Chapter 3 Part 2: Cracking the Code - The Tricks of the Trade
Birkenfeld was living the dream at Barclays. First-class flights, fine dining, Russian girls entertaining clients in Geneva, cash handovers like clockwork. He was pulling in CHF 200K, running a one-man monopoly as the only Swiss private banker at Barclays doing this game.
Even his vacations turned into business. On a trip to St. Barts he met an adult film actress named Marylin Star. She later showed up at his Geneva flat with a pink suitcase and a giant teddy bear. She asked for a knife, cut the bear open, and out poured $300,000 in cash. Barclays took the money happily. She later went to federal prison for insider trading. Not his problem.
Barclays Gets Nervous
Then Barclays dropped the hammer. No more soliciting North Americans. The US government was watching the rich more closely and Barclays did not want trouble. Birkenfeld thought his good days were over.
But his boss Olivier had a plan. London. Three premier Barclays branches – Knightsbridge, Sloane Square, Pall Mall. Wealthy Europeans were dumping piles of cash from selling flats, ships, and startups. Someone needed to move that money to Geneva. Birkenfeld was that someone.
The British tax rules made it almost too easy. A UK citizen could park money in Switzerland and as long as profits were spent outside Britain, no taxes. Most countries worked the same way. Only Americans and Japanese were strict about taxing overseas money.
So Birkenfeld would check into the Royal Automobile Club, hit the branches, wine and dine mega-rich clients at gentlemen’s clubs, take them to Wimbledon, Ascot, rugby matches. When a guy’s favorite horse is two lengths ahead and he is on his feet screaming – that is the perfect time to pitch hedge funds.
Every two weeks he flew back to Geneva carrying three to six dossiers with transfer instructions for millions of pounds. Easy money.
The $200 Million Phone Call
Back at his desk one day, a call came in from the Barclays Bahamas branch. They were dumping all American accounts. One client had $200 million. Birkenfeld sat up straight. The client was Igor Olenicoff, a real estate billionaire from California.
Problem was, Olenicoff would not sign the paperwork that let the IRS see his money. Barclays wanted him to fill out a W-9. He was not having it. So Birkenfeld flew to California and met Olenicoff at a bistro in Newport Beach.
Olenicoff looked like Goldfinger. White hair, cold blue eyes, one eyebrow permanently raised. His son Andrei looked like a young Brad Pitt. Birkenfeld pitched a two-part plan: find a Geneva bank that would not ask questions, then set up shell companies and trusts in Liechtenstein so Olenicoff’s name appeared nowhere. Classic offshore playbook.
The Olenicoffs loved it. Andrei called back the same day. “My dad’s ecstatic!”
The Jump to UBS
Meanwhile a London headhunter named Harry Pilkington had been trying to recruit Birkenfeld for UBS. At first Birkenfeld said no. He liked the boutique feel of Barclays. But after meeting Olenicoff and his $200 million, a lightbulb went off. Maybe UBS could be the “chain store” for Olenicoff’s money.
Birkenfeld had one demand: an 18-20% performance-based bonus on every dollar of new money he brought in. Unheard of in Swiss banking. Most private bankers did not even have college degrees. They made modest salaries and got small Christmas tips.
UBS balked. But Birkenfeld knew he had leverage. The previous guy in the job got fired for watching porn at his desk. Their second choice declined. Birkenfeld had an MBA, hundreds of clients, and a proven track record.
On July 4, 2001, Birkenfeld signed with UBS at an 18% performance bonus. Before the ink dried, he told them he was bringing a client with $200 million. They could not believe it.
He was instantly the highest-paid UBS private banker in all of Switzerland. And he was walking into the belly of the beast.
Checkmate.
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Part of the Lucifer’s Banker Uncensored series