Friday, December 26, 2014

Article on Swiss Enabler Fugitives Avoiding U.S. Indictments (12/26/14)

Giles Broom and David Voreacos, Swiss Bankers in Limbo After U.S. Jury Clears Ex-UBS Manager (12/22/14), here.  Excerpts:
Twenty-five offshore bankers, lawyers and advisers have yet to answer U.S. Justice Department charges that they helped Americans evade taxes. Most live in Switzerland, where they remain off-limits to U.S. prosecutors because the country doesn’t extradite people for tax crimes. If they cross the border into another country, they risk arrest, and the U.S. charges have no expiration date. 
* * * * 
Weil’s compatriots were cheered by his court victory, with Geneva financial newspaper L’Agefi calling him a “national hero” of “remarkable courage.” His success may tempt others to take their chances with a jury or to plead guilty and help prosecutors in bids for leniency. 
They include former employees of Switzerland’s top three wealth managers -- UBS, Credit Suisse Group AG (CSGN) and Julius Baer Group Ltd. (BAER) Just 10 days after Weil’s acquittal, Martin Dunki, a 66-year-old retired client adviser at Zurich-based Rahn & Bodmer Banquiers, a private bank established in 1750, was indicted on a charge of conspiring to help Americans hide hundreds of millions of dollars in offshore accounts. 
* * * * 
Making Deals 
“Client advisers who committed egregious offenses are probably trying to cooperate and strike a deal with the Justice Department,” Patel said. “Bankers fear coming to the U.S. because the DOJ can detain them on arrival pending trial. Therefore, walking around freely in Switzerland may be a more appealing option, even if the charges remain unresolved.” 
Stefan Buck, who was Bank Frey & Co.’s head of private banking, was indicted last year in New York. His lawyer filed a motion seeking bail without Buck’s first having to appear in a New York courtroom. Buck ultimately “wishes to leave the ‘safe haven’ of Switzerland to appear in a U.S. court to clear his name,” the filing said. Prosecutors oppose his bail motion, which is pending. 
Josef Dorig, who founded a Swiss trust company after working 36 years at Credit Suisse, pleaded guilty in April, admitting he created phony structures to help clients cheat the IRS. Dorig, 72, cooperated with U.S. prosecutors and is slated for sentencing Jan. 16 in federal court in Alexandria, Virginia. 
Probation Sought
In a pre-sentencing memorandum filed with the court, his lawyers said he deserves probation because he accepted responsibility and was not extraditable from Switzerland.
“Mr. Dorig had absolutely no incentive to voluntarily enter the United States to answer the charges against him or cooperate with the government,” his lawyers wrote. “He easily could have stayed in Switzerland and lived the rest of his life peacefully and happily in his homeland. But he did not.” 
The U.S. probe has benefited from voluntary disclosures by at least 45,000 taxpayers and more than 100 Swiss banks seeking to reduce penalties through non-prosecution agreements. Information passed to U.S. authorities contains thousands of employee names, according to Douglas Hornung, a Geneva-based lawyer who represents Swiss financial workers. 
“Weil’s acquittal was far from good news for bank employees lower down the food chain,” Hornung [Douglas Hornung, a Geneva-based attorney] said. “After losing face in court in November, U.S. prosecutors will redouble their efforts to pursue smaller fish.”
JAT Comments:

1.  The Senate PSI Report Offshore Tax Evasion, dated 2/26/14 (as finalized 8/20/14), here, stated:
To date, the U.S. Department of Justice has not made public any extradition requests made in connection with its investigation of Swiss banks suspected of facilitating U.S. tax evasion, even though it has indicted over two dozen Swiss banking and other professionals, most of whom have avoided trial for years by remaining in Switzerland. The United States has not said whether it has tested how Switzerland would exercise its discretion under the extradition treaty in the context of Swiss bankers charged with aiding and abetting U.S. tax evasion. 
2.  On March 18, 2014, the  bipartisan leaders of the PSI, Senators Levin and McCain, wrote a letter to DOJ noting that “charged 35 bankers and 25 financial advisors” with tax related crimes, that the extradition treaty does not bar extradition for at least some of the charged crimes, and urging the DOJ to make requests under the treaty.  See letter posted on the PSI newsroom here.

3.  Of course, Swiss enablers who have been identified or who may self-identified as within the scope of the DOJ's interest may prefer not to leave Switzerland for fear of being found in a country that will extradite.  That is what happened to Mr. Weil.  For those enablers, Switzerland is a sort-of club fed, but certainly the best form of club fed.  See Switzerland as Club Fed for Swiss Enablers of U.S. Tax Crimes (Federal Tax Crimes Blog 10/24/13), here.


  1. Jack and others, some months ago there was pointing relative the law having to do with depositing small amounts of money in a bank (did it have to de with foreign currency exchanged to dollars?) whereby the depositor could inadvertently be violating the law I do not remember what you called. I think there was a max that was reportable? Anyone cal help?

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  3. Obviously there are different facts for each bank employee. Not all are to blame. Many simply opened and managed accounts and did not conspire or induce US clients to engage in tax evasion.

  4. The release states that identifying information was provided for 1500 of its account holders. From how it is phrased it would seem that this does not represent all US persons with accounts, only those meeting certain criteria (which may be similar to the UBS criteria used in 2009.)

    As far as numbered accounts, those are (or were) offered by most Swiss banks (and in some other countries; I don't know which.) All a numbered account means is that the account holder name does not appear on the records that every single teller in the bank can access, and only a few people in the bank have access to that information. The know your customere and identification requirements are the same as for any other account. Also, it is not possible to send/receive bank wires in/out of Switzerland with only the account number and not the customer name; this has been true for many years. Therefore the extra privacy of a numbered account is very small.

    What surprised me a bi is the agreement to stop offering accoiunts to US clients. since other banks such as UBS and CS can still do so, after paying heavy fines. Of course given the risk and hassle of dealing with US persons, the bank may not want to deal with USPs, as is the case with most foreign banks.

  5. Ron,

    I don't know for sure what you refer to. There was a posting on multiple cash deposits into a U.S. bank in order to avoid the reports required when $10,000+ currency is deposited. That does not relate to foreign currency, although I suppose that foreign currency could be involved in such multiple deposits (they would have to be converted into $$$).


  6. It is interesting that Joseph Dorig would fly to the US to turn himself in. After all, he is 72 and could comfortably live out his days in peace in Switzerland. My guess is that some sort of deal was made with the prosecutors for no jail time - only probation. If all he gets is probation then that is irrelevant to him. Nobody in Switzerland cares if you are on probation in the US. I'm assuming he intends to return to Switzerland after his sentencing.
    The other interesting case is Stefan Buck. Since he is younger, he would benefit more than Dorig by resolving his case. The question is why the US prosecutors won't negotiate bail terms for him in advance. Maybe they think they will eventually be able to extradite him. Or that he will get caught travelling in another country like Raul Weil did. But, I would think the prosecutor would want to get him to trail as soon as possible rather than hope for some sort of extradition. Are they afraid of going to trail because their case is weak? There were some rumors in Swiss newspapers that the DOJ/IRS didn't really want to try Weil's because they knew their case was weak. Their hand was forced when Weil refused to accept a plea bargain.
    The only Swiss banker who went to trail thus far is Weil. The other convictions were plea bargains which, possible, could have been innocent verdicts at trail. But, is it worth it to pay the huge expense for a trail if you are offered a deal for only probation? As I previously said, if you return to Switzerland after trail nobody cares.

  7. Jack can you enter the SDOP if you were non-wilful but happened to have an account in one of these Banks mentioned.

  8. My understanding (and I have confirmed this with colleagues) is that a person qualified for streamlined is not disqualified because of an account with a listed bank.

    The caveat is that the person must be qualified fro streamlined. Specifically, the person must be a nonwillful actor for income tax and FBAR violations.

    So, the taxpayer must certify nonwillfulness and then be at risk of audit on the nonwillfulness issue if the IRS chooses to audit.

    And, to close the loop on that, it is not clear that the IRS will or will not audit the willfulness certification if the taxpayer had deposited in a listed bank. My hunch is that it is more likely that the IRS will audit the certification if a deposit is with a listed bank, but I do not know that for sure. And I certainly do not know how likely that audit would be. Hence, it is critical in the certification to state the case strongly for nonwillfulness, so that the IRS will not have an incentive to audit the issue.

    Jack Townsend

  9. This is referred to as "structuring." There have been many cases of people who made multiple deposits for various legitimate reasons and whose funds were seized. If you search for that term you will find many examples. Also, I remember reading that in some cases (for example buying a money order for cash) the limit is $3K. AND ... asking your banker about limits is considered suspicious behavior which may cause a suspicious behavior report (SAR) to be filed.

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  12. Wow. Crazy. thanks a lot Guest.

  13. Swiss Bank
    Accounts. Jan.. 2015.

    Is your monies safe
    in these accounts ---- definitely NOT.

    Would you get your
    money back if every body decided to withdraw all their accounts –
    NO WAY.

    Economic Experts
    say that there would only enough money to repay 50% of their clients.

    Are you going to be
    in the 50% --- that loose your money.-- Get it out NOW.

    2012 -- - June.
    -- Published in Anglo INFO .Geneva.--- USA Trust Fund Investors were
    sent false and fraudulent documents by Pictet Bank.Switzerland. in
    order to collect large fees. ( Like MADOFF) ---Even after the SEC in
    the USA uncovered the fraud Pictet continued to charge fees and drain
    whatever was left in these accounts. Estimated that $90,000,000
    million lost in this Pictet Ponzi scheme.

    2012 - - - July.
    -- De – Spiegel. -- states – Pictet Bank uses a letterbox
    company in

    and a tax loophole involving investments in London to gain

    millionaires as clients.

    - - - August ---- German Opposition Leader accuses Swiss Banks of
    "organised crime."

    the fines that crooked Swiss banks have incurred in the last few
    years exceeds £75.Billion.

    is also calculated that the secrecy " agreements" with
    regards to tax evation by their clients will cost the banks another
    £450 Billion.( paid out of your monies.)

    banks are panicking --- the are quickly restructuring their banks
    ---- from partnerships --

    " LIMITED COMPANIES." ----- this will probably mean that
    in the future --- they could

    you only 10% of your monies " if you are one of the lucky ones"
    ---- and it be legal.

    ---- The Crimes of ---- Pictet & Cie Bank.

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