by Brian Mahany
It’s a new year and already the feds have indicted 3 more Swiss bankers, this time from Wegelin & Co, Switzerland’s oldest private bank. The feds say that the 3 helped American holders hide $1.2 billion from the IRS.
On January 3rd, an indictment was unsealed in a Manhattan federal court charging Urs Frei, Michael Berlinka and Roger Keller with felony conspiracy to defraud the U.S. government. If convicted the three could face 5 years in prison. All 3 are presently in Switzerland and have not surrendered or been extradited yet according to court records.
The 46 page indictment says the trio opened undeclared bank accounts for Americans who were former UBS clients. Prosecutors say the bankers were trying to capture clients who were spooked by the investigation into UBS. If true, the bank appears to have been intentionally looking for high wealth individuals who were already knew they had tax problems.
The indictment says that bank officials told customers that their accounts would not be disclosed. The Grand Jury also said charged the three falsified records and created phony account names to further foil the government. It’s one thing to simply open an account for an individual but in this case, the IRS says that Wegelin actively conspired with their clients to hide accounts from the government.
As readers of this blog know, it is not illegal to maintain an offshore account. Willful failure to declare that account or income from such an account is a felony, however. While there are many valid reasons to have an offshore account, using to evade taxes is illegal.
Since the UBS investigation and prosecution in 2008, the Justice Department officials have been targeting both taxpayers with unreported accounts and their private bankers. By targeting the bankers, the feds are making it more difficult for Americans to hide their money. The indictment of the bankers has an added “benefit” of coercing foreign bank officials to disclose the identities of their American clients.
Swiss bank secrecy sounds great on paper but when faced with years in prison, most bankers will cooperate and reveal the names of their clients in return for leniency and a lighter sentence.
Taxpayers with unreported accounts at Wegelin and other Swiss banks should act quickly. Although an amnesty program for those with foreign accounts recently ended (2011 Offshore Voluntary Disclosure Initiative), there are still reasons why coming clean makes sense.
By coming forward first, criminal prosecution is almost always avoided. Wait for the knock on the door, however, and its too late. Chances of having some of the penalties abated or reduced are also better if one comes forward voluntarily. With the stakes so high, however, these voluntary disclosures should definitely not be handled alone. ALWAYS seek competent tax counsel with offshore reporting experience.
If you have not filed an FBAR form (Report of Foreign Bank and Financial Account), have not declared income from your offshore account or believe that you may be under investigation, contact us immediately. Our offshore tax lawyers have helped many taxpayers with a variety of foreign reporting, criminal tax and voluntary disclosure issues.
Mahany & Ertl – America’s Tax Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine; San Francisco, California and Minneapolis, Minnesota. Services available in most locations.