By attracting ex-UBS clients, Wegelin opened new undeclared accounts for at least 70 U.S. taxpayers, according to the indictment. Most of those accounts were given an internal code of “BNQ,” indicating the accounts were undeclared.
“Wegelin became a haven for U.S. taxpayers seeking to circumvent the tax code by hiding their money in secret offshore accounts, and the bank willfully and aggressively jumped in to fill a void that was left when other Swiss banks abandoned the practice due to pressure from U.S. law enforcement,” Bharara said.
Top Management
The effort to woo UBS clients was backed by Wegelin’s senior management, according to the indictment.
Earlier in the case, Wegelin declined to answer the charges or appear in court, prompting Rakoff to declare the bank a “fugitive.”
“The Justice Department is sending a message that not every bank gets a deferred-prosecution agreement,” said Larry Campagna, a Houston tax attorney at Chamberlain, Hrdlicka, White, Williams & Aughtry. “A deferred-prosecution agreement essentially says that if you keep your nose clean going forward, we won’t prosecute you for what you did in the past.”
The U.S. and Switzerland are in talks to resolve a U.S. probe of offshore tax evasion. Wegelin was one of at least 11 banks under criminal investigation by the Justice Department’s tax division.
New Owner
Wegelin, founded in 1741, which had $25 billion in assets in December 2010, announced on Jan. 27 that it agreed to a sale to Switzerland’s Raiffeisen Group. In the announcement, Wegelin said any liability for the firm’s U.S. business would remain with the current partners. Wegelin didn’t disclose the sale price.
“Wegelin believed that, as a practical matter, it would not be prosecuted in the United States for this conduct because it had no branches in the United States and because of its understanding that it acted in accordance with, and not in violation of, Swiss law and that such conduct was common in the Swiss banking industry,” Bruderer told Rakoff in today’s hearing.