Prosecutors said that Wegelin and the three bankers wooed U.S. clients fleeing UBS, the largest Swiss bank. UBS avoided U.S. prosecution in 2009 by admitting it aided tax evasion, paying $780 million and handing over data on 250 accounts. It later disclosed information on about 4,450 more accounts.
UBS Clients
By attracting clients leaving UBS, Wegelin "opened new undeclared accounts for at least 70 U.S. taxpayers," according to the indictment. The effort to woo UBS clients was backed by Wegelin's senior management, according to the indictment. Wegelin bankers emphasized that because it had no offices in the U.S., it wasn't subject to law enforcement pressure there, prosecutors said.
Phil West, a former international tax counsel at the Treasury Department, said it was "unfortunate" that the Justice Department and Wegelin couldn't reach an agreement short of indictment.
"The Justice Department alleged that Switzerland's oldest bank had tried to capitalize on the misfortunes of UBS and attract the clients UBS was rejecting, and assisting them in doing just what UBS was accused of doing," West said in an e- mail. "If true, this would have made any resolution short of indictment very difficult."
In its Jan. 27 announcement, Wegelin, based in St. Gallen, Switzerland, said its U.S. business, and the risks and responsibilities that go with it, will remain with the current partners. Wegelin, which describes itself as the oldest Swiss bank, didn't disclose the sale price.
Credit Suisse AG, the second-largest Swiss bank, said July 15 that it was a target of a criminal probe by the Department of Justice over former cross-border private-banking services to U.S. customers. On July 21, seven Credit Suisse bankers were indicted on a charge of conspiring to help U.S. clients evade taxes through secret accounts.
The IRS has said 30,000 U.S. taxpayers with offshore accounts have avoided prosecution since 2009 by entering a limited amnesty program, paying back taxes and saying who helped them hide their accounts from authorities. Hundreds of taxpayers in the program have given information to prosecutors that has helped them build criminal cases against bankers and advisers.
The U.S. crackdown against offshore tax evasion has led to criminal charges against at least 21 foreign bankers, advisers and attorneys and at least 40 U.S. taxpayers.
The case is U.S. v. Berlinka, 12-cr-00002, U.S. District Court, Southern District of New York (Manhattan).