UBS fends off lawsuit of billionaire tax evader (Reuters) - A U.S. federal judge ruled on Tuesday in favor of Swiss bank UBS AG in a lawsuit brought by Igor Olenicoff, a billionaire former client who ran afoul of the tax-collecting Internal Revenue Service and tried to blame the bank. Olenicoff sued UBS in 2008, accusing the bank of fraud, conspiracy and other charges in handling some $200 million he kept in offshore accounts and claiming that UBS had wrongfully advised him that he did not have to report them to the IRS. Judge Andrew Guilford of the U.S. District Court in Santa Ana, California, issued a harshly worded ruling on Tuesday, about a month before the case was due to go to trial. Olenicoff, a Russia-born American property developer, pleaded guilty to tax evasion in 2007 and to lying on his tax returns by failing to disclose the offshore accounts. He paid $52 million in back taxes. In March, Forbes estimated Olenicoff's wealth at $2.6 billion. The judge wrote that Olenicoff's case was "built upon a simple premise: UBS gave Olenicoff bad tax advice, which Olenicoff believed." But the judge said that having pleaded guilty to tax evasion, Olenicoff already had placed "nearly every room of his legal house of cards into jeopardy." Drawing on the maxim, "two wrongs do not make a right," the judge said that "UBS's admission of guilt does not give Olenicoff the right to sue UBS for fraudulent tax advice." Olenicoff's civil case, asking up to $1.7 billion in damages, had sought in part to probe whether clients of Swiss banks could legally rely on their private bankers' assertions that there was no need to disclose the accounts on their tax returns or sign required disclosures. U.S. residents may legally hold offshore bank accounts, but the IRS requires taxpayers to disclose the accounts on their tax returns and to sign disclosures provided by the banks, known as W9 forms. In 2009, UBS paid a $780 million fine to the U.S. Justice Department as part of a deferred prosecution agreement in which it admitted to fraud and conspiracy in helping about 19,000 wealthy Americans hide up to $20 billion in secret bank accounts. UBS spokeswoman Torie Von Alt said in a written statement, "We are pleased with the Court's decision. It corresponds with our view that Olenicoff's claims for damages have been without merit. The judge confirmed that Olenicoff cannot turn to UBS to blame it for his own omissions/failures to disclose his offshore accounts and to pay taxes. Lawyers for Olenicoff could not immediately be reached for comment. UBS had filed motions to dismiss Olenicoff's case, arguing that its clients have a duty to know what to declare on their U.S. tax returns. The judge granted UBS's motions, ending the matter. Olenicoff had also named his former UBS private banker, Bradley Birkenfeld, as a defendant in his lawsuit. Because the UBS motions to dismiss the case were joined by Birkenfeld, the judge's granting of the motions also ended Olenicoff's case against his former private banker. The judge wrote that Olenicoff's case was ironic because UBS had argued in various motions that it had merely assisted U.S. clients in evading taxes, not forced them to evade taxes. The judge further noted that because Olenicoff already had pleaded guilty to tax evasion, "It is directly inconsistent for him now to claim that he unwittingly relied on UBS's counsel." In his ruling, the judge criticized Olenicoff's past dealings with the IRS. He noted that around 2003, Olenicoff had persuaded a former Russian army general to meet with the IRS on his behalf. The general, the judge wrote, was trying to show that offshore accounts for a Bahamas company called Sovereign Bancorp Ltd and owned by Olenicoff were in fact set up at the request of former Russian president Boris Yeltsin and were not under Olenicoff's control. "During his meeting with the IRS agent, the general became frustrated and told the agent that several years ago he was in charge of pushing the button that would have wiped the IRS off the Washington map," the judge wrote in his ruling. The general was not identified. The judge also found that Olenicoff's lawyers had not shown that UBS's investment scheme for their client had resulted in any measurable harm. The case unfolded at a time when U.S. authorities are investigating the Swiss banking industry. The U.S. Justice Department has indicted one Swiss private bank, Wegelin, and charged scores of Swiss bankers and their American clients with tax evasion. Olenicoff's case differs in one key aspect from a separate one brought by former clients of UBS against the bank in a Chicago federal court last June. In that case, the former clients have not faced criminal legal charges from the IRS. The Chicago case, which seeks class-action status, was filed in June 2011 on behalf of former UBS clients Matthew Thomas of California and Himanshu Patel of Arizona. Thomas and Patel previously paid back taxes, interest and penalties to the IRS related to their Swiss accounts. They are accusing UBS of fraud and breach of fiduciary duty, claiming UBS told them that their accounts, opened when the two worked overseas during the last two decades, did not have to be disclosed to the IRS. Reporting by Lynnley Browning in Hamden, Conn.; Editing by Howard Goller