Wednesday, December 19, 2012

More Swiss Bank Enablers Indicted (12/18/12)

There is a newly unsealed indictment, here, today of three Swiss bankers in the usual venue, the Southern District of New York.  The press release by USAO SDNY is here.  The defendants are Stephan Fellman, Otto Huppi, and Christof Reist who worked for Bank 1, a Zurich bank, as "client advisor to various individuals, including U.S. taxpayers who maintained accounts at Swiss Bank No. 1."  Similar allegations, although fewer, are made regarding one or more of the defendants' activities at Swiss Bank No. 2, Swiss Bank No. 3.and Swiss Bank No. 4.  [I will post the names of the pseudononymous banks when I get that information.]

The indictment alleges a Klein conspiracy "to defraud the United States, to conceal from the IRS the existence of bank accounts maintained at Swiss Bank No. 1, and the income earned in these accounts (hereafter "the undeclared accounts"), and to evade U.S. taxes on income generated in those accounts."  Specifically, they (with other client advisors of Swiss Bank No. 1"conspired with U.S. taxpayer-clients to hide at least $423,000,000 in assets from the IRS."  The U.S. taxpayer-clients are alleged to be members of the conspiracy.  The trio, in the order listed, "personally managed undeclared U.S. taxpayer assets worth at least $104,000,000, $14,800,000, and $5,400,000 respectively."

Now familiar acts of stealth to impair or impede the IRS are alleged: (i) code names; (ii) no mail to U.S.; (iii) meetings in Switzerland; (iv) meetings in the U.S., (v) sham corporate entities, (vi) use of a correspondent bank account in the U.S. for client access to funds, and (vii) U.S. taxpayer-clients filed false returns and failed to file FBARs.  UBS appears several times as a bank from which funds were transferred into Swiss Bank No. 1 after the pressure and resulting publicity on UBS beginning in 2008.

The indictment makes specific allegations for clients names "Client 1," "Client 2," and so forth, but these merely make specific allegations in the nature of the stealth allegations summarized above.

On my quick review, I saw nothing out of the ordinary in this indictment of the enablers.  If I have or obtain from others any more insight of potential use to readers, I will post it.

5 comments:

  1. It appears Bank #1 is ZKB. Christof Reist is listed as a ZKB employee:

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  2. Otto (no longer with ZKB): http://www.s-a-advisors.com/Your-asset-managers/Our-team/Our-team-56

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  3. Point 73 lists the approximate high balances. As high as 2 million, as low as 65K. The 65K surprised me (clients 3 and 4) since there seems no be no especially outrageous conduct on their part, unlike client #7, who declared one account on the FBAR but not the other, thus foreclosing lack of knowledge of FBAR reporting requirements.


    As to OTTO HUPPI a/k/a "Otto Hueppi": That is NOT an AKA! it's like saying the city of ZURICH a/k/a "Zuerich"

    In the German language, the umlaut (two dots over certain vowels) are not normally used on capital letters but on lower case letters only. If one does not have a keyboard with foreign characters, instead of a, o, or u one would type ae, oe, or ue. Sorry for getting off topic but calling this spelling variation an a/k/a is incorrect.

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  4. Correct that this is ZKB. See:

    http://www.swissinfo.ch/eng/business/Cantonal_bank_employees_charged_in_New_York.html?cid=34571310

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