Julius Baer Reserves $350 Million for U.S. Tax Investigation (6/24/15)

Julius Baer, one of the approximately 14 Swiss Category 1 banks (those under criminal investigation and thus ineligible for Category 2) has created financial reserves for cost of resolving U.S. criminal investigation.  See Julius Baer's media release here.  Key excerpts:

Today, Julius Baer has announced its decision to take a preliminary provision of USD 350 million for its eventual settlement with the U.S. Department of Justice (DOJ) regarding its legacy U.S. cross-border business.\\ 

Zurich, 23 June 2015 – The decision to take a preliminary provision at this time is the result of Julius Baer’s recent discussions with the DOJ regarding its eventual, comprehensive and final settlement of the DOJ’s investigation of Julius Baer’s legacy U.S. cross-border business. These settlement discussions have now sufficiently advanced to enable Julius Baer to make a preliminary assessment of a probable and approximate amount required to reach a settlement with the DOJ.  

* * * *  

Noting that estimates are by their nature based on judgment, currently available information and a variety of other factors, the amount of the provision reflects Julius Baer’s existing understanding and the present state of the preliminary discussions with the DOJ regarding the amount of an eventual settlement and may be subject to change. Whilst there is no defined timetable for a final settlement, Julius Baer continues to work towards closing this regrettable legacy issue as soon as possible.

In a news report, the following points were made (Katharina Bart,  UPDATE 1-Julius Baer to take $350 mln charge as end to U.S. tax probe nears (Reuters 6/23/15), here.)

• "The provision is far less than what most analysts had expected, with some estimates as high as 850 million Swiss francs ($909 million)."  
• "Asked whether Julius Baer would plead guilty to criminal charges like larger rival Credit Suisse did last May, a spokesman for the bank said U.S. officials had not requested it to do so."

Impact of Credit Suisse Guilty Plea on Resolution of Other Swiss Bank U.S. Tax Issues (5/21/14)

A Swiss web report has a good discussion of comments from various parts of the Swiss bank community regarding the effect of the Credit Suisse guilty plea.  Credit Suisse Deal Seen Paving Way for Swiss Banks to Settle (swissinfo.ch 5/210/14), here.  Excerpts that caught my attention are:

The Department of Justice reached the [Credit Suisse] deal after years investigating more than a dozen Swiss firms, including Julius Baer Group Ltd., the nation’s third-largest wealth manager. Many of the companies are close to settlements, said Andreas Brun, an analyst with Zuercher Kantonalbank in Zurich. 

“I expect resolutions in the next couple of weeks,” he said. 

* * * * 

'Speedy Resolution’ 

Julius Baer, which had 264 billion francs ($296 billion) of client assets worldwide at the end of April, may achieve a better deal than Credit Suisse as it has no business operations in the U.S.
“I can now see Julius Baer settling rapidly as well,” said Alevizos Alevizakos, a London-based analyst with Mediobanca SpA. In this bank’s case, four analysts polled by Bloomberg News estimated fines ranging from 400 million francs to 2 billion francs. 

Julius Baer dropped 0.8 percent to 39.4 francs as of 3:21 p.m. in Zurich today, extending the stock’s decline this year to 9 percent. 

“Removing the overhang of these tax disputes will be beneficial for any Category 1 bank,” Alevizakos said, using a Justice Department term for Swiss banks under investigation before it opened a voluntary disclosure program. “A speedy resolution in the coming weeks or months would be marginally positive for Julius Baer.” 

* * * *

Swiss Court Blocks Disclosure of Julius Baer Information to IRS -- More Delay (1/10/14)

Alice Baghdjian and Katharina Bart, UPDATE 1-Swiss court ruling outlines details of U.S. case against Baer (Reuters 1/8/14), here.  Excerpts:

U.S. prosecutors are accusing Swiss bank Julius Baer of helping more than 400 Americans hide undeclared money from the taxman, according to a ruling made public by a Swiss court on Wednesday. 

* * * * 

According to the Swiss ruling, U.S. tax authorities alleged at least 400 Americans hid more than $600 million from the IRS. Julius Baer private bankers used "codenames and numbers", as well as "travelling account statements", to conceal the identity of the account owners, the court document stated. 

The bank also advised wealthy Americans to use "sham corporate entities" to hide their money and ensured that bank correspondence wouldn't be sent to them in the United States in order to avoid detection, the court said, citing the IRS judicial aid request.
Julius Baer told clients they were safe from IRS prying because the Swiss bank didn't have a U.S. office, unlike larger rivals such as UBS, according to the court documents. 

* *  * * 

The Swiss court said the IRS pieced together the information from the indictment in 2011 of two former Julius Baer private bankers, Daniela Casadei and Fabio Frazzetto, as well as from voluntary disclosures from more than 400 one-time clients of the Swiss bank who admitted to their hidden accounts. 

* * * * 

The details of the U.S. case against Baer came to light through a ruling backing an appeal by two clients of the bank. The court ruled the couple's bank account data must not be disclosed to U.S. tax authorities, because the IRS had not provided enough detail to warrant judicial assistance from Switzerland.

Bloomberg reports on this development as well.  See Giles Broom, Swiss Court Blocks Julius Baer Client Data Transfer to U.S. (BloombergBusinessweek 1/8/14), here.  Key excerpts:

U.S. Request 

Julius Baer informed some American clients in May that their accounts meet the criteria of a U.S. request for data. The IRS is seeking information on accounts “owned through a domiciliary company” and held at any time between the beginning of 2002 and the end of 2012, the Zurich-based bank wrote in a letter obtained by Bloomberg News and dated May 16. 

Tax Evasion 

The Federal Administrative Court, which judges cases of appeal against decrees issued by Swiss federal authorities, reaffirmed in the statement that under the 1996 accord, “administrative assistance shall not be granted for presumed tax evasion, even if high amounts are at stake.” The court also confirmed that “the mere failure to declare a bank account may be qualified -- at the utmost -- as a tax evasion, which is not subject to administrative assistance.” 

The U.S. Senate has yet to ratify a 2009 protocol revising the 1996 accord to make it easier for Swiss banks to hand over data on clients suspected of tax evasion to the IRS.
In a separate decision on Jan. 6, the Federal Administrative Court threw out an appeal by a Julius Baer client that missed a deadline and as a consequence the client’s account data may be transferred to the U.S. Both decisions by the Federal Administrative Court can be referred to the Federal Supreme Court within 10 days.

 JAT Comment:  The Reuters article says that the Swiss case arose from "an IRS request for judicial aid."  It seems, however, that it arose more likely from the a request under the exchange of information provision in the double tax treaty.  I think what happens under that treaty is that the U.S. depositors are notified and can contest.  So presumably, some one or more U.S. depositors objected and brought one or more Swiss proceedings.  If that is the case, when that information is ultimately disclosed (as it will be when or even before the treaty is ratified), those contesting taxpayers are at very high risk of criminal prosecution for these delaying tactics that likely refreshed the statutes of limitations (plus I doubt that they notified the U.S. Attorney General as U.S. law requires.)

DOJ Tax Announcement on U.S. Swiss Deal (8/29/13; Updated 8/30/13)

DOJ Tax Press Release is here.  The press release links to two documents -- Joint Statement and Program, here, and Signed Joint Statement and Program, here.

Key excerpts from the press release (emphasis supplied) are:

“This program will provide us with additional information to prosecute those who used secret offshore bank accounts and those here and abroad who established and facilitated the use of such accounts,” said Deputy Attorney General James M. Cole.  “Now is the time for all U.S. taxpayers who hid behind Swiss bank secrecy laws or have undeclared offshore accounts in other foreign countries to come forward and resolve their outstanding tax issues with the United States.” 

Under the program, which is available only to banks that are not currently under criminal investigation by the department for their offshore activities, participating Swiss banks will be required to: 

• Agree to pay substantial penalties 
• Make a complete disclosure of their cross-border activities
• Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest
• Cooperate in treaty requests for account information
• Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed
• Agree to close accounts of account holders who fail to come into compliance with U.S. reporting obligations

The program holds banks to a higher degree of responsibility for opening secret accounts after it became publicly known that the department was actively investigating offshore tax evasion in Switzerland.  Under the penalty provisions of the program, banks seeking a non-prosecution agreement must agree to a penalty in an amount equal to 20 percent of the maximum aggregate dollar value of all non-disclosed U.S. accounts that were held by the bank on Aug.1, 2008. 

 The penalty amount will increase to 30 percent for secret accounts that were opened after that date but before the end of February 2009 and to 50 percent for secret accounts opened later than that.     

The program will significantly assist the department’s efforts to investigate and prosecute U.S. taxpayers who, when faced with the risk of detection, chose to move funds away from banks under investigation to banks that they believed might be better havens for tax secrecy.  A key component of the program requires cooperating banks to provide information that will enable the United States to follow the money to other Swiss banks and to banks located in other countries.

Swiss Banks and Swiss Government Move to Resolve Their Spat with the U.S. (7/12/13)

I provide below some links to and excerpts from article describing key aspects of the current state of play in the Swiss / U.S. spat over Swiss banks' participation in lost U.S. tax revenue.  The key point is that the Swiss banks know something bad is in the offing unless they get the UBS result (with or without a DPA, but with no criminal conviction) and without the Wegelin result (prosecution and demise as an entity).

Katharina Bart, Swiss banks seek permission to send data in U.S. probe: sources (Reuters 7/12/13), here.  Excerpts (bold-faced supplied by JAT):

Credit Suisse and Julius Baer are among five Swiss banks which have sought government approval to hand data to U.S. prosecutors in a bid to reach settlements in a long-running tax dispute, four sources familiar with the matter said. 

The requests represent a push towards sealing a final deal for some of the dozen Swiss banks in the crosshairs of U.S. prosecutors for helping wealthy Americans evade taxes through hidden accounts. 

Some of the five, which also include local government-backed banks Zuercher Kantonalbank and Basler Kantonalbank and the Swiss arm of Britain's HSBC, expect the government to approve their request in the coming days, two sources said. 

* * * * 

The five banks have already handed over data on their U.S. dealings as well as staff involved in the offshore business, but the U.S. authorities still want information on where clients closing their accounts moved their money. 

The Swiss government paved the way for the banks to comply last week, saying it would grant them individual permission to deliver exit lists [JAT Note, apparently called "leaver lists in other sources], information which will help investigators pursue tax evaders and their bankers. 

Swiss Finance Minister Eveline Widmer-Schlumpf said last week the move should allow the dozen banks to settle.

Julius Baer Retired Banker Pleads to FBAR Crime (6/28/13)

Pius Kampfen, a Julius Baer retired banker and resident of California, pled today to "an information charging him with willful failure to file the required reports of foreign bank accounts (FBAR) for a Swiss bank account he controlled."  The DOJ press release is here.  The charging information is here.

Key facts:

Defendant:  Pius Kampfen.
Count of Conviction (by information and plea):  FBAR Willful failure to file.
Maximum incarceration period:  5 years.
FBAR Penalty:  $1,465,393 (How calculated is not provided).
Entity:  Yes.
Banks:  UBS AG, Pictet & Cie, ABN-AMRO, Bank Vontobel and Baumann & Cie. (The quote in the opening paragraph indicates one bank account on the count of conviction; it is not clear which one of these relates to the count of conviction).
Admits:  Tax noncompliance on accounts and failure to file FBAR.

JAT comment:  Everyone watching the Swiss-U.S. spat knows that Julius Baer is a target of the U.S. angst over Swiss bank misbehavior.  Apparently Mr. Kampfen has the characteristics that would get the IRS's and DOJ Tax's attention anyway.  But the fact that he was a Julius Baer banker and perhaps even an enabler as well made likely him particularly attractive for the U.S. to send a signal to Switzerland.

There is a web page for Kampfen Investment Services, here.  The "about" page says:

Prior to forming the firm, Kampfen spent 17 years as the Senior Representative for Julius Baer Group on the US West Coast, a Swiss bank specializing in private banking and global and international money management for high net worth individuals, foundations and private corporations. Prior to joining Julius Baer, he worked for over 20 years for other Swiss financial corporations, including Union Bank of Switzerland, where he served as a portfolio manager for international clients.

Swiss Settlement May Be Near (5/28/13)

Lynnley Browning, Switzerland Weighs Deal in Tax Cases (NYT DealBook 5/28/13), here, reports that a deal between the U.S. and Swiss may be near that might cover most of the outstanding issues.  Excerpts are:

The Swiss government is considering a proposal to disclose bank client names and pay a multibillion-dollar fine to the United States to help resolve a long-running dispute between the two countries over the handling of tax-evasion cases, American and Swiss sources briefed on the matter said on Tuesday. 

The fine, which could reach at least $7 billion to $10 billion according to these people, could be paid in part by the Swiss government, which would then seek reimbursement from the banks. 

* * * * 

The Swiss banks that have been the targets of investigations include Credit Suisse, which disclosed in July 2011 that it had received a letter saying it was under a grand jury investigation; the Zurich-based Julius Bär; two cantonal, or regional, banks; the Swiss operations of HSBC Holdings; and three Israeli banks, Hapoalim, Mizrahi-Tefahot Bank and Bank Leumi. 

* * * * 

Members of the top echelon of the Swiss government known as the Federal Council are expected to discuss the matter as early as Wednesday, according to people briefed on the talks. These people asked to be unidentified because the discussions were continuing.
Hans Kaufmann, a Swiss parliamentarian and member of the conservative Swiss People’s Party, said that various levels of Parliament would be informed of the Federal Council’s decision in stages over the next 10 days or so.

U.S. Treaty Request for Julius Baer Domiciliary Company Accounts with U.S. Beneficiaries (5/28/13)

Julius Baer has sent certain U.S. ultimate owners of accounts a request to consent to the turnover of documents pursuant to an IRS treaty request.  The request states:

The IRS is seeking information with regard to accounts of certain U.S. persons (as beneficial owners) owned through a domiciliary company (a "DC") that have been maintained with Bank Julius Baer & Co. Ltd. ("Bank Julius Baer" or "the Bank") In Switzerland- as applicable in any given case in the ''IRS Treaty Request"- at any time during the period from January 1, 2002, to December 31, 2012.

These accounts include such held by a domiciliary company (a "DC account") with a U.S. beneficial owner that included U.S. securities but for which the Bank has no record of the timely filling of accurate Forms 1099 naming the account's U.S. beneficial owners and reporting to the IRS all payments made to such U.S. beneficial owners and for which there is evidence that the U.S. beneficial owner exercised control over the account in violation of the DC's corporate governance.

One Swiss attorney is quoted as follows (Giles Broom, Julius Baer Tells American Clients of U.S. Information Request (BloombergBusinessweek 5/28/13), here.)

“The Swiss government is taking a broad interpretation of the treaty to allow the handover of data in cases involving offshore structures,” said Milan Patel, a former IRS trial attorney who is now a partner at Zurich-based law firm Anaford AG. “The banks seem willing to oblige to show they are cooperating with the U.S. once the Swiss government approves the turnover to avoid any violation under Swiss banking secrecy.”

Since, as noted in the article, Julius Baer is only one of at least 14 financial firms being investigated, I think we can expect to see more such requests.  It is interesting that, at this time, the requests are only for accounts that use a "domiciliary company." Directly owned accounts are not within the scope of the treaty request.  Don't know precisely what to make of that without more speculation than I am willing to make.

Swiss Banks Rat Out Their Employees to U.S. (8/18/12; revised 8/21/12)

Reports are that the Swiss banks are ratting out their employees.  See Giles Brown, HSBC, Credit Suisse Sacrifice Employees To U.S., Lawyers Say (Bloomberg 8/16/12), here.

Here are some excerpts:

Swiss banks are turning over thousands of employee names to U.S. authorities as they seek leniency for their alleged role in helping American clients evade taxes, according to lawyers representing banking staff. 

At least five banks supplied e-mails and telephone records containing as many as 10,000 names to the U.S. Department of Justice, according to estimates by Douglas Hornung, a Geneva- based lawyer representing 40 current and former employees of HSBC Holdings Plc’s Swiss unit, Credit Suisse Group AG (CSGN) and Julius Baer Group Ltd. (BAER) The data handover is illegal, said Alec Reymond, a former president of the Geneva Bar Association, who is representing two Credit Suisse staff members. 

“The banks are burning their own people to try and cut deals with the DOJ,” said Hornung. “This violation of personal privacy is unprecedented in the Swiss banking industry.” 

* * *

Swiss Government and Swiss Banks Continue to Play Games (2/1/12)

The U.S., exercising its heavy hammer on the Swiss, set a deadline for more disclosures from 11 Swiss banks by January 30, 2011.  The Swiss apparently turned over data purportedly in response to the demand, but the Swiss encrypted the data so that the U.S. is unable to use the data without the encryption key.  The Swiss posture that the encryption key will not be disclosed until the IRS gives something on the unmitigated demands (probably some assurance that Swiss banks and all except the worst individual enablers won't be indicted).

The Swiss banks involved included Credit Suisse, Julius Baer and Basler Kantonalbank.

The transferred data is reported to "between 4 million and 6 million e-mails between Swiss bankers and their U.S. clients, including the names of those involved."  Randall Jackson, Swiss Banks Turn Over Encrypted Data to U.S. Officials, 2012 TNT 21-6 (2/1/12).

This new Swiss gambit of complying but not complying is apparently an attempt to show good faith on their part.  I doubt that compliance without compliance will be perceived by the U.S. as any form of good faith.  In  truth, it appears just a way to stall the process.  If the U.S. was really serious about the 1/30/12 deadline, the deadline has now been passed without any semblance of good faith compliance.  The ball is in the U.S. Court.  I suspect the U.S. knows how to parry that thrust and thrust back (to mix the metaphors).

Oh, we might all shrug, this is just the Swiss being the Swiss.  That is the point.  (In an analogous context, we might just say "Oh, with a shrug, it is just the Somali pirates being Somali pirates," but we take measures when feasible to move them into compliance or make them suffer if they do not.)

Swiss Bankers / Enablers Indictment; Reputedly Julius Baer Related (10/11/11)

Today brings another indictment of offshore bank enablers. The enablers are two Swiss bankers -- Daniela Casadei and Fabio Frazzetto -- reputedly associated with Julius Baer, a bank that by rumor has been on the DOJ's hit list for a while. The indictment is here. These indictments are standard fare now -- a conspiracy count with multiple allegations of skulduggery with multiple U.S. taxpayer clients, including accounts with secret codes -- sometimes called "fantasy" names -- and sham entities, all to ward off the evil spirit of the U.S. tax collector.

I presume that these defendants were targeted from the volume of information that the IRS is receiving incident to its special offshore voluntary disclosure programs. I am sure that there will be more to come.

Now, back to the allegations in the indictment, here are some of the fun - well, at least interesting to me -- allegations (Swiss Bank No. 1 being, reputedly, Julius Baer):

 6. From at least in or about the 1990s up through and including in or about 2010, more than 180 U.S. taxpayer-clients of Swiss Bank No. 1  conspired with, at various times, DANIELA CASADEI and FABIO FRAZZETTO, the defendants, and others known and unknown, including other client advisors at Swiss Bank No. 1, to defraud the United States, to conceal from the IRS on false tax returns and otherwise the existence of bank accounts maintained at Swiss Bank No. 1, and. the income earned in these accounts'  (hereafter "the undeclared accounts"), and to evade U.S. taxes on income generated in those accounts. CASADEI, FRAZZETTO and other client advisors at Swiss .Bank No. 1 conspired with U.S.  Taxpayer clients to hide at least $600,000,000 in assets from the IRS at Swiss Bank No. 1, and CASADEI and FRAZZETTO managed undeclared U.S. taxpayer assets worth at least $13,200,000 and $20,500,000 respectively. In furtherance of the conspiracy, CASADEI and FRAZZETTO, among other things, advised and helped U.S. taxpayer-clients open and maintain undeclared accounts in code names or in  [*4] the names of non-U.S. relatives or.sham corporate entities; ensured that mail relating to those accounts was not sent to U.S. taxpayer-clients in the United States; caused U.S. taxpayer-clients to travel to Switzerland to conduct business relating to the undeclared accounts; traveled to the United States to meet with U.S. taxpayers; and, in or about 2008 and 2009, assured U.S. taxpayer-clients not to worry about the undeclared accounts being discovered by the IRS or U.S. law enforcement authorities because, CASADEI and FRAZZETTO advised, unlike UBS AG - another Swiss bank that was being investigated by U.S. authorities for engaging in similar practices - Swiss Bank No. 1 did not have an office in the United States and the accounts would therefore remain secret.

 * * * *

The Noose Tightens: Swiss Banks Deliver Up Data (9/11/11)

Ten of the more significant Swiss bank players in assisting U.S. taxpayers hide their income from U.S. tax authorities have delivered statistical data to the U.S. The data is sufficiently broad that it does not identify individual taxpayers but almost certainly could give the U.S. ways to sharpen its focus on the information and documents that it might ultimately demand from the banks.

An article in Tax Notes (Randall Jackson, Swiss Banks Turn Over Statistical Data in Tax Evasion Investigation, 2011 TNT 177-3 (9/13/11)) reports:
The banks include the following:

HSBC
Wegelin
Julius Baer
Basler Kantonalbank
Zürcher Kantonalbank

Eveline Widmer-Schlumpf, chief of the Swiss Federal Department of Finance, on September 10 also stated that statistical data had been turned over to U.S. officials. However, she added that no personal data had been disclosed. "That would be a violation of banking secrecy," she said, as quoted in a September 11 Agence France-Presse report.
Widmer-Schlumpf stressed that reaching a mutually acceptable outcome between the United States and Switzerland over the latest tax argument is of vital importance, but that it would not require an emergency law or separate treaty.
"The fact is that we are working with a lot of commitment for a solution that Switzerland can deliver within the existing legal framework of administrative assistance in the case of tax fraud and tax evasion. This is happening in accordance with the government and in conjunction with the involved banks. There is no need for an emergency law or separate treaty," she said, as quoted in a September 11 interview with NZZ am Sonntag.

Katie Reid, U.S. Obtains Data From 10 Swiss Banks In Tax-Dodging Probe (Huffington Post/Reuters 9/10/11), here.

Breaking News 9/13/11:

As the commenter notes below, the reports are that the Swiss are caving for all banks by now allowing what I call John Doe Treaty requests as follows (US client data to be provided based on activity (swissinfo.ch), here):

In cases where US authorities are able to supply enough details to justify a suspicious pattern of behaviour, Swiss banks will hand over the names and account details of US clients suspected of tax fraud – which happened to 4,500 UBS clients in 2009.

Of course, the U.S. will only be able to supply very general characteristics, such as use of foreign entities between the swiss account and the U.S. taxpayer, failure to supply the required forms, perhaps some minimum dollar amount (say $50,000).  Many of the characteristics might be discernible from the aggregate data discussed above, and were a key component of the UBS requests.

I will post more on this as more details are known.

Credit Suisse, Bank Sarasin and Julius Baer in the News (7/24/11; 7/27/11)

Reuters reports that there is little appetite in the Swiss Government to help Credit Suisse avoid the U.S. juggernaut the way it assisted UBS by authorizing turnover of information and documents on U.S. depositors.

The report also says that "The [U.S.] investigation against Credit Suisse has also prompted Swiss private banks Bank Sarasin and Julius Baer to ban staff from travelling to the United States." Bank Sarasin spokesman is quoted as saying: "It's about protection. So the bank and its employees will be protected from investigations and arrests."

Articles:
Reuters Report: Credit Suisse unlikely to get help over U.S tax probe (Reuters 7/24/11).

Addendum 7/27/11:  A commenter posted this article: Marie-Christine Bonzom in Washington, Credit Suisse “worse off” than UBS in the US, (sissinfo.ch 7/27/11).  The author of the article paints a gloomy picture for Credit Suisse.  Among the items covered are:

“The very serious allegations against Credit Suisse relate to a wider range of conduct extending beyond a tax conspiracy into a broader range of criminal activity,” Michel of the Washington firm Caplin & Drysdale told swissinfo.ch.
“These are not just allegations that a Swiss bank opened accounts that they knew would not be reported to the IRS [Internal Revenue Service], there are also allegations that employees of the bank lied to the Federal Reserve, engaged in destruction of records, helped people try and evade DOJ [Department of Justice] investigation and provided unlicensed banking services to customers,” the lawyer representing some 30 Credit Suisse clients said.

U.S. Is Reported to Have Abandoned Negotiations with Swiss (7/18/11)

Rumors previously circulated that the Swiss Government and the U.S. were negotiating to reach their own version of the "grand bargain" over Swiss skullduggery in secret bank accounts for U.S. depositors. See U.S. Swiss Negotiations for Multi-Bank Settlement on Swiss Bank Enabled U.S. Tax Evasion (6/11/11). Now the rumors are that U.S. terminated the negotiations. (One could have speculated as much from the announcement that the U.S. is stepping up its investigation of Credit Suisse. See DOJ Investigating Credit Suisse (7/15/11) .

The following are excerpts from a Reuters report (Swiss-US tax talks flounder as CS probed-paper (Reuters 7/17/11)) which cites a Swiss newspaper.  The key points are (although I remind readers that this is probably the Swiss spin on matters):

1. "Citing unnamed banking sources, the Tages-Anzeiger daily said that negotiations between Switzerland and the United States had stalled because the U.S. Department of Justice was not particularly interested in a deal."

U.S. Swiss Negotiations for Multi-Bank Settlement on Swiss Bank Enabled U.S. Tax Evasion (6/11/11)

There are news reports that the U.S. and the Swiss Government are in negotiations regarding a multi-bank settlement regarding Swiss bank's participation in U.S. tax evasion. The source report I have seen to date is Lynnley Browning, Swiss, U.S. in talks on tax probe settlement -sources, Thompson Reuters News & Insight (6/9/11); see also Randall Jackson, U.S., Switzerland Negotiating Expanded Tax Evasion Settlement, 2011 TNT 113-6 (6/13/11); see also Randall Jackson, U.S., Switzerland Negotiating Expanded Tax Evasion Settlement, 2011 TNT 113-6 (6/13/11) (which I extrapolate may be based at least in part on Browning's article).

The takeaway for U.S. taxpayers playing the offshore financial account game -- particularly with Swiss banks -- who have not done a voluntary disclosure (OVDP or OVDI), the risk/reward ratio is rising.  Now is the time to reconsider whether to join the OVDI.  Of course, after the OVDI ends in August 30, 2011 (subject to the good faith extension to obtain the necessary documents), the IRS may still permit taxpayers to come into a voluntary disclosure program but the costs will likely rise significantly.

Addendum 6/13/11:
Matthew Allen, The IRS is building up pressure, Swissinfo.ch (6/10/11)

IRS Ratchets Up Its Focus on the Enablers (6/2/11)

Observers of the IRS offshore financial account initiative have known for a long time that the IRS had its sights on enablers (persons who promoted and enabled taxpayers into offshore accounts for U.S. tax evasion purposes). In the template letter required in the two programs, participants were required to identify enablers. Then IRS then took that information and built databases of names and relationships that could identify the signficiant enablers. At least anecdotally, practitioners observed that the IRS seemed to be particularly interested in enablers who had some U.S. presence -- particularly, as in the case of the UBS enablers, those who moved into and out of the country in stealth mode to sell their evasion services. This is probably not new to most of the professional readers of this blog.

In a very good article, a Bloomberg Business Week reporter discusses some of the IRS's efforts. The article is David Voreacos,The IRS Grills Taxpayers on Offshore Accounts, Bloomberg Businessweek (6/2/11). It is not a long article and is well-written, so I just link to it for you. 

Wikileaks Takes Aim at Swiss Bank Secrecy

Wikileaks is reported to be in the process of vetting and publishing some "secret" Swiss bank data.  See the Reuters article here.  As reported, this is not the first time.  The new data has information about "around 2,000 bank clients -- including prominent business people, artists and around 40 politicians -- who have parked their money offshore" -- "probably to avoid tax."  The data comes from 3 financial institutioins, including Julius Baer.

Another One Bites the Dust - Plea regarding Undeclared Swiss Bank Account

On 2/16/10, according to a DOJ Tax announcement here, one Dr. Andrew Silva pled to a Klein / defraud conspiracy and to making a false statement (presumably 18 U.S.C. § 1001). On its face it would appear that DOJ Tax is upping the ante. (See also Main Justice discussion here. * see footnote below)  Previously all that was required was a single plea – the defendant could take his pick between a tax perjury count and an FBAR failure to file count. The maximum sentence for Dr. Silva's plea counts of conviction is 10 years in the aggregate (5 years each count). One might infer that DOJ Tax is ratcheting up as one way of telling the target community that it will get steadily worse as an inducement to come to the table sooner rather than later.

But this case has some wrinkles that may have made it more egregious. The first tip off is that the DOJ Tax announcement here states that the announcement is made by DOJ Tax, ICE, the U.S. Postal Service and the IRS. This was a significant coordinated effort that seems disproportionate for ordinary offshore tax cheating. And, the disproportion is a result of the wrinkles. (See also the Main Justice rehash of the announcement here.)

Key Points that I think are worthy of note are:

Get in Line Brother #20 - Other European Banks

The Wall Street Journal has an article this morning here titled More Banks in Europe Identified in Tax Probe. The Swiss banks other than UBS mentioned in the article are: Credit Suisse Group AG, Julius Baer Holding AG, Zürcher Kantonalbank and Union Bancaire Privée, known as UBP.

A few other notable quotes from the article are:

Early on, Justice Department prosecutors viewed UBS as a "stalking horse" case, which they could use to prod other banks to drop their business of helping rich Americans hide income from the IRS, according to people close to the case.

In the process, government officials hoped they could induce alleged tax evaders to come forward to pay their taxes and provide information about bankers, accountants and others who helped them set up their offshore accounts.

Lawyers following the UBS settlement now are watching to see whether the settlement establishes a blueprint for how the IRS can obtain information in the future from Swiss banks.