New Swiss Enabler Indictments - Bankers Related to UBS and, Allegedly, Wegelin (1/3/12)

Three Swiss enablers, reputedly employed by or affiliated with Wegelin & Co., have been indicted in NYC.  The indictment is here; the USAO SDNY press release is here, see quote below].

The three are Michael Berlinka, Urs Frei, and Roger Keller.  The amount of money hidden allegedly exceeds $1.2 Billion (with a B).

The bullet points are:

Enabler Defendants:  Michael Berlinka, Urs Frei, and Roger Keller

Unindicted Co-Conspirators:  (i) the U.S. taxpayers involved (numbering over 100, although only U.S. taxpayers A - W (numbering 23) and two by name, Arthur Joel Eisenberg, see here, and Kenneth Heller, see here) are discussed specifically in the indictment; and (ii) other Swiss enablers, such as Client Advisor A, Managing Partner A, Swiss Asset Manager, Swiss Bank A Executive and Gian Gisler, see here.and Beda Singenberger, see here.

Banks : Principally Swiss Bank A (reputedly Wegelin & Co.); UBS AG and Swiss Bank No. 1 (unknown) play roles.

Entities: Yes (the taxpayers frequently employed entities)

Charges:  One count of conspiracy (both the ubiquitous Klein / defraud conspiracy and offense conspiracy to violate 7206(1) (tax perjury) and 7201 (evasion), charged as a single count).

Maximum Incarceration Period: 5 years (10 years on theft count; 3 years on tax count)

Court: USDC SDNY

Judge: Jed D. Rakoff (see Wikipedia entry here)

I suspect all are still in Switzerland and unlikely to come to the U.S. to have their day in court.  I suspect that, like all of this genre of indictment of absent Swiss bank enablers, DOJ is sending a message and perhaps putting additional pressure on some type of global settlement (that will preserve the U.S.'s ability to prosecute the really bad offenders, whether U.S. taxpayers or not).

The following is from the USAO SDNY press release:

During their time at Swiss Bank A, BERLINKA, FREI, and KELLER allegedly conspired with various U.S. taxpayers and others to hide from the IRS both the existence of certain Swiss bank accounts, as well as the income they generated. In particular, BERLINKA, FREI, and KELLER opened and serviced dozens of undeclared accounts for U.S. taxpayers in 2008 and 2009, in an effort to capture business lost by UBS AG (“UBS”) and another large international Swiss bank (“Swiss Bank B”) in the wake of widespread news reports that the IRS was investigating UBS for helping U.S. taxpayers evade taxes and hide assets in Swiss bank accounts. After the reports, both UBS and Swiss Bank B stopped servicing undeclared accounts for U.S. taxpayers. 

To capitalize on the business lost by UBS and Swiss Bank B and to otherwise increase the assets under management at Swiss Bank A, and fees earned from those assets, BERLINKA, FREI, KELLER, and other client advisers allegedly told various U.S. taxpayer-clients that their
undeclared accounts at Swiss Bank A would not be disclosed to the United States  authorities because Swiss Bank A had a long tradition of bank secrecy. The defendants and other client advisers at Swiss Bank A also told their U.S. taxpayer-clients that the bank was less vulnerable to United States law enforcement pressure because, unlike UBS, the bank did not have offices outside Switzerland. Members of Swiss Bank A’s senior management participated in some of these sales pitches to U.S. taxpayer-clients who were fleeing UBS. Additionally, to further the conspiracy, BERLINKA, FREI, KELLER, and/or other client advisers allegedly took steps that included the following: 

• They opened and serviced undeclared accounts for U.S. taxpayer-clients in the names of sham corporations and foundations formed under the laws of Liechtenstein, Panama, Hong Kong, and other jurisdictions for the purpose of concealing the identities of the U.S. taxpayer-clients from the IRS; 

• They received and retained at Swiss Bank A documents that falsely declared that the sham entities were the beneficial owners of certain accounts, when in fact, the accounts were owned by U.S. taxpayers; 

• They permitted certain U.S. taxpayer-clients to open and maintain undeclared accounts at Swiss Bank A using code names and numbers to minimize references to the actual names of the U.S. taxpayers on Swiss bank documents; 

• They ensured that account statements and other mail for U.S. taxpayer-clients were not mailed to them in the United States; and 

• They sometimes communicated with U.S. taxpayer-clients using their personal email
accounts to reduce the risk of detection by law enforcement.

One fun fact allegation in the indictment is as follows (bolded text applied by me):

52. In or about 2008, Clients J and K, who had maintained an undeclared account at UBS and one of its predecessor banks since in or about the 1980s, were advised by their UBS client adviser that they must close their undeclared UBS account. Clients J and K then spoke to an attorney in Los  [*28] Angeles ("the Los Angeles Attorney"), who advised them to create an offshore entity and open an account in the name of the entity with URS FREI, the defendant, at Swiss Bank A. Thereafter, in or about November 2008, at the Los Angeles Attorney's office, Clients J and K completed account opening documents for a new account to be held at Swiss Bank A in the name of White Tower Holdings, LLCAi (3) a separate bank form in which Clients J and K falsely stated that White Tower Holdings (rather than Clients J and K) was the "beneficial owner of all income from US sources deposited in the above-mentioned portfolio(s), in accordance with US tax law[]"; and (4) Forms W-9 signed by Clients J and K, even though the account was undeclared. The Los Angeles Attorney then sent the signed documents to FREI at Swiss Bank A.

The judge is Jed Rakoff, who has drawn some notoriety for questioning the leniency of SEC settlements in the banking fiasco.  Query, will he also question any leniency in plea bargain deals should there ever be one (or more) in the offshore bank cases assigned to him.