A Swiss banking executive and lawyer have been indicted on charges of conspiring to defraud the U.S. in a sign that the IRS is now looking beyond UBS in its international tax enforcement efforts.
The Justice Department accused the pair of helping wealthy Americans conceal their assets from U.S. authorities in secret Swiss bank accounts. The banker, Hansruedi Schumacher, is a former regional market manager for UBSs North America international business who later headed UBSs cross-border business. In mid-2002, he left UBS to continue to conduct private banking with Zurich-based Neue Zuercher Bank, or NZB. He and Swiss lawyer Matthias Rickenbach of the firm Rickenbach and Partner traveled regularly to the U.S. to conduct banking and investment activities with U.S. clients. Prosecutors allege that they concealed their business activities in the U.S. by falsely representing to American authorities that they were traveling to the U.S. for personal reasons, but while in the U.S., the two would sometimes bring thousands of dollars in cash for their clients.
To repatriate their clients money, Schumacher and Rickenbach allegedly helped their clients obtain offshore credit cards and created sham loan documents. In addition, they allegedly falsified bank documents to generate the appearance that the assets of their U.S. clients belonged to Swiss citizens, and they falsified documents to disguise their U.S. clients repatriation of offshore funds as inheritances from foreign citizens. Those clients allegedly included Jeffrey Chernick, who pleaded guilty last month to charges of evading taxes on $8 million in assets (see Toy Exec Pleads Guilty in UBS Tax Case).
According to court documents, Schumacher and Rickenbach discouraged their U.S. clients from voluntarily coming into compliance with U.S. tax authorities. Instead, the defendants encouraged their clients to transfer their assets from UBS to NZB. The defendants told their clients that their assets and identification would be safer at NZB because the smaller Swiss bank had no presence in the U.S. and was thus less likely to be pressured by the American authorities to disclose the identities of their U.S. clients.
The indictments were handed up a day after the Swiss and U.S. government announced a settlement with UBS that calls for the bank to reveal the names of 4,450 of its clients (see UBS Agrees to Disclose 4,450 Bank Names).
"This is another step in our ongoing effort to pursue hidden offshore assets - no matter where they are located," said IRS Commissioner Doug Shulman in a statement. "We're in the early stages of our work to crack down on offshore tax evasion. Through our efforts, we are gaining access to more and more information on institutions and individuals involved in offshore tax evasion, and you can expect us to use all of our enforcement tools to stop this abuse. For people with hidden offshore assets, they have an opportunity to get right with the government. Time is quickly running out, and people should take advantage of our voluntary disclosure process before special provisions expire September 23."
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