UBS Fined $4.2 Billion for Its French Foreign Account Escapades Raiding France of Taxes (2/20/19)

Liz Alderman, French Court Fines UBS $4.2 Billion for Helping Clients Evade Taxes (NYT 2/20/19), here.

Excerpts

The lavish spending caught up with UBS on Wednesday, when French judges ordered it to pay a record 3.7 billion euro fine, about $4.2 billion, for carrying out what prosecutors said was a long-running scheme to help French clients hide huge sums of money from the authorities. 

The penalty, the largest in French history, included €800 million to be paid to the government, which said it had lost revenue as a result of UBS’s helping French citizens evade taxes from 2004 to 2012. 

UBS said in a statement that it “strongly disagrees with the verdict” and that it planned to appeal. “The bank has consistently contested any criminal wrongdoing,” the statement said, adding that the judgment was “not supported by any concrete evidence.” 

The ruling coincides with crackdowns on tax evasion in France and other countries that have put Swiss banks in particular on the defensive. 

UBS paid a $780 million fine in the United States in 2009 to resolve accusations that it had helped rich clients dodge taxes, and pledged to divulge the names of over 4,450 people with Swiss bank accounts. Credit Suisse was fined $2.6 billion by the Justice Department in 2014, and €300 million by France in 2017 in similar cases

Ex UBS Banker Who Sold Client Data to Germany Convicted of Money Laundering and Acquitted of Bank Secrecy Violation (1/21/19)

A former Swiss Banker has been convicted and sentenced to 40 months in prison for money laundering charges but was acquitted of bank secrecy violations.  I give some of the detail that I think interesting in the excerpts of the articles below.

• John Miller, Ex-Swiss banker convicted for selling secret tax data to Germany (Federal Tax Crimes Blog 1/21/19), here.  Excerpts:

Rene S., as the 45-year-old ex-banker was called during court proceedings, was sentenced to 40 months in prison and must pay fines and court costs totaling more than 125,000 Swiss francs ($125,300) after being found guilty of charges that included spying and money laundering. 

Rene S., who according to court documents has moved to a small town in Germany just across the Rhine River from Switzerland, did not attend the proceedings in Bellinzona this month. 

He was acquitted of breaking Swiss banking secrecy laws. It was not immediately clear whether Switzerland would seek his extradition, with Swiss officials in Berne saying such a decision would come only after the appeals process had been exhausted and the judgment finalised. 

* * * * 

Prosecutors said that between 2005 and 2012, when Rene S. worked for UBS, he illegally collected data about Germans with accounts at the bank and sold the information for 1.15 million euros ($1.31 million) to tax authorities in North Rhine-Westphalia who were seeking to root out tax dodgers. 

* * * * 

Lawyers for UBS, which paid some $300 million in 2014 to settle claims it helped wealthy Germans evade taxes, had contended during the trial that its former employee’s actions had undermined Switzerland as a financial center. 

* * * * 

A decade ago, Germans were believed to be hiding about 150 billion francs in secret accounts in Switzerland and Liechtenstein. 

But thousands began declaring their assets after North Rhine-Westphalia, with the federal government’s blessing, started buying covertly collected data. 

North Rhine-Westphalia has spent some 17.9 million euros since 2010 on data that helped it recover nearly 7 billion euros ($7.97 billion) in tax revenue. 

In turn, Switzerland fought to protect its banking secrecy laws by prosecuting several people, including Rene S., in separate cases where it accused them of illegally handing over documents.

The dispute has included several twists, including the Swiss filing criminal charges in 2012 against three German tax collectors, accusing them of buying account information from informants. 

And in 2017, Germany arrested a Swiss man they accused of spying on North Rhine-Westphalia's tax authority, forcing Switzerland's spy agency to defend its practices against friendly neighboring countries. The accused Swiss spy got a suspended prison term.

• Ex-UBS Worker Guilty of Money Laundering in Data Theft Case (SWI swissinfo.ch 1/21/19), here.  Excerpts:

Swiss Dispute Sharing Data with U.S. (10/9/18)

Swiss-US tax data transfer method 'violates law' (SWI swissinfo 10/7/18), here.  The article is short.  I nevertheless excerpt the following:

The Swiss Supreme Court has already issued a ruling that bans the indiscriminate disclosure of people’s names without forewarning the individuals involved. This applies even when Switzerland has a treaty to automatically exchange tax information with other countries, as it does with 30 nations including the US. 

* * * * 

These treaties were signed following a US criminal probe into the way Swiss banks helped tax evaders. The investigation and threats of legal sanctions brought about the demise of Swiss banking secrecy.  

Data Protection Commissioner, Adrian Lobsiger, believes the Finance Ministry is failing to observe the court’s ruling on protecting the rights of individuals caught up in the transfer of data. His office told the SonntagsZeitung newspaper that it had issued a complaint to the Federal Administrative Court on Friday. 

* * * * 

The tax administration says it is too costly to black out all the names on thousands of pages of documents being handed to the US, the article states. It also states that Finance Minister Ueli Maurer has the backing of the cabinet on this issue, arguing that failure to comply with US demands for data could result in damaging repercussions. 

A spokesman for the Finance Ministry told the SonntagsZeitung that the department has authority to send data to countries that have a functioning constitutional system. Swiss citizens therefore have the opportunity to dispute proceedings in other countries, which result from their names being handed over, by arguing that the evidence is inadmissible.

Swiss Court Ruling Blocking the Disclosure to U.S. Tax Authorities of Individual Enabler Information (1/5/18)

The Swiss high court has issued an opinion that appears to be a setback for the U.S. efforts to obtain information about individual enablers working for or with Swiss banks to assist U.S. taxpayers avoid or evade their taxes.  The U.S. had expected to receive not only the U.S. taxpayer's Swiss bank financial information and information supplied to the Swiss bank by the U.S. taxpayers, but also the names and participations of the individual enablers (such as bankers, lawyers, and others).  I have not read the opinion, but, as reported, the court held that the information about the individual enablers was not relevant because not indispensable to the case against the U.S. taxpayer.  I cite articles below for further information, but the Swissinfo article concludes with this warning:

Despite Wednesday’s ruling, employees and managers of Swiss banks involved in helping foreign tax avoiders have also not been immune to prosecution.

I will update this blog entry as I get further information\.

Articles:

• Swiss court stops handover of bank employee details to US (Swissinfo 11/3/18), here.
• Helen Burggraf, Relief for some US bankers in Switzerland as court blocks tax case info disclosure (International Investment 11/5/17), here.

Finews Article on Swiss Bank Shenanigans (Including the Recently Publicized U.S. Tax Shenanigans) (1/9/17)

I picked up this offering:  Dormant Accounts: How a Theft Changed Swiss Banking (finews.com 1/9/17), here.  The article is not very flattering of Swiss banks' attempts over the years to steal money from their customers, their relatives, and in the case of its tax shenanigans, through customer fees that were payments for raiding their respect home country fiscs.  Finews is a swiss media outlet.  There was a time when Swiss media outlets would not have offered such articles.  Before getting into some of the contents of the article I first present something on this particular news  outlet.

According to the "About" page on its web site:

Where Finance Meets 

finews.com is Switzerland’s leading news site for all professionals in the financial sector. finews.com delivers real-time news about the financial industry: breaking news, feature stories, industry developments, opinions plus the latest on people and trends. 

finews.com was founded by an independent team of journalists and writers with extensive experience covering global financial services from a Swiss perspective.

Of course, these are promo statements.  I don't know whether finews.com is Switzerland's leading news site for professionals in the financial sector.  On a quick Google search, I did not immediately spot a source that I felt reliable as to the credibility of finews.  I suppose that this could be so-called "fake news."  Nevertheless, I decided to post this article because it does provide, in summary fashion, an accurate review of some of the Swiss bank shenanigans with which I am familiar -- the Holocaust gambit and the raid on U.S. and other countries' fiscs by helping customers hide assets and income.  So, I turn to the article and, since I presume readers of this blog already know about the Holocaust gambit and the the raid on U.S. and other countries' fiscs by helping customers hide assets and income, I only cut and paste an excerpt about one I had not previously known -- one that preceded the Holocaust.

It is twenty years now that a night guard stole documents destined for the shredder at the predecessor of UBS in Zurich. The theft indirectly caused one of the biggest ever crisis for Swiss banking. And is exemplary for the woes of a once proud industry. 

Christoph Meili was doing his shift at Union Bank of Switzerland in the night to January 9, 1997, when he spotted documents ready for destruction. He (falsely) assumed they were proof for banking relations with victims of the Holocaust and removed the documents.  

The employee of Wache AG missed the fact that the documents dated back to the years of 1897 through 1927 and thus couldn’t possibly be proof for the dormant accounts. He gave the files to a Jewish organization, which in turn handed them over to the police. 

The theft of the documents prompted an escalation of the simmering conflict over the so-called dormant accounts at Swiss banks. It also proved to be the catalyzer for one of the crisis Swiss banking has ever seen, with a now infamous class-action lawsuit engineered by a group of New York-based lawyers. UBS and Credit Suisse settled the conflict at the end of the century with the payment of $1.25 billion. 

So, this is a good read, albeit quite summary.  I cannot speak to the accuracy of it, except as it relates to the Holocaust and the the raid on U.S. and other countries' fiscs by helping customers hide assets and income, which is basically right.

As an aside, long ago, I asked more than once somewhat tongue in cheek:  How do you tell a Swiss Banker from a Somali Pirate?  My set up answer was that the Swiss Banker was the one wearing a suit.  Subsequent events have even knocked down that answer, as the investigations into the Swiss banks and bankers' U.S. tax shenanigans brought to light Swiss bankers traveling in camouflage (e.g., Hawaiian shirts when coming into the U.S. to make the customs authorities think their story of vacationing in the U.S. credible, when in fact they were set on doing their part in the tax conspiracy).  I suppose they might even dress like Somali Pirates if necessary to get the business of Somali "Pirate King" (not like the Pirate King, here, in Gilbert & Sullivan's Pirates of Penzance).

German Court Denies U.S. Request for Extradition of Wegelin Banker (12/9/16)

We covered in several blog entries the saga of Raoul Weil, a top UBS banker, who was arrested in Italy on an Interpol Red Notice and extradited to the U.S.    See entries on Weil, here.  Now, we have news that a German court has refused to extradite a Wegelin banker, Roger Keller.  Nate Raymond, Ex-Swiss banker goes home after U.S. loses extradition from Germany (Reuters 12/9/16), here.  All posts on Keller can be viewed here.  Key excerpts from the article on Keller are:

A former Swiss banker who was arrested last year in Germany on U.S. charges that he helped wealthy Americans evade taxes is back in Switzerland after the denial of a request to extradite him to the United States from Germany, his lawyer said on Friday. 

Roger Keller, a onetime client adviser in Zurich at Wegelin & Co, was one of three bankers at the now-defunct Swiss private bank charged in a 2012 indictment in New York federal court for helping U.S. taxpayers hide more than $1.2 billion in assets. 

He was arrested in Germany in February 2015 at the request of the U.S. government, which sought his extradition, and served seven months in jail before being granted bail, said Thomas Green, Keller's U.S. lawyer at the law firm Sidley Austin. 

By German court order, he was officially released on Friday after the U.S. request to extradite him was denied, Green said, though Keller had already been allowed to return to Switzerland a "few days ago."

Denial of extradition just wins that battle.  It does not resolve the U.S. criminal charge against Keller.

And, the statute of limitations is determined by the filing of the charges.  And, as to any other charges, the statute would be suspended by § 6531, here, which provides:  "The time during which the person committing any of the various offenses arising under the internal revenue laws is outside the United States or is a fugitive from justice within the meaning of section 3290 of Title 18 of the United States Code, shall not be taken as any part of the time limited by law for the commencement of such proceedings."

Chutzpah - Swiss Banker Moans that Switzerland Is Not Protecting Swiss Banks From Their Raids for Foreign Governments (7/12/16; 7/13/16)

I don't know what more I can say about reports such as this one:  Tom Miles, UBS chief says Swiss government is leaving banks exposed (Reuters 7/10/16), here.  Just a few excerpts, though:

Switzerland's politicians have done too little to protect the country's banks from demands for data from foreign governments, UBS (UBSG.S) Chief Executive Sergio Ermotti said in an interview published by the SonntagsZeitung newspaper on Sunday. 

Since the financial crisis, cash-strapped governments around the world have clamped down on tax evasion, with authorities investigating Swiss banks in Germany, France and the United States. 

But Switzerland's attempts to negotiate with other governments have not provided legal certainty or closed the book on issues of the past, Ermotti said. 

"This is unacceptable and opens the door for a new offensive against Swiss banks," he told the paper, adding that the government had been too ready to hand over customer data and that it is perhaps too late to get a better deal after years of negotiations. 

* * * * 

Last week UBS said it had been ordered by Switzerland's tax agency to provide France with tax information and it expected other countries to file similar requests. 

The request related to current and former French-domiciled clients and was based on data from 2006 and 2008, the bank said. 

Switzerland's tradition of banking secrecy has helped to make it the world's biggest offshore financial center, with more than $2 trillion in foreign wealth kept with the country's banks. 

In 2014 French authorities placed UBS under formal examination over whether it had helped clients to avoid tax and investigating judges ordered the bank to provide bail of 1.1 billion euros ($1.22 billion).

JAT Further Comment:  The Swiss Government was an enabler of this genre of Swiss banking activity.  Simply put, the Swiss banks could not have behaved as they did without the wall of secrecy established by the Swiss Government which certainly, over the years, knew (or was willfully blind to such knowledge) that the Swiss banks were enabling U.S. taxpayers and other countries' taxpayers evade tax.  In many ways its actions over the years could be viewed as a actions of a co-conspirator.  But, there is the old saying that there is no honor among thieves.  So, the Swiss bankers could not have reasonably expected that the Swiss Government would protect them when the Swiss Government determined that it was not in its interest to further protect them.

Two Ex-Julius Baer Bankers Return to U.S. to Face Charges (2/2/16)

There are several articles reporting that Daniela Casadei and Fabio Frazzetto, two former Julius Baier bankers, have voluntarily come to the U.S., have entered not guilty pleas, but, reportedly will enter guilty pleas when Julius Baer resolves its case with a $547 million payment.  E.g., Nate Raymond, Two ex-Julius Baer bankers plead not guilty in U.S. tax case (Reuters 2/2/16), here.  David Voreacos, Patricia Hurtado and Giles Broom, Julius Baer Bankers Said Ready to Plead Guilty in Tax Case (BloombergBusiness 2/2/16), here.

Prior reporting involving their initial indictment is Swiss Bankers / Enablers Indictment; Reputedly Julius Baer Related (Federal Tax Crimes Blog 10/11/11), here.

I recently reported that Julius Baer appeared to be on the verge of settling its criminal tax investigation.  Julius Baer Group Ltd. Expects to Pay $547 Million to US to Conclude Criminal Investigation (Federal Tax Crimes Blog 12/31/15), here.  In that blog I said:

3.  Two Julius Baer employees, Daniela Casadei and Fabio Frazzetto, were indicted in 2011, but have not yet come to the U.S., so the case has not proceeded beyond the indictment stage.  See BloombergBusiness article.  And, they are reported to still be with Julius Baer.  I would not expect that their criminal indictments will be resolved by the resolution with Julius Baer and would expect that their relationship with Julius Baer will be terminated.  (I am surprised that Julius Baer had not already terminate them in an attempt to curry favor with DOJ.)

I surmise that the report identifying them as "Ex-Julius Baer bankers" suggests that they are no longer with Julius Baer.  Perhaps more importantly, It is not clear whether, since they are not extraditable, Julius Baer induced them to come to the U.S. as a component of its appeasement with the U.S.   As to the reputed guilty plea, I can't imagine that they came back without first achieving a plea deal they deemed beneficial.

Swiss Proposal for Further Due Diligence on Untaxed Deposits by Foreigners (6/10/15)

Catherine Bosley, Swiss Government Wants Banks’ Extra Care to Avoid Untaxed Money (Swissinfo 6/5/15), here.  Key excerpts (emphasis supplied by JAT):

Switzerland’s government wants banks to toughen up checks to avoid accepting untaxed assets, possibly including a refusal to do business with a client who can’t show the money has been regularized. 

For clients from countries that aren’t covered by automatic exchange of information agreements, banks will need to conduct risk-based checks, the government said on Friday in a message to parliament. Lawmakers were asked to stiffen the current anti- money-laundering law. 

“As part of the measures to achieve a tax-compliant financial center, the new due-diligence requirements should prevent the inflow of untaxed assets to Switzerland,” the government said in a statement. “The details of the risk-based assessment will be established by the supervisory authorities and the recognized self-regulatory organization.” 

Switzerland has taken several steps to rid itself of its image as a haven for untaxed assets, including negotiating a pact allowing the automatic exchange of tax information of bank- account holders with the European Union. The accord would effectively end banking secrecy for citizens of EU countries with offshore accounts in Switzerland. Parliament will debate changing Swiss domestic law to allow the automatic exchange of information this autumn, the government said. 

* * * * 

According to the Swiss government’s proposal, which parliament will need to vote upon, banks wouldn’t be allowed to accept new clients if they suspect their money is untaxed. Should a fresh deposit by an existing client raise red flags, the bank must check up on the clients’ entire assets and -- should it have doubts -- request the client demonstrate his or her tax compliance. If the client cannot do so and or hasn’t entered into the process of regularizing the money, the bank must dissolve the business relationship, the government said. 

“The business relationship will not be terminated in cases where it is not possible for the client to provide proof of tax compliance or to regularize the tax situation without running the risk of unreasonable adverse effects,” it also said. 

The stepped up due diligence requirements would not apply to foreigners living in Switzerland and also not to U.S. citizens, who are covered under the U.S. Fatca law designed to clamp down on tax evasion.

I would make comments about the bold-faced items, but most readers can already anticipate my comments, so I will forego them.

Bradley Birkenfeld's Continuing Quest for Vindication and Redemption (5/5/15)

Swissinfo.ch has an article summarizing the substance of Bradley Birkenfeld's interview with Swiss public television channel SRF.  Whistleblower Birkenfeld: “I helped Switzerland” (Swissinfo.ch 5/3/15), here.  Here are some key excerpts:

Birkenfeld claims he was pushed into the action by the discovery of an internal document at UBS which contradicted the working practices that bankers were engaged in. Birkenfeld interpreted the memo as the bank covering its own back against criminal liability without protecting its staff. 

Birkenfeld went to the US authorities “to hold people accountable who were lying to myself, my colleagues, clients and the shareholders of the bank,” he told the Tagesschau programme on Saturday.  

“Hopefully Swiss citizens understand that this isn’t targeted at them, it’s targeted at the wrongdoings at the highest echelons of the bank.” 

* * * * 

During the televised interview, Birkenfeld repeated previous claims that he went to the DoJ only after being rebuffed by UBS’s internal whistleblowing scheme. “As a director of the bank with a CHF10 million signature power, I felt it imperative that I brought it to legal and compliance at the bank and ask for an answer. They buried the investigation, there was no investigation,” he said. 

* * * * 

Birkenfeld, who is currently writing a book about his experiences, denied that he was motivated by a dispute with UBS over bonus payments or by a fear that he was about to be implicated in a US tax investigation into one of his former clients. 

Despite receiving a $104 million (CHF97 million) reward for his whistleblowing activities by the US authorities, Birkenfeld feels aggrieved at spending 30 months in prison for failing to divulge everything he knew about his work with tax dodgers. 

* * * * 

“At some point I think I’ll visit Switzerland to help some of the people who don’t know me, to understand exactly what I did and why I did it,” he told Tagesschau. “I’m sure there will be some folk who are upset and angry, and a lot of people who understand hopefully that this was the right thing to do and that I helped Switzerland." 

 “I certainly hope that the Swiss citizens will finally say: 'We are going to hold [UBS] accountable, we want more transparency'.

JAT comment:  I suppose that the Swiss would think it is a matter of perspective as to whether Birkenfeld helped Switzerland.  I don't think the Swiss will be welcoming him back anytime soon or conferring any national medals or accolades on him.   Still, the situation that Birkenfeld brought to light was a ticking time bomb.  It would have happened even without Birkenfeld, perhaps a few years later.  But the Swiss bankers had gotten so brazen in their activities that little secret was going to out, particularly with the award system in the U.S. tax code.

Birkenfeld CNBC Interview (4/30/15)

CNBC has this interview of Brad Birkenfeld.  Eamon Javers, Why did the US pay this former Swiss banker $104M? (CNBC 4/30/15), here.

Mr. Birkenfeld was the UBS banker who blew the whistle on UBS and thereafter the other Swiss banks plying the U.S. tax evasion market.  He received a $104 million whistleblower award and a prison sentence.  But what he really wants is some form of vindication in addition to $104 million.

But Birkenfeld, 50, a big man with a brash style and a temper, isn't done with the U.S. Department of Justice. He's on a quest, he said, to force the government to explain why it was so aggressive in prosecuting him, but let nearly everyone else involved in the scam get off with light penalties or none at all. 

Now Birkenfeld is telling his story exclusively to CNBC. Wealthy, out of prison and soon to be removed from federal probation, he says he's now free to explain how he came to be the man who ended the tradition of bank secrecy and got rich in the process.

Great Article on U.S. Indicted Swiss Bankers (4/16/15)

Jesse Drucker has this article today:  America’s Most-Wanted Swiss Bankers Aren’t Hard to Find (BloombergBusiness 4/16/15), here.  The article is very good.  He traveled around Switzerland to find and talk with Swiss bankers who have been indicted by the U.S. for assisting U.S. taxpayers hide their incomes in Swiss banks.  I will include some excerpts just to get you interested, but I strongly encourage readers of this blog to click the link above for the full article.

For decades, Switzerland has occupied an outsize role in the world of shady international finance. The country’s strict secrecy laws have made it the offshore banking destination of choice for U.S. tax evaders, Russian oligarchs, Nigerian kleptocrats, and Brazilian money launderers. According to research by Gabriel Zucman, an assistant professor at the London School of Economics, Swiss banks still hold at least $2 trillion that customers haven’t declared to tax authorities in their home countries. “You’re not a self-respecting Swiss bank if you don’t have some dodgy money floating around your system,” says Martin Kenney, an attorney in the British Virgin Islands who specializes in international fraud. 

* * * * 

Swiss authorities, however, have refused to hand over any bankers—and the U.S. hasn’t asked for them. At least 21 financial advisers in Switzerland under U.S. indictment remain at large, making them fugitives in the eyes of the American government. Their acts aren’t considered crimes under Swiss law, so the country won’t extradite or prosecute them. Several still work in the Swiss financial industry, offering tax advice and other services. Some still have U.S. clients. 

* * * * 

At least four I talked to have decided to face the music: pleading guilty in the U.S. and cooperating with prosecutors. What persists is an indignation about being targeted for just following orders—and a sense that, despite their indictments, the Swiss banking system remains dirty.

For related blog entries, see

• Article on Swiss Enabler Fugitives Avoiding U.S. Indictments (Federal Tax Crimes Blog 12/26/14), here.
• Senators Urge Extradition of Indicted Swiss Bank Enablers (Federal Tax Crimes Blog 3/18/14), here.
• Switzerland as Club Fed for Swiss Enablers of U.S. Tax Crimes (Federal Tax Crimes Blog 10/24/13), here.

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:

Interesting Article from the Swiss Bankers Side (7/9/14)

The New York Times has an interesting article looking at the fallout to Swiss bankers who implemented the offshore evasion of taxes in the U.S. and other countries.  Doreen Carvajal, Swiss Banks’ Tradition of Secrecy Clashes With Quests Abroad for Disclosure (NYT 7/8/14), here.  

After describing the U.S. initiative against offshore banks and the hoped for change in Swiss attitudes on enabling tax evasion, the article continues:

But the impression of change is misleading, regulators and members of the insular banking fraternity here say. The reality, they say, remains closer to business as usual. 

Even as the Swiss authorities have nodded at cooperation with frustrated governments abroad, at home laws on the books since 1934 make violating client confidentiality a crime and require bankers to guard secrecy like priests or lawyers. Bankers who cooperate with foreign officials and violate their “duty of absolute silence,” as it is known here, potentially face home raids, prison, fines for secrecy violations and industrial espionage, and the ostracism of colleagues and friends. 

* * * * 

*** [B]ankers — caught in a vise of competing legal forces — are damned if they help either side. In the meantime, those being pressured to reveal their secrets or those of their clients to American and other foreign authorities investigating tax evasion and other crimes are maintaining their code of silence. For those bankers whose roles have brought legal charges abroad or the threat of them, that means avoiding extradition by staying within Switzerland, living life in legal and personal limbo. 

* * * * 

The situation is particularly galling to bankers — most at the midlevel — who say they are being pressured to take the fall for more powerful superiors in an industry that still jealously guards itself by closing its ranks. 

Describing a life of secretive techniques worthy of James Bond (who quipped in a 1999 film, “If you can’t trust a Swiss banker, then what’s the world come to?”), bankers who were interviewed said that one of the practices under most intensive criminal investigation — the clandestine recruitment of clients in the United States — was not only known to their bosses, but was also part of a business model. 

The bankers roamed the West and East Coasts of the United States with company instructions to recruit rich clients on a luxury circuit of five-star hotels, art exhibitions and tennis matches. Their bonuses, they said, depended on the business they cultivated and protected.

Around the Net on Offshore Accounts While Otherwise Unproductive (3/20/14)

This will aggregate some of the information I  picked up today in my automated Google searches of the web.

Item #1

A PR Newswire loudly [loudly is my web euphemism for hyperbolically] announced the following:  New Website to Assist Millions of Taxpayers with Undisclosed, Offshore Accounts (3/20/14), here.  I think this is an advertisement to attract those alleged millions and their resources to his coffers.  (I hope he has a good database and staff skills to handle the influx.)  The announcement includes the following:

For those US taxpayers in this precarious position they need expert advice and decisive action to pre-empt imposition of civil tax fraud and criminal tax evasion civil and criminal penalties, which may include: wire fraud, mail fraud, money laundering, failure to file FBAR forms (now known as FinCen Form 1114). Total penalties may be millions of dollars with jail sentences imposed for a maximum of over 80 years for all tax-related felonies.

This is, of course, fear mongering.  The real world is different.  Check out the spreadsheet here which indicates far less -- even minuscule sentences -- in the real world compared to this promo piece.  That does not mean that taxpayer do not face substantial downsides from the behavior, of course.

Item #2

A Wall Street Journal article addresses the expat  issue:  Nearly One-Third of Expats Confused by U.S. Tax Filing Requirements, here.

I don't subscribe to the WSJ because it is a business iteration of Fox News Network (which I like because of the blondes but I won't pay for that anymore because of the WSJ/blonde biases do not match my biases).  So, if you want to read that article, you will have to be a subscriber.  But, if I can speculate about the contents, are they really saying the 2/3's + of expats are not confused and that, therefore, they commit tax fraud when they don't report foreign income (including financial account income) and file FBARs.  WSJ being a Republican rag, I doubt that they intended to infer that because, I suspect, that data set includes a significant number in the "base" to which WSJ pitches its goods.  Really, what they might want to rag on is the IRS and Obama as being responsible for anything inappropriate by anybody anywhere, including expats.

Item #3

Senators Urge Extradition of Indicted Swiss Bank Enablers (3/18/14)

Senators Levin and McCain, key members of the Senate Permanent Subcommittee on Investigations which held a recent hearing on offshore bank tax evasion, has written DOJ to seek extradition from Switzerland of indicted enablers.  The letter is here.

The body of the letter is short, so I quote it in full:

We are writing to urge a change in the current policy of the Department of Justice (DOJ) which, for more than five years, has not sought extradition from Switzerland of a single Swiss national charged with criminal conduct related to aiding and abetting U.S. tax evasion. 

During the hearing held by the U.S. Senate Permanent Subcommittee on Investigations on February 26, 2014, you testified that DOJ has charged 35 bankers and 25 financial advisors with misconduct related to facilitating U.S. tax evasion.  Of those, 6 have been convicted or pled guilty, and the majority of the rest apparently live openly in Switzerland, having avoided trial on their alleged crimes for years.  Yet you also testified that DOJ has not asked Switzerland to extradite any of those defendants, because DOJ believes “the Swiss will not extradite its citizens.”  

The extradition treaty between the United States and Switzerland, however, does not bar the extradition of Swiss nationals who assisted U.S. nationals in the commission of criminal tax evasion, and it is time to test the Swiss government’s professed willingness to cooperate with international tax enforcement efforts and put an end to its nationals participating in criminal tax offenses.  While Article 3 of the U.S.-Swiss treaty provides some discretion to the Swiss government to deny U.S. extradition requests related to tax offenses, that discretion is limited.  The treaty states that it can “not be used to shield from extradition underlying criminal conduct, such as fraud …or falsification of public documents.”  At least some of the charges in the indictments filed against Swiss bankers and intermediaries appear to meet that standard.  Additionally, Article 8, which provides an exception to extradition requests that name a treaty partner’s nationals, is limited to circumstances where “[t]he Requested State [Switzerland] … has jurisdiction to prosecute that person for the acts for which extradition is sought.” Switzerland does not consider tax evasion a crime, and therefore cannot prosecute such cases, which means the Article 8 exception should not apply to U.S. extradition requests to Switzerland for cases related to tax evasion.  

Given that the current treaty does not foreclose the cooperation of the Swiss government in extradition requests for tax cases, we urge DOJ to at least attempt to use the authorities laid out in that treaty.  Even if a request is unsuccessful, it will inform both Switzerland and its citizens that the United States is ready to make full use of available legal tools to stop facilitation of U.S. tax evasion and hold alleged wrongdoers accountable. 

Thank you for your attention to this matter.

More on Credit Suisse and the Larger SEC Issue for Some Swiss Banks (3/7/14)

I previously blogged on the Credit Suisse SEC fine.  Credit Suisse Take a Hit on U.S. Tax Evasion Business (Federal Tax Crimes Blog 2/21/14), here.  The Wall Street Journal has a good more recent article: Joel Schedman, Broker Dealer Rules Have Teeth Against Swiss Banks (WSJ World 3/6/14), here.  Some f the opening excerpts to get your interest:

Despite stories of unmarked elevators and secret wire transfers, the most damaging charge against Credit Suisse Group AG has been comparatively mundane: as it courted Americans for offshore accounts, the bank failed to register its bankers with the Securities and Exchange Commission. 

Credit Suisse Group AG bankers courted American tax evaders, between 2002 and 2008, schooling them in how to do an end-run around the Internal Revenue Service and hide behind Swiss secrecy rules, according to a 181-page report from the Senate’s Permanent Subcommittee on Investigations. Beyond just offering American clients undeclared Swiss accounts, Credit Suisse bankers helped set up “shell entities” to “mask their U.S. ownership.” The bankers also offered helpful tips in hiding financial activity, like keeping transactions below a certain dollar amount to avoid triggering greater scrutiny, according to the report. 

Credit Suisse acknowledges the “misconduct, centered on a small group of Swiss-based private bankers, previously occurred at our bank,” according to the bank’s statement submitted to the subcommittee. Bank officials “deeply regret these employees’ actions.” Since 2008, after the allegations came to light, Credit Suisse, “took proactive and decisive steps to ensure that only U.S. clients who established compliance with U.S. tax laws could remain at the Bank,” according to the statement. The bank says it shut down the unit responsible for in 2009. 

Despite the color of the alleged tax evasion, the most painful charge against the bank has been less sexy: As bankers recruited American clients, they failed to register with the SEC. Credit Suisse agreed to pay the SEC $196 million over those charges last month, in a case that bore a striking resemblance to the allegations against another Swiss bank, UBS AG. “It’s Deja Vu all over again,” said John C. Coffee, a professor at Columbia Law School.

Switzerland's Quixotic Efforts to Close the Barn Door After the Horse Has Left the Barn (1/16/14)

Switzerland is reportedly investigating at least one Swiss banker -- Renzo Gadola -- ensnared in the U.S. criminal initiative who is cooperating with the U.S.  See Rachel Bade, Switzerland probing banker who is helping U.S. tax investigations (Politico 1/14/14), here.  Excerpts:

Switzerland is taking a new tack to protect its prized banking secrecy — one that could undermine the efforts of U.S. tax authorities to snag tax evaders stashing funds offshore. 

The country, which bars citizens from dishing banking secrets to foreign governments, is probing former Swiss banker Renzo Gadola for spilling the beans on wealthy Americans with hidden bank accounts, according to the Office of the Attorney General of Switzerland. 

It marks the first public admission by Switzerland that it is probing one of its own for helping U.S. offshore tax efforts. The Swiss contend they’re merely upholding their privacy laws, but some say the investigation sends a message to bankers: Keep quiet or else. 

* * * * 

Still, the Gadola probe comes at a critical time, with the U.S. prosecuting another former Swiss banker, Raoul Weil, Gadola’s former boss at UBS. 

* * * * 

Although some lawyers expect Weil to eventually make a deal with U.S. authorities, the Gadola investigation could complicate such a decision. 

* * * * 

Disclosure of client data and business secrets is a crime in Switzerland punishable by up to three years in prison. At the same time, U.S. prosecutors almost demand such information if bankers want to avoid jail time. 

After being captured in 2010, Gadola provided a trove of secrets to the Justice Department, including details on former colleagues and schemes UBS used to avoid U.S. detection. He even participated in secretly recorded phone calls with American clients, according to court records.
Several whistleblowers are now wanted in Switzerland, mostly on charges of stealing documents, including HSBC Geneva tech employee Hervé Falciani, passed data to France, and Heinrich Kieber, a former LGT Bank of Liechtenstein employee, who received millions of euros from the Germans for similar activity.

Raoul Weil Has First U.S. Court Appearance (12/17/13)

For most readers of this blog, this is probably old news by now.  So, I will just link to one of the articles.
David Adams, Florida judge grants $10.5 million bail for ex-UBS banker (Reuters 12/16/13)., here.

Key points from the article are:

1. Weil waived extradition.
2. Through his lawyer, Weil asserts his innocence and intent to enter a not guilty plea.
3. Weil was released to stay with friends in New Jersey " after putting up the bond, which included $9 million in a personal surety by Weil, $500,000 from the New Jersey family and the other $1 million a corporate surety bond signed with a bail bondsman."  He is on electronic surveillance and did surrender his passport.
4. Weil oversaw $4 trillion in assets at UBS, Marcu said. "He rose from being a bit of a technocrat and demonstrated that he could run a bigger business.""
5. Although Weil's lawyer denied that Weil is in negotiations with the prosecutors "at this time" (seemingly meaning right then, but not in the past or in the future) the article reports on speculations about Weil getting a sweetheart deal that will effectively buy his silence on the Swiss banking / tax evasion sins of prominent U.S. political figures.  From my experience, speculations should be viewed skeptically.  There will be time enough to react to real facts as they develop.

Weil, former UBS Exec and Former Fugitive, Set for Preliminary Hearing Today (12/16/13)

Raymond Weil, the former head of UBS's global wealth management business, who was a fugitive from justice until recently is expected cooperate with DOJ Tax incident to his extradition to the U.S.  See David Voreacos, Ex-UBS Banker Weil Seen Cooperating With Prosecutors (Bloomberg 12/16/13), here.  Key excerpts:

Weil, 54, is set to make an initial appearance today in federal court in Fort Lauderdale, Florida, where he was indicted in October 2008 and later declared a fugitive. His lawyer has said he is innocent. Weil hasn’t entered a plea in the case.

Weil is the highest-ranking banker among about 100 people charged since 2008 by the U.S. in a crackdown on offshore tax evasion. About three dozen foreign bankers, lawyers and advisers were charged. Most are at large. Tax lawyers not involved in the case said they expect Weil to plead guilty, cooperate with prosecutors, and seek leniency at sentencing. 

* * * * 

‘Less Useful’ 

“The window for his cooperation has shrunk and shrunk and shrunk as the U.S. government has gathered huge amounts of information from UBS and from taxpayers through the Offshore Voluntary Disclosure Program,” said Hochman of Bingham McCutchen LLP in Santa Monica, California. “What may have been useful five years ago is certainly a lot less useful today.” 

Still, Weil’s “only choice is to win at trial or turn over information that the U.S. government doesn’t have,” he said.