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.

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8. From at least in or about the early 1990s up to in or about 2010, DANIELA CASADEI, the defendant, in her capacity as a client advisor at Swiss Bank No. 1, opened new undeclared accounts, or managed previously-opened undeclared accounts, for at least seventeen U.S. taxpayer-clients hiding at least $13,241,446 in total from the IRS at Swiss Bank No. 1. CASADEI's U.S. taxpayer-clients included, among others, Clients 1 through 6, described below.

9. At all times relevant to this Indictment, Client 1 was a U.S. citizen and resident of the United States. By in or about the early 1990s, Client 1's father had an undeclared account at Swiss Bank No. 1 (the "Account"). In or about the early 1990s, Client 1 and Client 1's father traveled to the  [*7] Zurich office of Swiss Bank No. 1 and met with DANIELA CASADEI, the defendant, to sign documents that gave Client 1 signature authority over the Account. Client 1 provided CASADEI a copy of his U.S. passport during the meeting. CASADEI provided account statements to Client 1 and Client 1's father. CASADEI referred to these statements as "traveling. statements" because they contained no client-identifying information on them.

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11. In or about April 2008, Client 1 traveled to Swiss Bank No. 1 in Zurich and met with DANIELA CASADEI, the defendant, and a director of Swiss Bank No. 1's private banking department (the "Director") to discuss news reports regarding the United States Department of Justice's ("DOJ") investigation into the cross-border banking business of UBS GA ("UBS"). At or about that time, DOJ's investigation of UBS's cross-border banking business became publicly known and received widespread media coverage in Switzerland and the United States. In this meeting,   [*8]  CASADEI and the Director told Client 1 that Swiss Bank No. 1 no longer had a presence in the United States, and was therefore different from UBS and immune from the issues relating to UBS and the U.S. government.

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21. At the end of 2008, as global stock markets were declining, Client 2 called DANIELA CASADEI, the defendant, from the United States and asked for advice concerning her investment portfolio within the Green White House Account. CASADEI advised that Client 2 would have to travel to Zurich to discuss the account. After the call, Client 2 traveled to Zurich and met  [*11] with CASADEI. At that meeting, CASADEI advised Client 2 to "wait it out," and not liquidate her investments because of the downturn. Client 2 followed this investment advice.

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30. In or about November 2009, DANIELA CASADEI, the defendant, who by that time was Client 4's client advisor, called Client 4 in the United States. CASADEI mentioned on the call that CASADEI had been trying to reach Client 4 for some time but did not want to leave a message. CASADEI told Client 4 that he had to travel to Swiss Bank No .. 1 in Zurich to close the account because the United States was applying too much pressure on Swiss banks for maintaining undeclared accounts for U.S. taxpayers.  However, CASADEI also stated that Client 4 could continue to maintain an account at Swiss Bank No. 1 by retaining a third party financial advisor to manage an account for Client 4 at Swiss Bank No. 1. CASADEI explained that these third party financial advisors were former employees of Swiss Bank No. 1 who had left Swiss Bank No. 1 to set up their own investment firms, and Client 4 would be charged a fee for this service. During a telephone call to Client 4 in the United States, CASADEI provided Client 4 with a list of names of independent financial advisors.

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43. From in or about 2005 to in or about 2010, FABIO FRAZZETTO, the defendant, in his capacity as a client-advisor at Swiss Bank No. 1, opened new undeclared accounts or managed previously-opened but undeclared accounts for at least twelve U.S. taxpayer-clients hiding at least approximately $20,585,774 in total from the IRS at Swiss Bank No. 1. FRAZZETTO's U.S. taxpayer-clients included, among others, Clients 7 through 15, described below.

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47. In or about the fall of 2006, Client 8 traveled to Swiss Bank No. 1 in Zurich and met with FABIO FRAZZETTO, the defendant. In this meeting, FRAZZETTO recommended that Client 8 get a debit card from Swiss Bank No. 1 in order for Client 8 to have easier access to Client 8's funds. FRAZZETTO further advised Client 8 that she could only use the debit card in Europe, and that Client 8 should not use it in the United States.

48. At various times, including in or about October 2006 and September 2007, FABIO FRAZZETTO, the defendant, traveled to hotels in Manhattan and met with Client 7, who was accompanied during these visits by either Client 8 or Client 10. During these trips, FRAZZETTO sometimes reviewed account statements with  [*19] Client 7, and specifically noted to Client 7 that the statements did not have Client 7's name on them because FRAZZETTO did not want any documents  identifying Client 7.

49. In or about 2008 or 2009, Client 9 traveled to Swiss Bank No. 1 in Zurich and met with FABIO FRAZZETTO, the defendant. Client 9 had become aware of the DOJ investigation into UBS and asked FRAZZETTO how the investigation of UBS would impact Swiss Bank No. 1. FRAZZETTO told Client 9 that Swiss Bank No. 1 was accepting new U.S. clients and that Swiss Bank No. 1 was not exposed to investigation like UBS because Swiss Bank No. 1 did not have a presence in the United States.

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51. In or about July and August of 2009, Client 8 traveled to Swiss Bank No. 1 in Zurich and met with FABIO FRAZZETTO, the defendant. Client 8 discussed the IRS voluntary disclosure program with FRAZZETTO and told FRAZZETTO that Client 8 would bring the disclosure paperwork with her to Zurich so   [*20]  FRAZZETTO could review the documents. FRAZZETTO told Client 8 it was "unwise" to carry the paperwork with her to Zurich and instructed Client 8 not to do it. FRAZZETTO mentioned a law firm that could assist Client 8 in making a voluntary disclosure to the IRS but FRAZZETTO discouraged Client 8 from making a disclosure.  FRAZZETTO told Client 8 not to panic.

52. In or about August 2009 1 the Daughters traveled to Swiss Bank No. 1 in Zurich and had two separate meetings with FABIO FRAZZETT0 , the defendant.

 a. In the first meeting/ the Daughters told FRAZZETTO that Client 10's husband had an Israeli cousin ("the Cousin") 1 who could become the new nominee account holder for funds in the Daughters 1 existing joint accounts. FRAZZETTO  made it clear that 1 as far as Swiss Bank No. 1 was concerned, the Cousin would now legally own the money, and the Daughters would have to go through the Cousin for withdrawals or any other type of transaction.

  b. The next day 1 the Daughters brought the Cousin to the office of Swiss Bank No. 1 to meet with FRAZZETTO. In this second meeting 1 FRAZZETTO interviewed the Cousin and asked the Cousin questions about the Cousin's background and place of residence. FRAZZETTO made a copy of the Cousin's Israeli passport. FRAZZETTO instructed the Cousin to complete  [*21]  the account opening documents. FRAZZETTO also instructed the Daughters to complete documents to close their accounts so the transfer of funds into the nominee account opened under the Cousin's name could be executed. The nominee account was opened and the funds were transferred.

There are more, but surely readers get the point by now.

Links for more information:
USAO SDNY Press Release - here.

David Jolly, U.S. Tax Evasion Case Touches Julius Baer (NYT Dealbook 10/12/11) - here.  (This article suggests the defendant remain in Switzerland.  JAT note: for that reason, the indictments may never lead to a trial but may be intended to have the principal affect of nudging the Swiss toward some type of global agreement that would requirement large payments and disclosure of information.)

Jeff Neiman's Blog Entry, Report: Julius Baer Bankers Charged in Offshore Tax Probe (10/11/11) - here.  (Jeff notes the inability to extradite from Switzerland but the possibility of being able to extradite if the defendants try to enter a cooperating country.)