by Brian Mahany
In the aftermath of the indictments against three Wegelin bankers for conspiracy to defraud the U.S. government, I thought it interesting to post the investment “commentary” called “Farewell America” published on the Wegelin website in August of 2009. As of this writing, it is still available for anyone to read. For those not familiar with Wegelin & Co., it is one of the oldest Swiss private banks in the world, tracing its origins to 1741.
In its commentary, the bank takes aim at the then 2009 agreement between UBS bank and the IRS to turn over the names of 4450 UBS clients suspected of tax fraud. Whether you agree with the bank’s position or not, it is an interesting and well written piece.
Wegelin claims the losers in the agreement hammered out between the IRS, UBS and the Swiss government are the holders of Swiss accounts who were promised that foreign authorities seeking to attack Swiss banking secrecy would encounter a “brick wall.” They claim this agreement was a breach of trust.
Perhaps it is, but since the commentary was written, the Justice Department has indicted several Wegelin bankers for capitalizing on the very agreement mentioned in the 2009 commentary. The government says Wegelin actively helped UBS account holders who were trying to find a new bank in which to hide their money.
Simply opening a Swiss account for a former UBS customer is obviously not illegal. The feds say, however, the trio – and the bank – deliberately helped the account holders conceal their money from the IRS.
As mentioned above, three Wegein bankers are now under indictment. The bank, however, had its own indictment against the United States government back in 2009. This is what they said then:
“[L]et us briefly recall the sort of tax authorities we are dealing with, and the sort of state they serve: a country that, over the last 60 years, has unquestionably been one of the most aggressive nations in the world. The USA has fought by far the largest number of wars, sometimes with, but mostly without a UN mandate. It has broken the interna- tional laws of war, maintained secret prisons, and fought an absurd war against drugs, with serious consequences both abroad (Columbia, Afghani- stan) and at home (according to reliable sources, the tentacles of the narcotics mafia now reach well into political circles). With breathtaking moral duplicity, the USA maintains enormous offshore havens in Florida, Delaware and others of its states. The moralizers have joined sides with a nation that still makes extensive use of the death penalty, and that has a legal system under which lawyers can get rich on the misfortunes of their clients. Liability cases often end in verdicts with exorbitant damages, which makes business activity extremely risky, for medium-sized enterprises in particular. The moralizers provide intellectual support for a country that allows its infrastructure to collapse, and then stuffs convicts into hopelessly overfilled jails, after what are not infrequently dubious proceedings. They fund a nation that tolerates – or rather, causes – regular crises in the global financial system that it manages. A country whose underclass enjoys neither the benefits of an adequate education, nor a half-way functional healthcare system; a country whose economic system is increasingly inclined to overconsumption, and in which saving and investing have increasingly become alien concepts, a situation that has undoubtedly been one of the driving forces behind the current recession, with all its catastrophic consequences for the whole world.”
Will the three bankers join the ranks of “convicts stuffed into hopelessly overfilled jails”? Time will tell. For now, none of the men have surrendered and all still are employed by Wegelin.
Wegelin’s coommentary gives a rare glimpse into the politics of the entire IRS system of offshore taxation. Right or wrong, however, the IRS and Justice Department continues to pursue U.S. taxpayers with unreported foreign accounts and foreign income.
If you have failed to file an annual Report of Foreign Bank and Financial Account (FBAR), are under audit or have unreported Swiss, Indian, Israeli or other foreign accounts, contact us immediately. We will help you understand your rights and obligations. All call are completly confidential.
Mahany & Ertl – America’s Tax Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine; San Francisco, California and now Minneapolis, Minnesota. IRS services available anywhere in the world.