4 more Credit Suisse bankers charged in tax case

By JESSICA GRESKO

Associated Press

WASHINGTON — Federal prosecutors in Virginia have charged four more bankers with Zurich-based Credit Suisse Group with conspiracy in what they say was a long-running scheme to help U.S. taxpayers hide as much as $4 billion in assets.

Prosecutors originally charged four people in the scheme in February, so the charges announced Thursday bring the total number of people charged up to eight. Charging documents filed in the case do not specify what bank the group worked for, but The Associated Press previously reported its identity.

Prosecutors wrote in February that as of late 2008 Credit Suisse was maintaining thousands of secret accounts for U.S. customers with approximately $3 billion in assets, but that amount was increased to $4 billion in a document filed Thursday. Prosecutors previously alleged that the conspiracy goes back as far as 1953.

The four individuals charged Thursday were: Markus Walder, who was the head of North American Offshore Banking; Susanne D. Ruegg Meier, a member of the bank’s senior management; Andreas Bachmann and Josef Dorig, both of whom worked for a Credit Suisse subsidiary. Court documents did not include Dorig’s nationality, but all three others charged are Swiss.

Credit Suisse itself is not charged in the case, but prosecutors wrote that bank officials “knew and should have known that they were aiding and abetting U.S. customers in evading their U.S. income taxes.”

“Credit Suisse is committed to a fully compliant cross-border business. Subject to our Swiss legal obligations and throughout this process we will continue to cooperate with the U.S. authorities in an effort to resolve these matters,” the bank said in an emailed statement.

The four individuals previously charged in the case were Italian citizen Marco Parenti Adami and Swiss citizens Emanuel Agustoni, Michele Bergantino and Roger Schaerer. Schaerer has dual citizenship with the United States.

Revised court documents released Thursday discuss how the group is alleged to have worked with 35 clients including people in New York, New Jersey, California, Florida and Virginia to conceal assets and income in secret accounts. The original court papers noted 17 customers, none of them by name.

IRS Steps Up Witch Hunt for Secret Offshore Bank Accounts

Oct. 15 (originally reported by Bloomberg) — The IRS is intensifying its hunt for secret offshore banking, opening offices in Beijing, Sydney and Panama City after more than 7,500 Americans revealed undeclared accounts in 70 countries on six continents.

Internal Revenue Commissioner said yesterday Americans scared into coming forward before today’s deadline, which was manufactured to create a ‘false urgency’ on behalf of the sheep, have revealed accounts ranging in value from $10,000 to more than $100 million. The partial amnesty won’t be extended, he said, however then mumbled something like ‘again’, and winked and nudged this reporter.

Americans with undeclared offshore accounts have been under growing pressure since the US began inundating the media with stories of ‘cracking down’. In addition, in August, Switzerland agreed to hand over as many as 4,450 UBS AG accounts, from people who “didn’t matter” to settle a lawsuit in which the U.S. had sought as many as 52,000 accounts. (It has been revealed by UBS sources close to the matter that the list of 4450 accounts includes primarily widows, dentists, and the deceased — no bankers executives of fortune 500 companies with political contribution funds or politicians themselves have been included in the list.)

IRS Commissioner Shulman continued, “We’re going to be scouring the 7,500 disclosures to identify financial institutions, advisers and others who helped these serfs….uh i mean ‘taxpayers’ act like corporations,” the Commssioner said during a propoganda call with reporters. “This entire effort is not just about UBS and a single country.”

It isn’t yet known how much overlap might exist between the 4,500 names that UBS will eventually provide and the 7,500 people who have come forward to the IRS, Shulman said. However, great care went into properly informing those “in the know” that they were safe.

As part of its efforts to defraud and bully the American public into ‘compliance’, the IRS also intends to hire more than 800 new thugs in the next year and add staff to eight existing overseas offices, including Hong Kong and Barbados. “After all,” the Commissioner continued, “we’ve got to extract money from expats as well as just citizens. You don’t think you escape the long arm of the IRS just by leaving the country’s confines. Oh no. You were born into tax-slavery, you die in tax-slavery.”

After a reporter on the call reminded Shulman that some did ‘earn’ their freeman status by becoming part of the publically traded corporate elite, the Commissioner softened his statement slightly. “Alright, for those 1% of you destined to live on the backs of the other 99%, of course. But I’m talking to the ‘masses’ here.”

Back ‘on message’, he continued, “We have seen a very strong response to the program and I am very pleased with the results,” Shulman said.

Taxpayers disclosed assets that came from inheritances, profits skimmed from U.S. businesses, and international business transactions, he said.

“Clearly, assets cannot move from one generation to the other, profits cannot be strategically placed in tax havens, and profits generated outside the shores of the U.S. cannot be left to accumulate tax-free. It clearly states in tax law that these ‘exceptions’ are only available to corporations, who the supreme court says can take on the characteristics of a living person — for purposes of contract law. You see, corporations could just up and move….people, you see, we have them by the shorthairs.”

U.S. lawmakers praised the IRS program and called for stronger laws to help the agency. “We’ve done such a great job of enforcing the laws we already have on the books to avoid fraud and limit the growth and scope of the Federal Reserve, what we really need are more laws,” said Senator Shumer in a press release in support of the IRS victory.

Senator Carl Levin, a Michigan Democrat whose Permanent Subcommittee on Investigations has held two hearings into how UBS solicited Americans to put assets in Swiss banks, said he’ll keep pushing legislation to give the IRS more tools. He said he plans to offer his proposal as an amendment to a health-care measure the Senate will debate later this year.

“Hell, if I can’t get more power to the IRS in a standalone bill, I’ll just sneak it into a 9000 page bill on ‘healthcare reform’. They’ll be so busy arguing over the actual bill, they’ll never even notice this little added ‘treasure’ at the end. And besides, who wouldn’t want to take care of the sick and the elderly? It’s ‘un-American’, ” Levin said.

Levin continued, “Luckily, many Americans are losing confidence in the ability of tax-haven banks to secure what’s rightfully theirs from the grasping claws of the government and frivilous lawsuits in an unjust legal system,” Levin said. “But it is also clear that thousands of other taxpayers are still in the shadows, working to secure what they’ve rightfully earned, and keep their offshore accounts hidden from the politicians and judges who know better how their wealth should be distributed.”

Montana Democrat Max Baucus, chairman of the Senate Finance Committee that oversees the IRS, is drafting his own legislation to double financial penalties on those who avoid taxes by moving money offshore.

‘A Start’

He called the 7,500 disclosures “a start” that demonstrates the IRS propoganda is working.

“With record deficits and a weakened economy, we owe it to politicians, and government employees (myself included) to set an aggressive agenda that puts an end to offshore tax avoidance once and for all,” Baucus said. “After all, I’m a public employee to, and if you kill of overly generous pay, benefits and pensions to lawmakers and public employees, I’d have to earn an honest living by adding value somewhere.”

Under the IRS program announced in March, the confiscation will take 20 percent of an account’s assets based on its peak value in the previous six years. Luckily, in many cases, these peak years include the heady year of 2006.

“We feel this program enables us to advertise that it’s only 20 percent, lure some suckers in, and then take about half of what’s remaining since the depress—er, i mean recession has halved most of these accounts from peak,” the Commissioner said.

Ordinarily, the IRS can seize the higher of $100,000 or 50 percent of an offshore account’s value when the holder deliberately doesn’t disclose the account to the Treasury Department. The penalty can apply each year that required forms aren’t filed, so after three years of noncompliance an account holder can owe 150 percent of the account’s value.

An IRS representative speaking on condition of anonymity said, “Hey, look, we rely on voluntary disclosure, hence all the propoganda and fear tactics…Regarding the 150 percent: well, clearly, you didn’t think you were allowed to work for your own benefit did you? Your life belongs to the state.”

Avoiding Prosecution

People who come forward voluntarily can avoid criminal prosecution and their identities will remain a secret under federal law requiring tax records to be kept confidential.

George Clarke, a tax lawyer at the Washington-based Miller & Chevalier firm, who is representing about 20 people seeking leniency in the program, said the IRS’s announcement indicates the agency is positioning itself to more efficiently hunt tax cheats.

“Look, in half these cases it’s some poor schmuck who’s worked his entire life for some assets and doesn’t want a cheating wife or frivilous lawsuit to drain him like an above ground pool,” he said. “If they agree to keep it on the hush hush and out of public light, the sheep are more willing to line up and be sheered — If it’s just the IRS, they are less likely to lose their balls to a divorce settlement or ‘personal injury’ lawsuit. It’s a brilliant approach, really.”

Shulman said the IRS is building on the information it has received, and declined to estimate how much money the IRS will capture.

“You add this huge media and propoganda blitz up and it means equals voluntary disclosure and compliance for the vast majority of sheeple thinking about hiding assets offshore,” Shulman said. “If I had to justify this on captured assets alone, the revenue wouldn’t begin to approach the costs.”

He continued, “It’s like a prison. A few guards have to keep a lot of prisoners at bay through fear and intimidation. In the coming weeks and months, as tax receipts plummet and deficit spending soars into the teeth of a global collapse, the saber rattling by the IRS will become deafening.”

The voluntary disclosure program isn’t available to widows or dentists already under scrutiny by the IRS. Since December 2007, six UBS clients have pleaded guilty and a seventh has agreed to do so. A UBS banker pleaded guilty; two were indicted; and three Europeans were charged with enabling U.S. tax evasion.

The Justice Department has said 150 taxpayers, and no corporations, banks, charities, goldman sachs employees, or ‘religious institutions’ are under criminal investigation.

Clock Is Ticking For Secret Offshore Account Holders Forbes.com by: Ashlea Ebeling

Taxpayers with foreign bank and investment accounts they haven’t reported to the U.S. government have a decision to make this week: whether to fess up to their accounts as part of a voluntary disclosure program that ends Sept. 23.
Those who report by the deadline should, in most cases, be able to avoid criminal prosecution and minimize the civil penalties they must pay. But the penalties will still be stiff and some taxpayers are gambling they won’t be found out.
Robert McKenzie, a tax lawyer with Arnstein; Lehr in Chicago, reports he had four clients engage him on Tuesday morning, four more scheduled for office consultations Tuesday afternoon, and telephone calls with prospective clients in between. “It is really hectic,” he says.
Seth J. Entin, a tax attorney with Greenberg Traurig in Miami, is similarly busy. “We’re seeing a lot of people who were sitting on the fence a couple of months ago now deciding to come forward,” he says. “It’s basically the 11th hour,”
The Internal Revenue Service has given no indication that it intends to extend the deadline for the program, which was first announced on March 23. Entin is telling clients: “It would be wise to clean up things right now. It’s unlikely the deal is going to get any better than this.”
Failure to file an annual form with the U.S. Treasury–a form called an FBAR–reporting an interest in a foreign account worth $10,000 or more is a criminal offense. It’s also punishable by a civil penalty of up to 50% of the account’s value, for each year the form goes unfiled. But under the voluntary deal, taxpayers will pay a maximum of 20% of the account’s highest value over the last six years as an FBAR civil penalty. They must also pay six years of back taxes owed on any unreported income from the accounts and six years of accuracy or delinquency penalties related to that unpaid tax.
A taxpayer with an unreported account that at its height in 2003 was worth $1 million could pay $386,000 to come clean under the program, versus $2.3 million if the taxpayer doesn’t come forward and the IRS discovers the account, according to a 52-question Q;A page about the program on the IRS Web site. (The IRS could come after your domestic assets to collect the full penalties, warns Entin.)
The penalties for failure to file an FBAR are based on an account’s balance each year. So even if the account hasn’t been generating income, or even if there are losses in it, someone with an undisclosed account can save on penalties by disclosing it the IRS.
In addition, failing to admit to a foreign account worth more than $10,000 on a 1040 individual tax return is also a felony. But under a longstanding IRS policy, taxpayers who enter into a voluntary disclosure before the IRS begins to audit or investigate them are usually not prosecuted.
There’s been an intense spotlight on secret foreign bank accounts since December 2007, when billionaire California real estate developer and Forbes 400 member Igor M. Olenicoff pleaded guilty to a felony and agreed to pay $57 million in back taxes, interest and civil fraud penalties for failing to disclose his offshore accounts.
Later, Bradley Birkenfeld, a former private banker with Switzerland’s UBS ( UBS – news – people ), pleaded guilty to helping Olenicoff hide more than $200 million offshore. Then, this past February, UBS agreed to pay $780 million in penalties, fines and restitution to the U.S. government to avoid criminal prosecution.
Most significantly for account holders, last month, in an unprecedented breach in Swiss bank secrecy, the Swiss government agreed to turn over to the U.S. the names of 4,450 Americans with secret UBS accounts.
The trail doesn’t end at UBS, however. Accounts at other banks in Switzerland and elsewhere are also at risk of disclosure in coming months and years.
“We are gaining access to more and more information on institutions and individuals involved in offshore tax Taxpayers with foreign bank and investment accounts they haven’t reported to the U.S. government have a decision to make this week: whether to fess up to their accounts as part of a voluntary disclosure program that ends Sept. 23.
Those who report by the deadline should, in most cases, be able to avoid criminal prosecution and minimize the civil penalties they must pay. But the penalties will still be stiff and some taxpayers are gambling they won’t be found out.
Robert McKenzie, a tax lawyer with Arnstein; Lehr in Chicago, reports he had four clients engage him on Tuesday morning, four more scheduled for office consultations Tuesday afternoon, and telephone calls with prospective clients in between. “It is really hectic,” he says.
Seth J. Entin, a tax attorney with Greenberg Traurig in Miami, is similarly busy. “We’re seeing a lot of people who were sitting on the fence a couple of months ago now deciding to come forward,” he says. “It’s basically the 11th hour,”
The Internal Revenue Service has given no indication that it intends to extend the deadline for the program, which was first announced on March 23. Entin is telling clients: “It would be wise to clean up things right now. It’s unlikely the deal is going to get any better than this.”
Failure to file an annual form with the U.S. Treasury–a form called an FBAR–reporting an interest in a foreign account worth $10,000 or more is a criminal offense. It’s also punishable by a civil penalty of up to 50% of the account’s value, for each year the form goes unfiled. But under the voluntary deal, taxpayers will pay a maximum of 20% of the account’s highest value over the last six years as an FBAR civil penalty. They must also pay six years of back taxes owed on any unreported income from the accounts and six years of accuracy or delinquency penalties related to that unpaid tax.
A taxpayer with an unreported account that at its height in 2003 was worth $1 million could pay $386,000 to come clean under the program, versus $2.3 million if the taxpayer doesn’t come forward and the IRS discovers the account, according to a 52-question Q&;A page about the program on the IRS Web site. (The IRS could come after your domestic assets to collect the full penalties, warns Entin.)
The penalties for failure to file an FBAR are based on an account’s balance each year. So even if the account hasn’t been generating income, or even if there are losses in it, someone with an undisclosed account can save on penalties by disclosing it the IRS.
In addition, failing to admit to a foreign account worth more than $10,000 on a 1040 individual tax return is also a felony. But under a longstanding IRS policy, taxpayers who enter into a voluntary disclosure before the IRS begins to audit or investigate them are usually not prosecuted.
There’s been an intense spotlight on secret foreign bank accounts since December 2007, when billionaire California real estate developer and Forbes 400 member Igor M. Olenicoff pleaded guilty to a felony and agreed to pay $57 million in back taxes, interest and civil fraud penalties for failing to disclose his offshore accounts.
Later, Bradley Birkenfeld, a former private banker with Switzerland’s UBS ( UBS – news – people ), pleaded guilty to helping Olenicoff hide more than $200 million offshore. Then, this past February, UBS agreed to pay $780 million in penalties, fines and restitution to the U.S. government to avoid criminal prosecution.
Most significantly for account holders, last month, in an unprecedented breach in Swiss bank secrecy, the Swiss government agreed to turn over to the U.S. the names of 4,450 Americans with secret UBS accounts.
The trail doesn’t end at UBS, however. Accounts at other banks in Switzerland and elsewhere are also at risk of disclosure in coming months and years.
“We are gaining access to more and more information on institutions and individuals involved in offshore tax evasion, and you can expect us to use all of our enforcement tools to stop this abuse,” IRS Commissioner Doug Shulman said last month, when he announced the indictment of a Swiss banker at the Neue Zuercher Bank and a Swiss lawyer who worked with him.
So who’s been confessing and who’s holding back?
Clients who have unreported income from other sources–not just the interest or investment earnings on the undisclosed foreign account–have been the most reluctant to enter into a voluntary disclosure with the IRS, McKenzie says. The reason is that to qualify for the program, they must come clean on everything, meaning they have to pay back taxes, interest and penalties on six years of unreported income as well.
One client who had a change of heart and asked McKenzie to file a report for him had two years of bonuses totaling $280,000 paid by a European employer into a Swiss account.
At the other extreme, McKenzie is filing the paperwork for a woman whose 92-year-old dad recently told her, on his deathbed, that he had set up an offshore account for her. Under the IRS guidelines for the program, she could be assessed a lighter penalty–5% instead of the 20% of highest balance–because she didn’t open the account herself and she hasn’t touched it.
Folks with inherited accounts might be able to get the 5% deal too. But McKenzie says it’s rare they qualify, since heirs will usually take a trip to Europe and raid the account, thus opening themselves up to the stiffer 20% of account balance penalty.
To qualify for the program, taxpayers must apply by Sept. 23; have income from entirely legal sources (no drug dealers or bookies); must cooperate fully with the IRS, including identifying any lawyers or bankers who assisted them; and must make good-faith arrangements to pay the back taxes and penalties. It’s OK if you don’t have all your records (if you haven’t been on a trip to Switzerland lately); you just have to get your foot in the door by the deadline.
All disclosure cases start at the IRS’ criminal division, which then forwards the cases to the civil division. A taxpayer already under audit–even if it’s for something like inflated business expense deductions unrelated to the offshore accounts–can’t participate in the disclosure program.
There are still some taxpayers who are choosing not to go forward with disclosure, notes McKenzie. In most cases, these are taxpayers with other unreported income. “They are rolling the dice that their names won’t come out,” he says. That’s a high stakes gamble.
Says Entin: “The bottom line of the voluntary disclosure is so you can sleep at night.”
evasion, and you can expect us to use all of our enforcement tools to stop this abuse,” IRS Commissioner Doug Shulman said last month, when he announced the indictment of a Swiss banker at the Neue Zuercher Bank and a Swiss lawyer who worked with him.
So who’s been confessing and who’s holding back?
Clients who have unreported income from other sources–not just the interest or investment earnings on the undisclosed foreign account–have been the most reluctant to enter into a voluntary disclosure with the IRS, McKenzie says. The reason is that to qualify for the program, they must come clean on everything, meaning they have to pay back taxes, interest and penalties on six years of unreported income as well.
One client who had a change of heart and asked McKenzie to file a report for him had two years of bonuses totaling $280,000 paid by a European employer into a Swiss account.
At the other extreme, McKenzie is filing the paperwork for a woman whose 92-year-old dad recently told her, on his deathbed, that he had set up an offshore account for her. Under the IRS guidelines for the program, she could be assessed a lighter penalty–5% instead of the 20% of highest balance–because she didn’t open the account herself and she hasn’t touched it.
Folks with inherited accounts might be able to get the 5% deal too. But McKenzie says it’s rare they qualify, since heirs will usually take a trip to Europe and raid the account, thus opening themselves up to the stiffer 20% of account balance penalty.
To qualify for the program, taxpayers must apply by Sept. 23; have income from entirely legal sources (no drug dealers or bookies); must cooperate fully with the IRS, including identifying any lawyers or bankers who assisted them; and must make good-faith arrangements to pay the back taxes and penalties. It’s OK if you don’t have all your records (if you haven’t been on a trip to Switzerland lately); you just have to get your foot in the door by the deadline.
All disclosure cases start at the IRS’ criminal division, which then forwards the cases to the civil division. A taxpayer already under audit–even if it’s for something like inflated business expense deductions unrelated to the offshore accounts–can’t participate in the disclosure program.
There are still some taxpayers who are choosing not to go forward with disclosure, notes McKenzie. In most cases, these are taxpayers with other unreported income. “They are rolling the dice that their names won’t come out,” he says. That’s a high stakes gamble.
Says Entin: “The bottom line of the voluntary disclosure is so you can sleep at night.”

UBS Agrees to Release 4,450 Names to IRS in Tax Evasion Case

· IRS Announcement

· IRS’s UBS Web Page

· U.S.-Swiss Government Agreement

· U.S.-Swiss Government Declarations

· U.S.-UBS Agreement

· New York Times

· Wall Street Journal

· Washington Post