MANHATTAN (CN) – Switzerland’s oldest bank was indicted Thursday for conspiring to help U.S. taxpayers hide more than $1.2 billion from the Internal Revenue Service.
“This is the first time an overseas bank has been indicted by the United States for facilitating tax fraud by U.S. taxpayers,” according to a statement from the U.S. Attorney’s Office.
Prosecutors seized $16.2 million from an account that the bank, Wegelin & Co., holds in the United States. The 54-page civil forfeiture complaint says these “correspondent account” funds were held at a UBS bank in Stamford, Ct.
“To promote and further this scheme to defraud, Wegelin and other Swiss banks used Wegelin’s correspondent bank account in the United States to launder undeclared funds from Switzerland to U.S. taxpayer clients in a manner that facilitated the continued concealment of these undeclared accounts from the IRS,” the complaint states. “The high volume of other transactions and other funds moving in and out of Wegelin’s correspondent account contemporaneously with the laundering of these undeclared assets helped to facilitate these money laundering transactions by making their true nature more difficult to detect and to lend these transactions an aura of legitimacy.”
St. Gallen-based Wegelin was indicted alongside three of its Zurich-based client advisers who were previously charged with the same conspiracy: Michael Berlinka, Urs Frei and Roger Keller.
The charges are the latest development in America’s crackdown on international tax shelters. After UBS and another large Swiss bank closed their respective businesses servicing undeclared accounts for U.S. taxpayers, Wegelin opened dozens of new undeclared accounts in 2008 and 2009 for these customers.
“As part of their sales pitch to U.S. taxpayer clients who were fleeing UBS, at various times, Berlinka, Frei, Keller and other client advisors told U.S. taxpayer clients, in substance, that their undeclared accounts at Wegelin would not be disclosed to the United States because Wegelin had a long tradition of bank secrecy and, unlike UBS, did not have offices outside Switzerland, thereby making Wegelin less vulnerable to United States law enforcement pressure,” according to the 59-page indictment.
The filing describes dozens of accounts belonging to U.S. citizens that Wegelin allegedly created.
Founded in 1741, Wegelin is Switzerland’s oldest bank.
The criminal case is pending before U.S. District Judge Jed Rakoff, and the civil forfeiture case is pending before U.S. District Judge Laura Taylor Swain.