Former Credit Suisse AG customers are being investigated by federal grand jurors in Miami trying to determine whether they engaged in tax fraud, expanding a long-running U.S. probe of the bank.
The customers include a Brazilian businessman whose residence on Fisher Island, Florida, was raided by Internal Revenue Service agents in 2021 and a Colombian family featured in a U.S. Senate
U.S. tax prosecutors are pursuing the cases as the Justice Department investigates whether Credit Suisse, now owned by UBS Group AG, helped Americans hide assets from the IRS despite pledging to end the practice a decade ago, said the people. Credit Suisse pleaded guilty in 2014, paid $2.6 billion, and admitted it helped thousands of Americans evade taxes.
Last year, a Senate Finance Committee report said the bank continued to help Americans avoid federal taxes. It detailed "major violations" of its plea deal, including helping the family hide $100 million from the IRS. Prosecutors are trying to determine if Credit Suisse breached its plea deal. Such a declaration could ultimately cost UBS $1 billion or more in penalties, the people said.
UBS is trying to resolve a liability it assumed when it acquired Credit Suisse last year for 3 billion francs ($3.26 billion) in a deal brokered by the Swiss government after years of scandal and mismanagement at Credit Suisse.
Lawyers for UBS have worked for the past year to persuade the Justice Department to resolve the matter civilly rather than declaring it in breach of its plea deal, said the people, who declined to be identified because the proceedings are confidential.
A UBS spokesperson declined to comment on the grand jury investigations. In a regulatory filing last month, it said: "Credit Suisse AG has provided information to U.S. authorities regarding potentially undeclared US assets held by clients at Credit Suisse AG since the May 2014 plea. Credit Suisse AG continues to cooperate with the authorities."
The current investigations have focused on how taxpayers may have turned to family members or close friends with non-U.S. passports to hide overseas accounts from the IRS, the people said. Prosecutors are looking at whether the bank assisted the practice or should have detected it.
Under the plea deal, Credit Suisse must identify undeclared accounts to the IRS. Since 2014, the bank had identified "thousands of previously undeclared accounts" valued at more than $1.3 billion, according to the Senate committee. That included about two dozen with accounts of $20 million or more, and one involved a U.S. taxpayer, Dan Horsky, who
Deputy Attorney General Lisa Monaco has
An attorney who represents both the Fisher Island businessman and one of the Colombian family members declined to comment, as did the Justice Department.
The final calculation on what Credit Suisse may depend on the Justice Department determination of how much bank clients concealed from the IRS, the people said. In previous cases, prosecutors have collected 50% of the account balances that weren't disclosed to U.S. tax authorities through reports of Foreign Bank and Financial Accounts, or FBARs.
Senate report
The Senate Finance report, released in March 2023, focused in part on Credit Suisse's handling of "large undeclared accounts" held by the family of dual US-Latin American citizens amid a US crackdown on Swiss banks. In 2013, Credit Suisse transferred nearly $100 million in eight family accounts to banks in Switzerland, Israel and Andorra.
Several other Swiss banks — Union Bancaire Privee, PKB Privatebank AG and Bank Leumi — received undeclared funds in 2012 and 2013 from the family, the committee said.
Credit Suisse was supposed to disclose the transfers to the U.S. but waited years to do so. It revealed one account to the IRS in 2018, and only disclosed the rest in December 2021 – months after whistleblowers told the committee, IRS and Justice Department about them, the report said.
The family accounts were registered using the holder's Latin American citizenship, without their U.S. passport, according to the report. But Credit Suisse told the committee that its bankers visited the family in Miami before 2014. They attended annual meetings there for ultra-high net worth clients at places like the Mandarin Hotel and the Capital Grille.
One Credit Suisse manager was the head of private banking for Latin America who supervised several bank employees indicted for helping U.S. clients maintain secret offshore accounts to evade taxes, according to the report.
In working with the committee, Credit Suisse examined the role of 13 employees who worked with the family's accounts. Eleven have left. None were "terminated due to this conduct because Credit Suisse only detected the existence of these accounts in late 2021," the report said.
The bank's failure to act "enabled what appears to be potentially criminal tax evasion by a client to go undetected for almost a decade," according to the report.
