Wyden Investigation Finds Credit Suisse Complicit in Ongoing Tax Evasion by Ultra-Wealthy Americans
Senate Finance Committee Details Credit Suisse’s Role in an Ongoing, Potentially Criminal Tax Conspiracy Involving $100 Million in Undeclared Offshore Accounts
In Response to Pressure from Committee Investigators, Credit Suisse Identifies 23 Additional Large, Undeclared Accounts Belonging to Ultra-Wealthy Americans each with Assets over $20 Million
Washington, D.C. – Senate Finance Committee Chairman Ron Wyden (D-Ore.) today released the findings of a two-year investigation into Swiss bank Credit Suisse’s compliance with its 2014 plea agreement with the U.S. Department of Justice (DOJ) for enabling tax evasion by thousands of wealthy U.S. individuals. The committee’s investigation uncovered major violations of that plea agreement, including a previously unknown, ongoing and potentially criminal conspiracy involving the failure to disclose nearly $100 million in secret offshore accounts belonging to a single family of American taxpayers. The investigation also shed new light on the extent to which Credit Suisse bankers aided and abetted offshore tax evasion by U.S. businessman Dan Horsky, who pleaded guilty in 2016 to one of the largest criminal tax evasion cases in American history.
The committee also requested information from Credit Suisse on any other large, undeclared accounts belonging to ultra-wealthy U.S. citizens with more than $20 million held at the bank. By the time of the investigation’s conclusion, Credit Suisse disclosed to the committee that it had identified 23 such accounts, with more reviews underway. Based on the committee’s findings, the total amount concealed in violation of Credit Suisse’s 2014 plea agreement is more than $700 million.
“At the center of this investigation are greedy Swiss bankers and catnapping government regulators, and the result appears to be a massive, ongoing conspiracy to help ultra-wealthy U.S. citizens to evade taxes and rip off their fellow Americans,” Senator Wyden said. “Credit Suisse got a discount on the penalty it faced in 2014 for enabling tax evasion because bank executives swore up and down they’d get out of the business of defrauding the United States. This investigation shows Credit Suisse did not make good on that promise, and the bank’s pending acquisition does not wipe the slate clean. Officials at the Department of Justice have said they intend to crack down on corporate offenders, particularly repeat offenders like Credit Suisse, and I expect them to follow through on that commitment. In addition to a significant penalty for the bank, the individual bankers involved in these schemes must also face criminal investigation. It simply makes no sense to allow the bankers who have their hands on these hidden accounts and enable tax evasion to get away scot free. Finally, the cases detailed in this investigation are textbook examples of why Democrats gave the IRS new funding for enforcement. Republican budget cuts have decimated the IRS’s ability to root out this kind of offshore tax evasion scheme, but Democrats are committed to stepping up enforcement against wealthy tax cheats.”
More detailed findings from the committee’s investigation include:
- The committee found that Credit Suisse violated key terms of its plea agreement with the Department of Justice. In particular, the committee believes Credit Suisse violated the “leaver list” provisions of its plea agreement when it closed large undeclared accounts belonging to a family of dual U.S.-Latin American nationals while some members resided in the United States, and transferred nearly $100 million in funds to other banks in Switzerland and elsewhere without notifying DOJ. By wiring these assets to other banks without notifying DOJ, Credit Suisse enabled what appears to be potentially criminal tax evasion to go undetected for almost a decade.
- The committee uncovered what may be one of the largest Foreign Bank Account Report (FBAR) violations in U.S. history. The scheme involving nearly $100 million in undeclared accounts held by the U.S.-Latin American family may lead to one of the largest FBAR penalties in history. FBAR penalties can be up to $100,000 or half the value of the undeclared accounts, whichever is greater. The largest penalties paid to date by individuals are believed to be the $100 million FBAR penalty paid by Dan Horsky and the $83 million paid by private equity executive Robert Smith.
- Former senior bankers at Credit Suisse were involved in the management of large, undeclared offshore accounts. The committee’s investigation revealed that the former head of private banking for Latin America, Alexander Siegenthaler, played a significant role in the management of the U.S.-Latin American family’s accounts. Siegenthaler supervised several Credit Suisse bankers who faced criminal charges in the United States. Siegenthaler reported directly to the head of private banking for all of the Americas, who in turn reported directly to the global head of private banking.
- Credit Suisse employees knowingly and willfully helped Dan Horsky conceal $220 million from U.S. authorities. Credit Suisse provided information to the committee that Horsky carried out his scheme “with the knowledge and participation of multiple Credit Suisse employees.” The committee obtained records showing that Credit Suisse bankers were aware of Horsky’s citizenship and worked to help him conceal his beneficial ownership of the accounts. Senior regional executives failed to comply with the Foreign Account Tax Compliance Act (FATCA) and the bank’s obligations under the plea agreement with DOJ.
- Dual citizenship affords unique opportunities for cross-border tax evasion. A trend in the concealment of offshore bank accounts involves bankers hiding accounts for ultra-high net worth U.S. citizens who have dual citizenship by coding bank accounts using only their non-U.S. passport and foreign residences. A complicit banker is able to code accounts in a manner that would evade any internal systems designed to identify Americans and comply with U.S. law. This behavior was observed in Credit Suisse’s handling of large undeclared accounts held by Horsky and the U.S.-Latin American family.
- DOJ must conduct rigorous scrutiny into why Credit Suisse continues to discover large, secret accounts held by U.S. persons. The committee is concerned that nine years after signing its plea agreement with DOJ, Credit Suisse is still disclosing information about large potentially undeclared accounts that may have been held at the bank. Despite internal reviews, a court appointed monitor, several whistleblower disclosures to DOJ, a modernization of systems and significant sums spent on outside attorneys, Credit Suisse is still reviewing dozens of additional accounts potentially held by ultra-high net worth U.S. persons. DOJ must correct its lax oversight of Credit Suisse, rigorously scrutinize the bank’s compliance with its 2014 plea, and hold Credit Suisse accountable for any violations of its plea agreement.
- Several additional Swiss banks may be currently holding large secret offshore accounts for U.S. persons. Credit Suisse indicated to the committee that from November 2012 to February 2013, a U.S.-Latin American family transferred tens of millions of dollars out of Credit Suisse to a group of unidentified banks in Switzerland. Confidential sources informed the committee these funds were sent to Union Bancaire Privée, UBP SA (UBP) and PKB Privatbank AG (PKB) in Switzerland. Both have existing non-prosecution agreements with DOJ resulting from previous investigations of their involvement in tax evasion cases. The failure to identify and report any accounts held by the family may constitute a violation of those non-prosecution agreements. In the case of UBP, this would represent the third violation of its non-prosecution agreement.
- Bank Leumi may have violated its own deferred prosecution agreement with DOJ. Credit Suisse indicated to the committee that a U.S.-Latin American family transferred tens of millions of dollars out of Credit Suisse to Bank Leumi in Israel. It is unclear whether Bank Leumi, which also entered into a deferred prosecution agreement with DOJ, ever disclosed the existence of the accounts to DOJ.
The full report on the committee’s investigation is available here.
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