Credit Suisse Banker Pleads Guilty to Conspiracy (7/20/17)

DOJ Tax announced here the guilty plea by Susanne D. Rüegg Meier, a former Credit Suisse AG banker, for conspiracy.  I link the Plea Agreement here, the Statement of Facts here and the docket entries as of today here.  I previously reported on the indictment here:  Criminal Charges for More Swiss Bank Enablers (Federal Tax Crimes Blog 7/21/11), here.  It is unclear where she has been in the meantime, but my spreadsheet indicates (accurately or not) that she was a fugitive, presumably because a Swiss citizen and resident who chose to stay away from the U.S. after the indictment.  There is no indication as to why she returned now

The key parts of the announcement are:

According to the statement of facts and the plea agreement, Susanne D. Rüegg Meier, admitted that from 2002 through 2011, while working as the team head of the Zurich Team of Credit Suisse’s North American desk in Switzerland, she participated in a wide-ranging conspiracy to aid and assist U.S. taxpayers in evading their income taxes by concealing assets and income in secret Swiss bank accounts. Rüegg Meier was responsible for supervising the servicing of accounts involving over 1,000 to 1,500 client relationships. She was also personally responsible for handling the accounts of approximately 140 to 150 clients, about 95 percent of whom were U.S. persons residing primarily in New York, Chicago and Florida, which held assets under management totaling approximately $400 million. Rüegg Meier admitted that the tax loss associated with her criminal conduct was between $3.5 and $9.5 million. 

Rüegg Meier assisted many U.S. clients in utilizing their Credit Suisse accounts to evade their U.S. income taxes and to facilitate concealment of their undeclared financial accounts from the U.S. Department of the Treasury and the Internal Revenue Service (IRS). She took the following steps to assist clients in hiding their Swiss accounts: retaining in Switzerland all mail related to the account; structuring withdrawals in the forms of multiple checks each payable in amounts less than $10,000 that were sent by courier to clients in the United States and arranging for U.S. customers to withdraw cash from their Credit Suisse accounts at Credit Suisse locations outside Switzerland, such as the Bahamas. Moreover, Rüegg Meier admitted that approximately 20 to 30 of her U.S. clients concealed their ownership and control of foreign financial accounts by holding those accounts in the names of nominee tax haven entities or other structures that were frequently created in the form of foreign partnerships, trusts, corporations or foundations. 

Between 2002 and 2008, Rüegg Meier traveled approximately twice per year to the United States to meet with clients. Among other places, Rüegg Meier met clients in the Credit Suisse New York representative office. To prepare for the trips, Rüegg Meier would obtain “travel” account statements that contained no Credit Suisse logos or customer information, as well as business cards that bore no Credit Suisse logos and had an alternative street address for her office, in order to assist her in concealing the nature and purpose of her business. 

After Credit Suisse began closing U.S. customers’ accounts in 2008, Rüegg Meier assisted the clients in keeping their assets concealed. For example, when one U.S. customer was informed that the bank planned to close his account, Rüegg Meier assisted the customer in closing the account by withdrawing approximately $1 million in cash. Rüegg Meier advised the client to find another bank simply by walking along the street in Zurich and locating a bank that would be willing to open an account for the client. The customer placed the cash into a paper bag and exited the bank. Rüegg Meier also recommended that a few U.S. clients open new accounts at other specific banks, such as Bank Frey and Wegelin & Co., and transfer their assets from their Credit Suisse accounts to the new accounts. 

Credit Suisse pleaded guilty in May 2014 for conspiring to aid and assist taxpayers in filing false returns, and was sentenced in November 2014 to pay more than $2 billion in fines and restitution.

JAT comments:

1.  The plea agreement and statement of facts describe a more or less standard pattern of conduct for Swiss bankers who chose to play this game.  The specifics may vary, but the pattern is familiar.

2.  The Sentencing Guidelines calculation in the plea agreement is:  (i) Base Offense Level of 24, based on a tax loss of more than $3.5 million and less then or equal to $9.5 million; and (ii) 2 level increase for sophisticated means.  The plea agreement leaves open the parties' right to assert other adjustments.  Then the plea agreement provides:

The United States and the defendant agree that the defendant has assisted the government in the investigation and prosecution of the defendant's own misconduct by timely notifying authorities of the defendant's intention to enter a plea of guilty, thereby permitting the government to avoid preparing for trial and permitting the government and the Court to allocate their resources efficiently. If the defendant qualifies for a two-level decrease in offense level pursuant to U.S.S.G. § 3El.l (a) and the offense level prior to the operation of that section is a level 16 or greater, the government agrees to file, pursuant to U.S.S.G. § 3El.l(b), a motion prior to, or at the time of, sentencing for an additional one-level decrease in the defendant's offense level.

This is an oddly worded provision related to the acceptance of responsibility adjustment.  It would seem that the defendant may qualify for the AOR downward adjustment, but the Government is apparently not agreeing to recommend the AOR downward adjustment.  Yet, the Government agrees to make the motion for the additional 1 level downward adjustment if it applies.  If that has been in other plea agreements, I just have not paid attention to it.

3.  The restitution provision (Plea Agreement par. 8, page 5) is interesting.  Here is the interesting part:

Defendant agrees that restitution is mandatory pursuant to 18 U.S.C. § 3663A. Defendant agrees to the entry of a Restitution Order for the full amount of the victims' losses. However, the parties have agreed that Defendant should not be required to pay restitution in this matter because all losses to the government as a result of the conspiracy with Defendant already have been paid in full by Credit Suisse AG as part of its criminal settlement. n1
   n1 See United States v. Credit Suisse AG, Criminal Number I:14-CR-188, (E.D.Va.) (Chief Judge Rebecca Beach Smith. presiding). In that matter, the Court ordered Credit Suisse AG to pay $666,500,000 in restitution to the IRS for its role in a decades-long conspiracy to aid in the preparation offalse income tax returns. Further Credit Suisse AG was ordered to pay a fine in the amount of$1,333.500,000.00. Credit Suisse AG paid these amounts in full in November 2014.

The balance of the restitution provision suggests that the Court might still impose restitution.  So, I asked why?

I don't know the answer but if I understand correctly the quoted portion above, Credit Suisse only paid $666,500 of restitution to the IRS for unpaid tax, presumably the customers' U.S. taxes.  I don't recall considering Credit Suisse's restitution in reporting on the case, but that seems like a very low amount of restitution for Credit Suisse's collective behavior over the years.  In Meier's case, Meier agreed to a tax loss for Guidelines calculations purposes between $3.5 million and $9.5 million.  Credit Suisse's restitution for tax would have only paid a fraction of that amount (around 20% of the low end of the tax loss).  I suppose that some or even all of the rest could have been paid by the taxpayers involved, but my hunch is that it was not.  Hence, I suspect, there is some amount of unpaid tax arising from Meier's conduct (keep in mind the conduct of the other conspirators in a sprawling conspiracy would be attributed to her).  And, Credit Suisse payments of fines (which was the bulk of its monetary payments) is not payment of tax that would reduce the tax loss to the IRS for purposes of restitution.