Clock ticks down on UBS tax case in U.S. court

By Tom Brown

MIAMI (Reuters) - The tax-evasion case first gained notoriety in June last year, when it was revealed that a former UBS AG banker once smuggled a client's diamonds into the United States in a toothpaste tube to avoid detection by U.S. authorities.

Now everyone seems to be getting squeezed as the clock ticks down to a trial, set for 9 a.m. (1300 GMT) Monday in sultry Miami, in which U.S. authorities hope to pry the lid off Switzerland's much-vaunted tradition of bank secrecy.

That's when U.S. District Court Judge Alan Gold will begin hearing evidence in a civil lawsuit against UBS and arguments about why he should force Switzerland's best-known bank to disclose information on up to 52,000 wealthy clients suspected of using it to dodge U.S. taxes.

There has been much speculation about possible moves to settle the case before Monday's battle between UBS and the U.S. Justice Department gets under way.

Lawyers for both sides did not return phone calls seeking comment on Friday. Many were apparently in Miami already, preparing their briefs for a case that could set legal precedent or hammer out details of a last-minute agreement.

Pressure from the UBS case is being felt far and wide, however. It comes against the backdrop of a global fight against tax cheats that is supported by the U.S. administration.

UBS, long known as a zealous guardian of its customers' privacy and money, is feeling the biggest squeeze.

It became the target of a sweeping U.S. criminal probe in 2007, when its diamond-smuggling former executive, Bradley Birkenfeld, alleged that the bank had been telling its U.S. clients since 2002 that it was not required to disclose their identities to U.S. authorities.