Dreyfus Sons & Co. has operated for two centuries as a private Swiss bank, catering to Jewish clients who wanted to hide assets from the Nazis during the 1930s and World War II.
More recently, it helped U.S. clients hide assets from the Internal Revenue Service by concealing their true ownership with offshore entities and by storing gold and cash in a segregated area of its vaults, according to a non-prosecution agreement, released Tuesday, that the bank reached with the Justice Department.
Dreyfus avoided U.S. prosecution by agreeing to pay $24.2 million and admitting it “did not implement strict enough controls” to ensure that its American clients paid their taxes, the agreement says.
George Clarke, a lawyer for Dreyfus, declined to comment on the accord.
The U.S. announced two other pacts Tuesday, with Credit Agricole SA’s Swiss unit, which agreed to pay $99.2 million, and Baumann & Cie., which is to pay $7.7 million.
Gold Rush
In all, 64 Swiss banks have agreed to pay almost $742 million in penalties this year. While many of the other accords spell out classic Swiss tactics, like numbered accounts and off-the-shelf corporations to help clients cheat the IRS, none detail the use of gold storage like the Dreyfus pact.
Two decades ago, Dreyfus agreed to serve as a custodian for gold and cash held by a Swiss-based British Virgin Islands entity -- 315 accounts valued at $440 million, in all. Some of those accounts should have been disclosed to the IRS and weren’t, until clients came forward to tell the tax agency about them to avoid prosecution, according to the bank’s statement of facts in the agreement.
“Although some of the gold and cash client base maintained their accounts because of fears related to the collapse of the banking system,” others “show strong indicia of the concealment of assets,” the agreement says.
The British Virgin Islands entity had an account at the bank, with U.S. customers holding sub-accounts, according to the pact. The sub-accounts were often held in the names of offshore trusts, foundations or corporations.