Tuesday, March 5, 2013

Wegelin Sentenced (3/5/13)

Wegelin & Co. was sentenced on March 4, 2013.  The Press Release for USAO SDNY is here.  Since Wegelin is a lifeless, breathless artificial entity (although it may be a person in the Supreme Court's mythos), it cannot be sentenced to prison.  So, there are other punishments for criminal conduct.  Here they are as imposed by the Judge Rakoff (consistent with the plea agreement):

1. $16.3 million in forfeitures previously approved.
2.  $22.05 million fine
3. $20 million in restitution

Most of the press release recites a summary Wegelin's skulduggery / crimes,  most of which was known.  Here is the paragraph on the sentencing:
Preet Bharara, the United States Attorney for the Southern District of New York, and Kathryn Keneally, the Assistant Attorney General for the Tax Division of the Department of Justice, announced that WEGELIN & CO. (“WEGELIN”), a Swiss private bank, was sentenced today and ordered to pay approximately $58 million to the United States for conspiring with U.S. taxpayers and others to hide approximately $1.5 billion in secret Swiss bank accounts, and the income generated in the accounts, from the Internal Revenue Service (the “IRS”). Together with the April 2012 forfeiture of more than $16.2 million from WEGELIN’s U.S. correspondent bank account, this amounts to a total recovery to the United States of approximately $74 million. WEGELIN pled guilty in January 2013 to one count of conspiracy to defraud the IRS, file false federal income tax returns, and evade federal income taxes before U.S. District Judge Jed S. Rakoff, who also imposed today’s sentence. This case represents the first time that a foreign bank has been indicted for facilitating tax evasion by U.S. taxpayers and the first guilty plea and sentencing of such a bank.
From Nate Raymond, UPDATE 2-Swiss bank Wegelin to pay $58 mln in US tax evasion casehere:
But while Rakoff approved the plea deal, he said there was a "funny tension" between the U.S. Justice Department's decision not to seek the maximum $40 million fine and its assertion Wegelin acted with "extreme willfulness." 
Rakoff said even including the $16.3 million the government recovered in April 2012 by seizing money in Wegelin's U.S. correspondent account, the bank will be giving up just 12 percent of the 560 million Swiss francs ($613 million) it earned after it sold most of its assets to regional Swiss bank Raiffeisen last year. 
"Not much pain there, is there?" Rakoff said. 
Rakoff, who has previously rejected U.S. Securities and Exchange Commission settlements with Citigroup Inc and Bank of America Corp, ultimately accepted the proposal, which prosecutor Daniel Levy called "very substantial." 
The judge said the government could justify a smaller fine to avoid the jurisidictional challenges of pursuing Wegelin. 
Wegelin said in a statement that it was pleased with the judge's decision.
The following is from a Tax Notes article (Shamik Trivedi, Swiss Bank Wegelin Ordered to Pay $58 Million, 2013 TNT 43-2 (3/5/13))
Jeffrey A. Neiman, a former assistant U.S. attorney who led the prosecution of UBS, said that from an institutional standpoint, the guilty plea "is effectively the nail in the coffin" for Wegelin. "As far as what that means for U.S. account holders, however, that's in question," he added.  
Neiman, now in private practice in Florida, said that the OVDP remains open to those who have not been specifically identified by the IRS, meaning that the Service does not know the account holders' names. FAQ 21 of the OVDP's frequently asked questions  states that the IRS may announce that groups of taxpayers "that have or had accounts at specific financial institutions will be ineligible [for the OVDP] due to U.S. government actions in connection with the specific financial institution." Neiman said that as of March 4, "until the IRS knows for a fact that you have an undeclared bank account at Wegelin . . . I think you're still eligible to participate." 

1 comment:

  1. The latest news writes that some tax cheats are moving from Switzerland to Florida. Looks like Florida is quickly becoming the most secret and largest tax haven in the world:

    "Tax cheats are being drawn from Switzerland to Florida"


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