A former UBS banker who is currently an independent asset manager has been accused of helping U.S. taxpayers use secret Swiss bank accounts to evade income taxes.
The Justice Department and the IRS said Tuesday that Martin Lack, a Swiss citizen, has been charged with conspiracy to defraud the United States. Lack, a former employee of UBS AG, founded his own investment management firm, Lack & Partner Asset Management AG, in Zurich in 2002. He currently resides in Switzerland.
According to prosecutors, Lack helped U.S. customers open and maintain secret bank accounts at a Swiss cantonal bank headquartered in Basel, Switzerland, with the assistance of a private banker at the bank, which has been identified as Basler Kantonalbank, according to Bloomberg.com. The indictment alleges that Lack traveled to the U.S. to do banking for U.S. customers with undeclared accounts and that he conducted currency transactions in the U.S. in violation of federal banking and currency reporting laws.
Lack allegedly encouraged his clients not to participate in the IRS voluntary disclosure program and offered to provide them with falsified bank documents to conceal the source of the funds in their undeclared bank accounts. Prosecutors also allege that Lack gave a U.S. customer with an undeclared bank account a cell phone and instructed the client to only contact him using the cell phone and not to use a U.S. land line.
Lack allegedly feared that he would be arrested by U.S. law enforcement authorities following the investigation of UBS, so, in November 2010, he sent an associate, Renzo Gadola, to meet a client at a Miami hotel and persuade the client not to disclose to the U.S. that he owned and controlled a bank account at a regional bank headquartered in Basel.
The undeclared bank account allegedly was funded when the client provided Lack with approximately $445,000 in cash during two meetings in New Orleans in 2007. At the Nov. 6, 2010, meeting in Miami, prosecutors claim that Gadola encouraged the customer not to disclose the undeclared cantonal bank account to U.S. authorities, telling the customer that there was a “99.9 percent chance the client had nothing to worry about because the “likelihood . . .that they will somehow. . . find out about the account is practically zero percent.”
Lack also allegedly encouraged the client not to disclose the secret account at the cantonal bank to the U.S. authorities and offered to provide the client with falsified bank documents to make the funds in the account appear to be the proceeds of a loan. On Dec. 22, 2010, Gadola pleaded guilty to conspiring to defraud the United States. He is scheduled to be sentenced before U.S. District Judge James King of the Southern District of Florida on Nov. 18, 2011.
The IRS and the Justice Department have ramped up their investigations of Swiss banks in recent years. In 2009, UBS agreed to pay $787 million as part of a deferred prosecution agreement, and later agreed to provide the identities of up to 4,450 U.S.-based clients with undeclared bank accounts. More recently, the IRS and the Justice Department have been investigating Credit Suisse and other Swiss banks (see Credit Suisse Officials Charged in Tax Conspiracy).
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