email exchanges and communications with officials at these groups.

The lawsuit refers to a deposition Mr. Birkenfeld gave the Senate investigations subcommittee in which he told of an alleged $20 million UBS bank account held by Mr. Costner. A spokesman for the committee didn't respond to a request for comment, while the IRS and Justice Department declined to comment.

Write to James V. Grimaldi at James.Grimaldi@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
ESTÉE LAUDER COMPANIES (THE) -2.67% 197.15 Delayed Quote.51.54%
UBS GROUP -0.15% 10.355 Delayed Quote.-15.45%
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