Swiss Bankers Face Indictment over Alleged Criminal Tax Evasion Involving Offshore Accounts

March 5, 2011
By Dennis N. Brager on March 5, 2011 9:05 AM |

Four Swiss bankers have been charged with conspiracy to defraud the United States of income tax revenue, according to an indictment unsealed in the United States District Court in Virginia. The bankers are accused of helping high net worth clients hide undeclared Swiss bank accounts.

U.S. citizens with $10,000 or more in foreign accounts are required to file with the Department of Treasury a Report of Foreign Bank and Financial Accounts, or FBAR. Tax litigation attorneys are frequently being called to defend clients against charges of tax evasion since the government launched its Offshore Voluntary Disclosure Program (OVDP) in 2009. The OVDP has since been replaced with the Offshore Voluntary Disclosure Initiative (OVDI). OVDI permits U.S. taxpayers to avoid criminal prosecution by declaring overseas accounts and paying tax on unreported income together with a 25 percent penalty.

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The indictments alleges that International Bank operates as one of the biggest banks in Switzerland and is one of the largest managers of wealth in the world. As part of its business, it provided international bank accounts to U.S. customers. In doing so, authorities allege that the bank's managers and employees knew or should have known that they were aiding and abetting U.S. income tax evasion. All totaled, the bank maintains thousands of undeclared accounts containing about $3 billion in assets.

The indictment also alleges that the bank did not register as a broker-dealer with the Securities and Exchange Commission, as required by U.S. law. In 2001, the bank allegedly agreed to cooperate with the Internal Revenue Service in verifying the identity, citizenship and residency of clients through IRS Forms W-8BEN and W-9 forms.

Several other Swiss banks are also accused in the indictment. By failing to have clients fill out the proper paperwork, the government alleges the bankers were complicit in assisting clients to evade U.S. tax obligations.

In one case, a banker is accused of helping a Palm Beach, Florida customer make investment decisions regarding an undeclared overseas bank account during meetings at a New York hotel. The account statements were also mailed to the address of an overseas residence, rather than to the client's primary U.S. residents. Meanwhile, the client is accused of filing tax returns in 2005 that did not declare the account or its related income. When the account was closed in 2008, the banker allegedly recommended moving the funds to an Israeli bank or a bank in Hong Kong in order to continue to evade the U.S. tax obligation.

If you are facing criminal charges for tax evasion or charges in connection with offshore bank accounts, contact the Los Angeles tax attorneys at the Brager Tax Law Group, A.P.C. for a confidential appointment to discuss your rights. Call 310-208-6200.