Former UBS banker indicted in tax evasion conspiracy case

A former UBS banker was indicted today on a charge that he helped U.S. clients evade taxes through accounts at UBS and a regional Swiss bank.

The indictment says the banker, Martin Lack, discouraged at least nine U.S. customer from joining an Internal Revenue Service amnesty program offered to those who were hiding assets overseas. He also offered to provide his customers with falsified bank documents to conceal the source of the funds in their undeclared bank accounts, according to the indictment.

Lack, a Swiss resident, is accused of conspiring with another UBS banker to encourage U.S. clients to move their undeclared UBS accounts to the smaller regional bank, which news reports identify as Basler Kantonalbank. The other UBS banker, Renzo Gadola, pleaded guilty last year to similar charges in federal court in Miami.

Switzerland’s Credit Suisse bank targeted for criminal investigation by DOJ

Switzerland’s second largest bank, Credit Suisse Group AG, announced last week that it is the target of a criminal investigation by the Department of Justice, pertaining to former cross-border banking services provided to US clients.

According to Justice Department guidelines, there must be “significant evidence” of illegal activity for the DOJ to target an entity for investigation. In February, four Credit Suisse employees were indicted for allegedly helping US clients evade taxes through secret bank accounts.

Following the agreement reached in 2008 with UBS, Switzerland’s largest bank, some experts have speculated that this investigation could follow a similar trajectory. As a result of that action, UBS signed a differed prosecution deal which required the bank to pay $780 million and turn over data on 250 US clients – it has since provided data on an additional 4,450 accounts.

Credit Suisse is also under investigation in Germany for allegedly helping German clients evade taxes.

New rules for Swiss banks mark shift away from undeclared assets

Switzerland is expected to make changes to its banking laws that will make it more difficult for European neighbors to hide their assets from tax collectors. The proposed agreement with Germany and Britain, expected to be reached by the summer of this year, is intended to preserve banking secrecy, but marks a shift away from undeclared assets. France and Italy are expected to reach similar deals with Switzerland thereafter.

Switzerland is seeking to avoid recurrences of some of the more contentious responses to the problem of banking secrecy for foreign tax collectors, such as the lawsuit between the IRS and UBS that resulted in a payment of $780 million, Swiss bankers being arrested abroad, and the theft and sale of Swizz bank client lists to foreign governments that wish to collect taxes legally owed to them.

The shift in Switzerland’s banking will likely result in the downsizing or consolidation of some firms that rely solely on undeclared assets. Although client confidentiality will be retained under the proposed agreement, Swiss banks will likely be forced to compete in a more transparent environment, the results of which are only beginning to unfold.

IRS to focus on tax evasion schemes in India

The IRS is now considering India among the countries believed to be facilitating major off-shore tax evasion for wealthy Americans, as indicated by the Justice Department’s efforts to acquire the names Indian-American HSBC clients suspected of evading taxes through offshore banking in India.

The request for permission from a federal Judge by the Justice Department to demand those names comes on the heels of a protracted legal engagement with UBS in Switzerland. That action began in 2008 and ended last August with the agreement by UBS to provide information on 4,500 American clients. The IRS is now expanding its anti-fraud efforts to India, a region not previously considered a hotbed for offshore evasion.

According to the New York Times, sources close to the matter indicate that HSBC’s N.R.I. program (Non-Resident Indian), which sought out Indian-Americans for banking in India, may be related to the current legal effort. HSBC has indicated that it does not condone tax evasion, and will cooperate with US requests “while complying with the law in all jurisdictions in which it operates, including India.”

Former UBS client pleads guilty to offshore tax evasion

Richard Werdiger, a former client of Zurich-based UBS AG, has pleaded guilty to concealing assets from the IRS in offshore bank accounts.

The 63-year-old is one of 7 former UBS clients believed to have concealed over $100 million from the IRS. Werdiger was accused of hiding $7 million in 3 accounts in Panama and Lichtenstein.

The former UBS client has agreed to pay $3.5 million in civil penalties and faces up to 20 years in prison when he is sentenced on June 14. The accusations form part of a larger IRS crackdown on offshore tax evasion, which has previously made UBS a focus of interest.

Hunting down tax cheats in Switzerland gets easier

Switzerland has taken steps towards improving cooperation with countries seeking to pursue tax evaders hiding funds in the country.

Before the change in policy, which will take effect following Parliament’s approval, countries seeking information on tax evaders could receive administrative assistance from the Swiss government only with the full name and address of the parties of interest; the new policy will allow governments to use more varied search methods and provide less complete information.

However, the Swiss Ministry has said that it will not allow for “fishing expeditions,” whereby a government might attempt to gain information on parties that are not reasonably suspected of any wrongdoing.

The policy change comes on the heels of increased pressure from the US government to pursue tax evaders in Switzerland and other countries, including a sustained inquiry into UBS, Switzerland's biggest bank, which was recently completed.

IRS to announce second amnesty program for self-disclosing tax cheats

The IRS will soon be announcing a second amnesty program for Americans concealing accounts in foreign tax shelters; it will not be “as generous” as the last program, which 15,000 Americans opted to participate in (as well as an additional 3,000 after the October 15 deadline).

A white collar criminal defense lawyer told The New York Times that some Americans may have cheated the IRS by paying taxes on a smaller UBS account while concealing larger accounts in a smaller Swiss bank. A current focus of US prosecution is the use of regional Swiss banks, known as cantonal banks, which have been utilized successfully by tax evaders.

While the terms of the impending amnesty program have not yet been outlined in detail, they are expected to be similar to those of the previous program. However, one authority suggested to the Times that guilty parties might be better served by coming forward even prior to the program’s announcement, as ongoing investigations could reveal the offender’s identity before a voluntary disclosure, potentially voiding the possibility of amnesty.

Guilty plea from Swiss banker could indicate new direction in US fight against illegal tax havens

A Swiss banker and former UBS employee’s recent guilty plea in a US tax case suggests a possible new direction and commitment for the US in its fight against illegal tax havens abroad.

Renzo Gadola was accused of recently travelling to Miami to advise a wealthy American to illegally conceal her money in a regional Swiss bank. The type of bank into which Gadola had intended to conceal the funds is known as a cantonal bank.

Attorney Brian Skarlatos, whose firm represents numerous former UBS account holders, told The Wall Street Journal that the regional cantonal banks were thought, until now, to be places where it was “safe to hide [US] money because those banks do not do business in the United States.”

Gadola’s guilty plea and cooperation with US officials could mark the beginning of further US efforts to root out illegally hidden, taxable US money in cantonal Swiss banks.

New accusation suggests that tax fraud continues in Switzerland

A former UBS employee and Swiss citizen has been accused of advising wealthy Americans to conceal their offshore accounts so as to avoid paying taxes to the US government. The allegations of tax fraud date from 2000 up through this month.

Renzo Gadola, head of RG Investment Partners, was named in a criminal information filed by the United States attorney’s office in Miami. Mr. Gadola and another unnamed co-conspirator (also a Swiss citizen and former UBS employee) are alleged to have advised an American citizen not to participate in the IRS’s voluntary disclosure program and to have later withdrawn the client’s money to conceal any paper trail.

This accusation comes shortly after the end of an over-four-year investigation of UBS banking in Switzerland. Even as American authorities have continued to crack down on tax evasion in overseas accounts, some bankers reportedly have persisted in recommending and providing illegal tax havens for wealthy Americans.

IRS ends civil action against UBS, ending chapter in continued crack-down on tax cheats

The Internal Revenue Service has ended a long-lasting civil action against UBS AG, marking the end of a significant phase of efforts to crack down on tax fraud through hidden foreign accounts. Although the legal action against UBS has been concluded, the IRS plans to use information gathered to pursue U.S. clients of other banks, such as HSBC Holdings PLC, based in London.

The UBS case was brought to a close following the agreement by the Swiss government to provide the names of U.S. customers of UBS in Switzerland. Four thousand such names were given to the IRS following an August 2009 deal, and ultimately 7,500 names are expected to be provided.

In addition to the names procured through the course of the civil action against UBS, the IRS received an additional 18,000 names of U.S. taxpayers with secret accounts abroad since the implementation of a program offering unspecified leniency. While that program has ended, The Wall Street Journal reports that IRS Commissioner Doug Shulman has signaled the possibility of another such program, “although with higher penalties than for the first group.”

IRS to drop suit following Swiss assurance to disclosure names of suspected tax evaders

The Internal Revenue Services has said that it will drop a lawsuit against UBS, the world’s largest private bank, following confirmation from Switzerland that it is on track to produce details for the remaining 2,450 of 4,450 American clients suspected of using UBS accounts for tax evasion. The IRS has received 2,000 thus far.

Although this provides some respite for UBS and the Swiss banking system, the impending disclosures themselves could bring more litigation against those professionals that may have facilitated tax evasion.

William M. Sharp, a tax lawyer who represents a number of former UBS clients, told the New York Times that some Americans among the 4,450 names had hidden accounts of more than $100 million. While it has not happened yet, the IRS has indicated that if all 4,450 names are received by this fall, it may withdraw the John Doe summons, a separate request for 52,000 UBS client names.

France aims to use leaked data to prosecute tax evaders

Details surrounding the acquisition and transfer of client information from HSBC’s Swiss private-banking arm have placed a Franco-Italian computer engineer and colleague at the center of a dispute between Switzerland and France. While Switzerland objects to the use of data that it claims was stolen, France intends to use the data to prosecute potential tax cheats and has even shared the information with other countries.

Although some evidence indicates that the computer engineer and colleague were attempting to sell the client banking information, France insists that it did not pay for the data and rather attained it lawfully. The data was in fact acquired by French authorities acting at the request of a Swiss prosecutor to conduct a search.

Regardless of the details of the data’s acquisition, the release of client information and the ensuing international dispute over legitimacy has, as The Wall Street Journal writes, “rocked the banking world.” Tax evaders in Italy, Spain, and the U.K. may soon face prosecution as a result of this data leak.

I.R.S. achieves victory over tax havens

Recent advances in the I.R.S.’s efforts to prevent tax-evasion among Americans illegally concealing taxable assets in offshore holdings may signal an end to the acceptability of these practices in popular tax havens.

“The Swiss Parliament’s approval of a deal to give the I.R.S. the names on 4,450 American accounts at the Swiss bank UBS is an important victory,” states a New York Times editorial today. Additionally, bilateral tax treaties entered into by the United States, Switzerland, Singapore, Luxembourg and other countries require that certain tax information be disclosed to treaty partners, overriding individual bank secrecy laws.

Further, Congress’s March passage of the Foreign Account Tax Compliance Act will require, beginning in 2013, foreign financial entities to disclose information about American account holders and business owners on penalty of a substantial withholding tax on income from U.S. securities.

Swiss Parliament sides with I.R.S. in deal to expose potential tax evaders

The Swiss Parliament agreed today to uphold an August 2009 arrangement with the United States, whereby UBS, Switzerland’s largest bank, would disclose information on 4,500 accounts held by Americans suspected of tax evasion.

Lynnley Browning of The New York Times reports that “The parliamentary approval was a watershed moment in the history of Swiss private banking, whose tradition of client confidentiality goes back centuries.”

The decision, which represents months of legal and diplomatic efforts, will likely be used as a template to pursue tax fraud and tax evasion perpetrated in conjunction with other banks in Switzerland, such as Credit Suisse and HSBC, as well as operations in such burgeoning tax havens as Hong Kong and Singapore.

UBS, U.S. and Swiss reach deal on releasing names of possible tax evaders

UBS AG and the U.S. and Swiss governments have worked out agreements to settle a dispute over whether the Swiss bank should be forced to disclose the names of 52,000 wealthy American clients suspected of tax evasion, media outlets reported today.

UBS and the two governments have initialed agreements that will "take a little time to be signed in final form," Department of Justice lawyer Stuart Gibson told U.S. District Court Judge Alan Gold during a brief conference call on Wednesday, according to Reuters.

"For U.S. taxpayers it is going to be impossible to hide money in Switzerland and it is just a matter of time that this is the case also for Germans and Britons," Asher Rubinstein, a partner at law firm Rubinstein & Rubinstein, said in a separate story by Reuters.

See also:

- UBS Tax Lawsuit Settled by U.S., Swiss Governments (Bloomberg)

- UBS Welcomes IRS Settlement (Dow Jones Newswires)

UBS fight with IRS convinces Swiss banks to drop U.S. clients

More ripples from the UBS-IRS standoff: Some Swiss banks reportedly aren't accepting or are cutting off U.S. clients out of concern the Internal Revenue Service might get into a similar fight with them over client account information as it has with UBS AG.

More ripples from the UBS-IRS standoff: Some Swiss banks reportedly aren't accepting or are cutting off U.S. clients out of concern the Internal Revenue Service might get into a similar fight with them over client account information as it has with UBS AG.

DowJones Newswires says it's "a sign that UBS AG's high-profile spat with the Internal Revenue Service is chipping away at Switzerland's private banking industry."

The IRS is after information about the UBS accounts of 52,000 U.S. citizens in a major tax-evasion probe, challenging not just UBS but Swiss bank-secrecy laws.

U.S, Switzerland agree to increase the exchange of tax information

The U.S. and Switzerland have reached an agreement to increase the exchange of tax information between the two countries, the U.S. Department of Treasury announced today.

The announcement comes as the IRS continues to pursue its investigation into tax evasion by wealthy U.S. citizens who are clients of Swiss banking giant UBS.

"This treaty will increase our ability to enforce our tax laws and will help bring an end to an era of offshore accounts and investments being used for tax evasion," Treasury Secretary Timothy Geithner said in a statement.

Official signing of the protocol is expected within a few months.