In Latest Chapter of Swiss Bank Probe, U.S. Charges Two for Allegedly Helping Tax Dodgers
Friday, August 21, 2009
The U.S. government kept the heat on Swiss banking secrecy Thursday, charging a banker and a lawyer with fraud for allegedly helping rich Americans dodge taxes by hiding assets in bogus offshore entities.
The indictments announced by the Justice Department come a day after U.S. and Swiss authorities unveiled a historic agreement to force Swiss banking giant UBS to hand over the names on 4,450 secret bank accounts suspected of being used by wealthy Americans to avoid taxes.
Named in the charges are Hansruedi Schumacher, an executive with Neue Zurcher Bank in Zurich, and Matthias Rickenbach, a lawyer who worked with Schumacher.
According to the indictment, "Schumacher and Rickenbach helped wealthy American clients conceal their assets by establishing sham and nominee offshore entities to hide their U.S. clients' assets and income while allowing these clients to still control the assets and make investment decisions," the Justice Department said in a statement.
The Justice Department would not comment on the pair's location or if they have been arrested. Schumacher and Rickenbach could not be reached for comment.
The Justice Department and Internal Revenue Service have been aggressively pursuing American tax cheats who have used Switzerland's legendary bank secrecy to hide assets. The UBS deal announced on Wednesday was the result of lengthy negotiations and a lawsuit filed by the United States, which the U.S. government has promised to withdraw now that Switzerland has agreed to hand over the names on the secret accounts.
The suit's pending withdrawal boosted investor confidence in UBS, and on Thursday the government of Switzerland sold back its 8.5 percent stake in the bank, generating a $1.1 billion profit on the sale. The Swiss government took the stake in UBS last fall to help the bank move toxic assets from its balance sheets. Thursday's sale returns that stake to the private sector.
A Swiss banking giant such as UBS is an obvious target for U.S. investigators. But a small, private bank such as Neue Zurcher Bank (NZB) is not.
However, it appears that Schumacher and Rickenbach may have brought the U.S. probe down on themselves.
"According to court documents, Schumacher and Rickenbach discouraged their U.S. clients from voluntarily coming into compliance in the United States," the Justice Department said in a statement. "Instead, the defendants encouraged their clients to transfer their assets from UBS, a large Swiss bank, to NZB, a smaller bank in Switzerland. The defendants told their clients that their assets and identification would be safer at NZB because they had no presence in the United States and was therefore less likely to be pressured by the American authorities to disclose the identities of their United States clients."
The Justice Department would not say how it found the pair but hinted in its statement that the leads may have come from the IRS's leniency program that began in March and expires on Sept. 23. The IRS extensively debriefs holders of secret Swiss accounts who seek leniency to try to identify their contacts at the banks.
"For people with hidden offshore assets, they have an opportunity to get right with the government," IRS Commissioner Douglas Shulman said in a statement.