(Bloomberg) A former Credit Suisse Group AG banker and a Swiss trust firm founder who pleaded guilty were spared prison after helping the U.S. government build a $2.6 billion criminal tax case against the bank.
Andreas Bachmann, the banker, and Josef Dorig got probation and fines at their sentencings Friday in federal court in Alexandria, Virginia. The Swiss citizens pleaded guilty last year to conspiring to defraud the Internal Revenue Service by helping clients hide assets. Credit Suisse’s main bank unit paid its penalty after admitting in May it helped Americans evade taxes.
“I feel deeply sorry for what I did,” Dorig told U.S. District Judge Gerald Lee at the hearing.
The $2.6 billion penalty on Zurich-based Credit Suisse was the highest since the U.S. began targeting offshore tax evasion in 2008. A dozen Swiss banks still face criminal probes, and about 100 are seeking deals that they won’t be prosecuted by disclosing their wrongdoing and paying fines.
Dorig, 73, worked at Credit Suisse for more than three decades before setting up a trust firm that helped Americans cheat the IRS, while Bachmann, 57, was a banker at a Credit Suisse subsidiary. They were indicted with six other former Credit Suisse bankers in 2011 and were the only ones to plead guilty and cooperate before the bank admitted wrongdoing.
“Mr. Dorig had absolutely no incentive to voluntarily enter the United States to answer the charges against him or cooperate with the government,” his attorneys said in court papers filed in November. “He easily could have stayed in Switzerland and lived the rest of his life peacefully and happily.”
Dorig was fined $125,000 and Bachmann was fined $100,000. The two faced as long as five years in prison.
Bachmann told the judge that the period from his 2011 indictment “has been the most difficult of my life.”
Dorig and Bachmann admitted in their guilty pleas that they helped U.S. clients hide assets and income in secret Swiss bank accounts. Both men helped clients conceal accounts in the names of phony structures created in the forms of trusts, corporations or foundations.
Dorig, who worked for Credit Suisse from 1961 to 1997, helped set up structures for clients. In 1997, the unit where he worked spun off the structures linked to undeclared accounts to a new trust company controlled by Dorig, he said in his plea.
Credit Suisse bankers then referred U.S. clients seeking to avoid domestic taxes to Dorig.
“It was Dorig’s role to create a paper trail that made it appear the structure operated independently and the U.S. person who owned the assets in the undeclared account linked to the structure had no control over the assets,” according to a statement of facts Dorig admitted. “In truth, Dorig regularly acted at the direction of the U.S. person who owned the assets.”
Bachmann worked from 1994 to 2006 at a Credit Suisse unit, where his approximately 100 clients included as many as 30 in the U.S. He admitted that many U.S. accounts weren’t declared to the IRS and relied on sham structures to conceal true ownership.
Bachmann said he carried cash to and from U.S. clients on four trips. In October 2001 he was stopped at a New York airport after receiving $50,000 from one customer that he intended to take to a client in South Florida.
When authorities found the cash in his luggage, he was briefly questioned by a police officer, according to his statement of facts. Bachmann continued to travel. When he got to South Florida, he told the client about the airport incident.
Cash in Luggage
The customer “refused to receive the money out of concern that Bachmann’s brief encounter with law enforcement might lead to the discovery of the client’s undeclared account,” according to his statement. “As a result, Bachmann returned to Switzerland with the $50,000 in cash in his checked luggage.”
He visited U.S. clients in their homes or in hotels and restaurants, where he would review their account statements.
“Most U.S. customers had instructed Bachmann not to mail account statements to them,” according to the statement. “If during a meeting a customer requested a copy of the account statement, Bachmann would inquire of the customer, Do you really want to keep the statement?’”
Bachmann continued the scheme when he worked from 2006 to 2009 for a Zurich asset manager. He left “because the firm planned to cease servicing the accounts of U.S. customers,” and the bank holding assets stopped accepting U.S. customers, according to the statement. In 2009, he left to form another asset management firm in Zurich.
The case is U.S. v. Adami, 11-cr-00095, U.S. District Court, Eastern District of Virginia (Alexandria).
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