Credit Suisse AG, a huge Swiss banking company with $872 billion in assets, was sentenced yesterday for its role in assisting U.S. taxpayers commit tax evasion. Convicted on May 19th of conspiracy to defraud the IRS, sentencing was postponed until November 21st. Yesterday, the bank was penalized $2.6 billion in fines and restitution. The case was brought in the Eastern District of Virginia.
The investigation of Credit Suisse had been ongoing for years. In addition to the tax evasion charges against the bank, the investigation has also resulted in indictments against 7 Credit Suisse bankers and several former clients of the bank. A prepared release by the Justice Department claims the investigation also resulted in criminal charges against the owner of a trust company.
When pleading guilty earlier this spring, the bank admitted that for years it assisted Americans who wished to conceal their assets from the IRS. Opening a Swiss bank account isn’t illegal but failure to report it to the IRS can be a felony and almost always results in huge civil penalties. The IRS believes that unreported offshore accounts help facilitate tax evasion.
The indictment claimed that Credit Suisse actively helped Americans evade taxes and hide their offshore accounts in a number of ways including:
– Destroying records of US clients
– Providing debit cards to assist Americans in repatriating their money
– Structuring fund transfers to avoid anti-money laundering reporting rules
– Hand delivering cash to Americans with undeclared accounts
– Assisting Americans create or use sham or nominee entities to disguise account ownership
– Soliciting IRS forms that falsely stated that these sham entities were the beneficial owners of the accounts
Because corporations can’t be jailed, the penalties imposed by the court included fines and restitution. The court ordered a fine of $1,136,000,000 and restitution to the IRS of $666,500,000. The bank must also pay $100 million to the Federal Reserve, $715 million to the New York State Department of Financial Services and $196 million to the SEC. The SEC had brought its own charges against the bank for providing investment advisory services to Americans without being properly licensed.
A record number of Americans have faced criminal prosecution in recent years for tax evasion and filing false tax returns involving unreported foreign accounts. As part of the sentence against Credit Suisse, the bank must make “a complete disclosure of its cross border activities” and cooperate in treaty requests for account information. The court also ordered the bank to disclose information about banks that accepted monies from secret accounts. Since the crackdown on Swiss banks began, many Americans transfer their funds from one offshore bank to another trying to stay ahead of the IRS.
After the sentencing, the Justice Department released a statement saying, “Today’s sentencing of Credit Suisse AG holds the bank responsible for its decades-long pervasive conduct of aiding U.S. taxpayers in the commission of tax crimes. The Justice Department will continue to vigorously pursue our global enforcement efforts against individuals who avoid their tax obligations by hiding their assets in foreign bank accounts, and the financial institutions, bankers, and other professionals who facilitate these crimes.”
Anyone who defends Americans accused of tax evasion and unreported foreign accounts has no doubt as to that statement. Many more prosecutions and civil enforcement actions are expected.
Have an unreported foreign account or under investigation for tax evasion? We can help. Our dedicated group of IRS tax lawyers represents taxpayers in a wide variety of criminal tax and offshore reporting matters. Have a question about unreported offshore accounts, FBARs or FATCA? Contact attorney Beth Canfield at or by phone at (414) 223-0464. Facing criminal prosecution? Contact attorney Brian Mahany at or by telephone at (414) 704-6731 (direct). All inquiries protected by the attorney client privilege and kept in complete confidence.