1. Daniel Levy, AUSA SDNY, prominently involved on offshore bank and related prosecutions, said that the prosecutions of foreign bankers and banks is intended to send a message even if there is no ability to arrest and try the defendants because they will not be extradited to the U.S.. In my view, this sends a relatively cheap message when only an indictment is involved because large and costly systemic resources never have to be deployed (trial, sentencing and incarceration). In addition, as Levy noted, the charges " produce strong sanctions such as preventing individuals from traveling internationally."
2. Levy noted the following with respect to Wegelin & Co."
For example, the Justice Department indicted Swiss bank Wegelin & Co. despite its having only a correspondent account in the U.S., because there was clear proof that the bank had marketed and assisted taxpayers in hiding money offshore, Levy said. Indictments create stiff sanctions that will help deter financial institutions from helping tax evaders, he said.3. John McDougal, an IRS attorney prominently involved in the offshore juggernaut, said that "the IRS has more summonses in the pipeline seeking taxpayer data from financial institutions."
Levy added that in Wegelin's case, the U.S. government took control of the entire amount in the correspondent account, not just what could be traced to tax evasion. He explained that the DOJ believed that the entire Wegelin correspondent account was "facilitating" tax evasion. That was "a very creative theory" that "sent a message," according to Levy.
4. On a complaint "that many nonresident taxpayers may find they owe a lot of tax but otherwise lack fraud indicia," "McDougal responded that taxpayers with deficiencies larger than $1,500 might as well try the streamlined disclosure program provided they have no other risk factors."
5. On the notion that Singapore is "the next Switzerland," McDougal noted that Singapore "will sign the Convention on Mutual Administrative Assistance in Tax Matters, will sign an intergovernmental agreement with the United States, and is making tax evasion a predicate offense to money laundering."