As part of its guilty plea, WEGELIN agreed to pay approximately $20 million in restitution to the IRS and to pay a $22.05 million fine. In addition, WEGELIN agreed to the civil forfeiture of an additional $15.8 million, representing the gross fees earned by the bank on the undeclared accounts of U.S. taxpayers. Together with the April 2012 forfeiture of over $16.2 million from WEGELIN’s correspondent bank account, this amounts to a total recovery to the United States of approximately $74 million.The press release is a lot more detailed than most such announcements, but conviction of Wegelin, although practically defunct, is a major development. I recommend reading the press release. The press release contains a link to the indictment.
Addendum on 1/5/12 4:35 pm:
1. Probably the biggest point is that the U.S. brought a Swiss bank with deliberately minimum U.S. contacts to the table to take a plea agreement.
2. Despite knowing it was acting unlawfully, "Wegelin believed that, as a practical matter, it would not be prosecuted in the United States for this conduct because it had no branches or offices in the United States and because of its understanding that it acted in accordance with, and not in violation of, Swiss law and that such conduct was common in the Swiss banking industry. " Allocution (Exh A to Plea Agreement], p.2.
3. I had thought Wegelin got out of the banking business when the original indictment was published, but apparently it now commits to get out.
4. Wegelin agrees to keep records relating to U.S. taxpayers' names and account information. The presumption is that the U.S. will or is already pursuing a request for those records under the U.S. / Swiss Double Tax Treaty. I speculate that the resolution of that request might be a template for resolving the U.S. complaints against the other 10 Swiss banks publicized to be in the U.S. sights.
5. The Plea Agreement provides that "This Agreement does not provide any protection against prosecution except as set forth above, and applies only to Wegelin and not to any individuals." Certainly it does not appear to resolve the case against the individual defendants named in the indictment.
a. However, Robert S. Fink of Kostelanetz & Fink, a major player in this area, is quoted as saying (Shamik Trivedi, Swiss Bank Wegelin Pleads Guilty to Conspiracy to Evade Tax, 2013 TNT 3-4 (1/4/13)):
"It's evident to me that an agreement or deal was made whereby the bank voluntarily gave the court personal jurisdiction, pleaded guilty, and agreed to a fine," with an agreement that no other individual at the bank would be indicted, he said, adding, "America has now indicted a bank that had no presence in the United States, which gives tremendous publicity to the long arm of American jurisprudence."
b. This is, of course, one of the big issues for the other banks. How can they protect all or most of their people. I don't think the U.S. is interested in indicting a lot of Swiss bankers. Many of the indictments are just show, anyway, as the bankers are not likely to come to the U.S. or travel anywhere they may be deported to the U.S. Still, unless there is some agreement reached, the threat of indictments will cramp their style.
6. I speculate that there may be a strong push for some of the more aggressive banks in the list of 10 to seek to avoid Wegelin's fate by entering a deferred prosecution agreement, with stiff penalties.