(Bloomberg) The founder of a Swiss trust company that U.S. prosecutors say worked with Credit Suisse Group AG to help American clients evade taxes pleaded guilty in Virginia, increasing pressure on the bank as it tries to resolve a Justice Department criminal probe.
Josef Dorig, 72, admitted today in federal court in Alexandria that he helped U.S. clients of the bank cheat the Internal Revenue Service by opening secret accounts under the names of nominees in tax havens. He was indicted in 2011 with seven Credit Suisse bankers on a charge of conspiring to help the bank’s U.S. clients hide $4 billion from the IRS.
Dorig is cooperating with federal prosecutors in the Credit Suisse probe, U.S. District Judge Gerald Lee said today in court. Zurich-based Credit Suisse is the largest of 14 Swiss banks under U.S. criminal investigation in a crackdown on offshore tax evasion. Former Credit Suisse banker Andreas Bachmann, who admitted on March 12 that he helped American clients evade taxes, also is cooperating with the U.S.
Since 2009, the U.S. charged more than 70 U.S. taxpayers and about three dozen offshore bankers, lawyers and advisers with using undeclared accounts to cheat the IRS. A handful of offshore enablers have come to the U.S. to plead guilty. The rest are wanted. An additional 43,000 U.S. taxpayers avoided prosecution by paying back taxes, fines and penalties, and telling the IRS what offshore banks and enablers helped them.
Bachmann admitted his guilt after the Senate Permanent Subcommittee on Investigations said in a report that Credit Suisse helped 22,000 Americans hide as much as $10 billion from the IRS. Chief Executive Officer Brady Dougan apologized to the panel at a Feb. 26 hearing, saying a small group of Swiss-based bankers appear to have broken U.S. law and fooled top managers.
He said bankers worked with outside intermediaries to help U.S. clients set up offshore shell entities with money deposited at Credit Suisse in the names of the entities rather than the clients. Such conduct was egregious, Dougan said.
Credit Suisse said April 3 that it increased reserves to 720 million francs ($818 million) to resolve the U.S. case. The bank also agreed Feb. 21 to pay $197 million to the U.S. Securities and Exchange Commission for providing cross-border securities services to thousands of Americans without registering to conduct the business.
In pleading guilty, Bachmann admitted he conspired with Dorig, who worked at a Credit Suisse unit, to help U.S. customers open secret accounts and set up nominee accounts in tax havens.
Credit Suisse said in 1997 it was “too risky” for Dorig to form such entities within the bank. Instead, the bank “announced that the formation and management of nominee tax havens should be done from outside,” Bachmann said.
Dorig then formed a Swiss trust company in Zurich, according to the indictment. Before his arrest yesterday, Dorig hadn’t appeared in Alexandria to respond to the indictment.
The case is U.S. v. Walder, 11-cr-00095, U.S. District Court, Eastern District of Virginia (Alexandria).
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