Wegelin & Co, the oldest Swiss private bank, will shut down permanently after more than 250 years of operations, following its guilty plea to U.S. charges of helping Americans to evade taxes through secret accounts. The plea was entered in the U.S. District Court in Manhattan and is viewed as a major turning point in the fight by U.S. authorities against previously famous Swiss bank secrecy.
The bank admitted to charges of conspiracy in helping Americans evade taxes on at least $1.2 billion for nearly a decade. Wegelin also agreed to pay $57.8 million to the United States in fines, including $20 million in restitution to the Internal Revenue Service.
Otto Bruderer, a managing partner at the bank, admitted in court that “Wegelin was aware that this conduct was wrong.” He said that “from about 2002 through about 2010, Wegelin agreed with certain U.S. taxpayers to evade the U.S. tax obligations of these U.S. taxpayer clients, who filed false tax returns with the IRS.”
The bank was indicted in February 2012, the first indictment of a foreign bank by U.S. authorities in recent history, and was declared a fugitive from justice when its Swiss-based executives failed to appear in U.S. court. The surprise plea effectively ends the U.S. case against Wegelin and shuts down the institution which was founded in 1741. “Once the matter is finally concluded, Wegelin will cease to operate as a bank,” Wegelin said in a statement from its headquarters.
Dozens of Swiss bankers and their clients have been indicted in recent years, following a 2009 agreement between the U.S. authorities and UBS AG to pay a $780 million fine after admitting to criminal wrongdoing in selling tax-evasion services to wealthy Americans. Banks under criminal investigation by U.S. authorities in the wider probe include Credit Suisse, Zurich-based Julius Baer, and some regional banks. U.S. also investigates UK-based HSBC Holdings and three Israeli banks, Hapoalim, Mizrahi-Tefahot Bank Ltd and Bank Leumi.
In a statement after the plea, Assistant U.S. Attorney General Kathryn Keneally said it was a top priority of the Justice Department “to find those who continue to shirk their tax obligations,” as well as those who help them and profit from it. “The best deal now for these folks is to come in and ‘get right’ with the IRS, before either the IRS or the Justice Department finds them,” she said.
We remind everyone that the IRS has in effect an Offshore Voluntary Disclosure Program, which allows taxpayers with undisclosed foreign accounts to report them and avoid criminal prosecution in exchange for certain penalties. We encourage those taxpayers who have previously undisclosed foreign accounts to consult with a tax attorney and discuss possible solutions.
Former IRS Trial Attorneys of Holtz, Slavett & Drabkinare available to assist you with the issues related to offshore assets and foreign accounts. To arrange for a consultations, please contact us at (310) 550-6200.
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