In Depth June 18, 2008, 11:48AM EST

Tax Scandal's Mystery Man

Liechtenstein's Mario Staggl is accused of working with a former UBS banker to hide $200 million from the IRS. Now he's a fugitive

by David Henry, Matthew Goldstein and Jack Ewing

Staggl client: heir to the Tesco grocery fortune Dame Shirley Porter Martin Stenning/Rex Features

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From all appearances it's business as usual for financial consultant Mario Staggl. The 43-year-old married father of two continues to report for work at a modest three-story building in his native Liechtenstein, the tiny principality of 35,000 between the Austrian and Swiss Alps. He answers calls and e-mails as before. When friends stop by his office, they're greeted by an affable assistant.

Half a world away, however, Staggl is in deep trouble. Last month he failed to appear in U.S. federal court in Fort Lauderdale to answer charges that he helped a billionaire hide $200 million from the IRS. After that, prosecutors branded him a fugitive. Staggl's partner in the alleged scheme, former UBS private banker Bradley Birkenfeld, was expected to plead guilty on June 19—and to implicate colleagues and wealthy U.S. clients. It would be another black eye for UBS, already battered by subprime—related losses.

Yet the Staggl scandal barely merits notice in Liechtenstein, which rivals Switzerland as one of the world's most prominent tax havens. Tax evasion isn't considered a major offense here, so Staggl may not be extradited; local newspaper editor Tino Quaderer call the charges "no big deal." So far Staggl doesn't seem inclined to fly to the States to dispute allegations that he set up secret accounts and offshore companies for Birkenfeld's client. Staggl declined to comment. "It's all too much," says Staggl's attorney, Andreas Schurti, declining BusinessWeek's interview request.

A Savvy Operator, but Dour

Despite Staggl's silence, a portrait of this mystery man emerges from court documents, regulatory filings, and company reports, as well as interviews with associates and authorities in the U.S. and Europe. It shows Staggl to be a savvy, if dour, operator for a roster of notorious clients, including an heir to Britain's Tesco grocery store fortune, a penny stock promoter, and an alleged smuggler of atomic bomb secrets.

For decades, some wealthy people have called on Liechtenstein bankers to hide their cash—honestly earned or ill—gotten—from the prying eyes of tax collectors and regulators. Some are uneasy about the perceptions. "The banking community in Liechtenstein stands for privacy and confidentiality," says Michael Lauber, director of the Liechtenstein Bankers Assn., "but not tolerance for financing terrorism, money laundering, organized crime, or corruption."

Staggl, who attended the Liechtenstein Trustee School in the early 1990s, has been on the banking scene since at least 1995. That year he and Klaus Biedermann, a former member of the Liechtenstein Banking Commission, co-founded a firm called New Haven Trust. Bypassing Vaduz, the principality's financial center, they set up shop in nearby Schaan, a town in a picturesque valley known for denture making.

Soon Staggl was helping a host of wealthy clients, some of them quite colorful. His services proved valuable to Dame Shirley Porter, an heir to the Tesco grocery fortune and a supporter of former Prime Minister Margaret Thatcher. During the late 1990s, Porter was fighting charges in Britain that she rigged elections by evicting low-income residents from public housing and replacing them with well-to-do Conservative Party voters. Facing penalties of more than 20 million pounds, the Porters moved the majority of their wealth to offshore accounts, according to British authorities. Staggl, a stocky man who favors expensive suits, acted as a director for at least one entity, Zollikon Investments, which was registered in the British Virgin Islands, another popular place to hide money.

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