The former head of Credit Suisse’s North America Offshore Banking unit has been charged along with three other officials with conspiring to help U.S. taxpayers hide their assets in secret accounts at the Swiss bank.
The Justice Department and the Internal Revenue Service charged Markus Walder, who ran the unit for the Zurich-based bank, on Thursday, along with Susanne D. Rüegg Meier, a former manager at Credit Suisse; Andreas Bachmann, a former banker at a Credit Suisse subsidiary; and Josef Dörig, the founder of a Swiss trust company, with conspiring with other Swiss bankers to defraud the United States.
The four were charged in a superseding indictment together with four other defendants (Marco Parenti Adami, Emanuel Agustino, Michele Bergantino and Roger Schaerer) who were charged in February.
Prosecutors claim the bankers helped their U.S. customers evade income taxes by setting up thousands of secret bank accounts at Credit Suisse and other Swiss banks holding up to $3 billion in assets. The arrangement dates back to 1953 and involved two generations of U.S. customers, some of whom inherited the secret accounts.
The bankers allegedly set up an office in New York City to provide unlicensed and unregistered banking services to U.S. customers with undeclared accounts. According to prosecutors, Walder, Schaerer and the others allegedly made false statements and provided misleading information to the Federal Reserve Bank of New York and the IRS to hide the bank’s U.S. cross-border banking business and the role of the New York representative office in that business.
Prosecutors claim that Walder supervised the U.S. cross-border banking business, including the New York office headed by Schaerer, a Geneva-based team of bankers led by manager Marco Parenti Adami and a Zurich-based team of bankers led by Rüegg Meier, a senior official at Credit Suisse who also served as a private banker and helped U.S. customers with undeclared accounts.
Bachmann, a private banker who worked for a wholly-owned subsidiary of Credit Suisse, allegedly traveled to the United States to help customers stash their money in the secret Swiss bank accounts and evade taxes. Dörig, the founder of a Swiss trust company, was allegedly a preferred provider for Credit Suisse who helped U.S. customers create and maintain nominee tax haven entities and open secret accounts at Credit Suisse and its subsidiaries using the entities’ names.
Swiss banking secrecy laws helped the bankers hide their clients’ ownership of the accounts from the IRS. They allegedly destroyed statements and other account records sent by email and fax to the representative office in New York so the records of the secret accounts would not be found in the United States.
The bankers allegedly induced some of their U.S. customers to travel outside the country so they could conduct banking related to their secret accounts and opened secret accounts in the names of nominee tax haven entities for their U.S. customers. They also allegedly accepted IRS forms that falsely stated under penalty of perjury that the owners of the secret accounts were not subject to U.S. taxation. In some cases, they allegedly advised their U.S. clients to structure withdrawals from their accounts in amounts less than $10,000 in an effort to conceal the transactions from U.S. authorities.
Similarly, they mailed bank checks in amounts less than $10,000 to their customers in the U.S., and advised U.S. customers to rely on offshore charge, credit and debit cards linked to their secret accounts. They allegedly provided the customers with the cards, including cards issued by American Express, Visa and Maestro.
After the bank decided to close the secret accounts maintained by U.S. customers, the defendants allegedly encouraged and helped their U.S. clients transfer their secret accounts to other foreign banks so they could continue to hide their assets from the IRS. They also allegedly discouraged their customers from disclosing their secret accounts to the IRS through the IRS’s Voluntary Disclosure Program.
If convicted, the defendants each face up to five years in prison and a maximum fine of $250,000.
Last week, Credit Suisse announced that it has become the target of an investigation by the Justice Department and other U.S. authorities, presumably including the IRS (see Credit Suisse Targeted in Tax Inquiry). Until recently, UBS has been the most prominent Swiss bank to be targeted for investigation of its private banking business. The Swiss government agreed to disclose the identities of about 4,450 clients of UBS in 2009 after UBS signed a deferred prosecution agreement with the Justice Department under which it agreed to pay $780 million.
However, a few other Swiss banks, such as Julius Baer and Basler Kantonalbank, are reportedly also under investigation.
In a separate case, the U.S. Attorney's Office in New York indicted Swiss financial advisor Beda Singenberger on Thursday, accusing him of conspiring with over 60 U.S. taxpayers to hide more than $184 million in Swiss bank accounts. Singenberger operated wealth management and tax dvisory business called Sinco Treuhand AG.
Separately, U.S. officials have also been investigating HSBC for setting up secret accounts for U.S. clients in India. In April, the IRS asked a judge to issue a "John Doe" summons seeking information on thousands of U.S. customers of HSBC's Non-Resident Indians business.
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