U.S. Justice Department: Switzerland's Largest Private Bank Is A 'Fugitive' From Justice

NEW YORK -- The U.S. Justice Department called Switzerland's largest private bank a fugitive from justice on Friday after it didn't send any representatives to a court hearing in New York, where it has been charged with conspired with American clients to hide $1.2 billion from the Internal Revenue Service.

Wegelin & Co. is accused of helping at least 100 U.S. clients conceal huge sums of money from the IRS in overseas accounts. Federal prosecutors said the bank recruited American customers who were concerned about possible prosecution for tax violations at home, including some that had already pulled money out of other Swiss banks because of growing pressure from U.S. law enforcement. Three of the bank's client advisers were indicted in January. The bank was added as a defendant in the case on Feb. 2

U.S. officials, however, have yet to find a way to move the case forward. The three Wegelin advisers charged in the case, Michael Berlinka, Urs Frei and Roger Keller, have not been arrested and the Justice Department has decided that any attempt to extradite them from Switzerland is unlikely to succeed.

The bank was summoned to appear before a federal judge in New York on Friday at 3 p.m., but neither a bank officer nor a lawyer showed.

In a statement issued in Switzerland after the court hearing, the bank said it had not been properly served with the criminal summons, and was therefore under no obligation to appear in court.

As for the charges, the bank suggested that there was a conflict between US and Swiss law.

"The circumstances create a clear dilemma for Wegelin & Co: If it were to adhere to current US legal practice aimed at Swiss banks, it would have to breach Swiss law," the statement said.

The bank added that it would "make every effort to resolve this matter within the boundaries of respectful cooperation."

It is unclear what prosecutors can do next. Wegelin doesn't have an office in the U.S. Federal authorities have frozen $16 million that the bank had in a correspondent account in the U.S., but that amount is tiny compared to the large sums involved.

U.S. District Judge Jed Rakoff, who is presiding over the case, asked prosecutors to make a proposal on how to move the prosecution forward, and suggested involving the State Department, but the hearing ended without any immediate resolution.

Comments

[deluxebrand]

03:41 PM on 02/13/2012

good, that's where i keep my cash....

[Olderandwiser55]

01:59 PM on 02/13/2012

People are saying the US is "over-reaching" but why would Wegelin have an account in the US at...UBS-of all banks? The US, of course, would catch that.

Wegelin & Co., the 270-year-old private bank, became the first Swiss lender to face criminal charges in a broadening U.S. crackdown on offshore firms suspected of helping Americans evade taxes.

Wegelin helped Americans hide more than $1.2 billion in assets and evade U.S. taxes, according to an indictment filed yesterday in federal court in New York. The new charges expand on earlier ones filed Jan. 3 against three bankers at Wegelin’s Zurich branch accused of conspiring to help U.S. clients cheat on their taxes.

http://www.bloomberg.com/news/2012-02-02/swiss-private-bank-wegelin-co-charged-in-u-s-with-aiding-tax-evasion.html

The Swiss don't want to extradite? Fine-they can't do business in or with the US. If their only business is hiding $$ from the IRS, they need a new business model.

[Michael GE]

03:47 PM on 02/13/2012

"The Swiss don't want to extradite?"

Here you go astray. It hasn't even much to do with "over- reaching". The simple point is: Like in many continental European constitutions, it is simply outlawed to deliver one's own nationals to a foreign jurisdiction.
And that is a good and well thought through principle. Nations exist to protect their people/ nationals. That's the whole point of getting together as a nation. Besides that, where would we end up without such principles: Granting any foreign request for extradition because one of our own maybe violated a law that doesn't even exist here?
And if there is (usually the legal basis for any extradition agreement) dual criminality, why doesn't the US make their case in front of a Swiss Court. Because - this is the other side of the same medal that made us establish a "no extradition" principle - laws ensure that criminal acts by nationals can be prosecuted even if they have been committed abroad.
The probably most famous example is Polanski. He would long have faced trial if the US didn't insist to try him in the US. What he did, although done abroad, is an act that could be prosecuted both in France and Switzerland.

[Michael GE]

03:57 PM on 02/13/2012

The US "over- reach" is a long line of bills/laws passed in the US that superimposes US law over other sovereign laws. For example, when the US didn't get the sanctions they sought in the UN Security Council. It is one thing, and entirely legitimate, if the US unilaterally decides to enact more sanctions. It is over-reach if, in order to do so, the US just does pass laws that make others involuntary enact the sanctions.

But also, consider how the US (re)acts in reverse: The outrage when, after the SWIFT servers were relocated to Europe, the only data they could get were those that are in compliance with European data privacy laws.
Or, consider the case of several CIA operatives that are sought by Germany for trial. Does the US extradite them?
Isn't it even in your eyes a double standard when the US postures in cases of US interests but denies the very same principle in reverse when other sovereign countries are asking the US to act in reciprocity?

[Olderandwiser55]

04:37 PM on 02/13/2012

You missed the entire point. Stick to the topic or you confuse issues.

US authorities seized $16 million in Wegelin’s correspondent account at UBS AG in Stamford, Connecticut. That complaint alleges that Wegelin and other Swiss banks used the account to “launder” undeclared funds for U.S. clients and hide them from the IRS.

The problem was that Wegelin had a US account-they should have known better. They had the account because USB was shedding accounts after their little run-in....to make it easier to transfer accounts to Wegelin.

[Olderandwiser55]

01:27 PM on 02/13/2012

NEW YORK -- The U.S. Justice Department called Switzerland's largest private bank a fugitive from justice on Friday after it didn't send any representatives to a court hearing in New York, where it has been charged with conspired with American clients to hide $1.2 billion from the Internal Revenue Service.

Mitt, I hope you moved your money-we know you moved it from UBS. It's almost like there's no place a rich guy can hide money these days! Lol-Go get 'em DOJ

[ezer]

05:37 PM on 02/13/2012

Romney did nothing illegal. I don't like the guy particularly but his Swiss account was managed by a SEC registered Swiss institution that deals with US citizens and residents that is completely legal. We know about his account because he paid taxes on it.

[Olderandwiser55]

08:17 PM on 02/13/2012

He reported and paid taxes during the "amnesty period." Which is interesting. Not illegal but strange.

[donald meyer]

09:12 AM on 02/13/2012

fascists are only fascists when they of another opinion or tribe. What right do we have going into another country and making demands?

[2lib4oh]

05:05 AM on 02/13/2012

Banking giant built on profits of gold teeth.

[Michael GE]

03:58 PM on 02/13/2012

Mysticism.

Of all countries, I suppose, Switzerland with their strong elements of direct democracy has the highest degree of legitimacy for their laws and constitution.

[ezer]

05:23 PM on 02/13/2012

After millions spent investigating the issue, including analyzing chemically batches of Swiss gold, there is no evidence that the gold came from concentration camp victims.

[2lib4oh]

07:51 PM on 02/13/2012

http://www.claimscon.org/index.asp?url=swiss/settlement

[zinxeb]

10:21 PM on 02/12/2012

Send in a couple of drones to flatten the banks. The cost to the Swiss to rebuild them would at least give us a bit of satisfaction, and the American millionaire's money would go up in smoke...more satisfaction.

But we would have to disable their navy first!

[Michael GE]

04:00 PM on 02/13/2012

Exactly that mentality, that "Do as we say or else ...", "Sovereignty and human rights are for US passport holders only" is exactly why you have gained such a high reputation over the past two or three decades.

[zinxeb]

04:13 PM on 02/13/2012

Hoo, boy! Don't you have a sense of humor?

[zinxeb]

07:58 PM on 02/13/2012

I always felt that the 132B gold mark reparations that Germany was penalized for after WW1 led to the rise of the Nazi party, and all of the suffering that followed...and I know that when a country is in a financial depression or recession, it makes people mean and easy to manipulate...and I see signs of that happening today in America.

It also happened when the Twin Towers came down in New York in 2001. Everyone wanted to "kick ass" somewhere, so Iraq was the victim...all of that BS about "weapons of mass destruction"...again, with all of the suffering that followed.

I don't believe in the republican neocon spiel of American Exceptionalism, and their idea that we rate because we're rich, but I don't make policy and only my one little vote gives me a voice (except when I can sound off here)! I think that the reason that the US is given so much leeway is because of our money, which is power. You don't count for much, whether you're a country or a citizen, if you don't have money.

But you know what's funny? None of it means anything...not the economy...not foreign policy...not anyone's exceptionalism...or who wins...or who loses, if nothing is done about the most important issue of our time...the environment.

[ezer]

06:04 PM on 02/13/2012

Why do you suggest such a thing? Switzerland and the US have been allies for decades investing in each others economy. On the diplomatic side, Switzerland represents the US interests in Iran.
Nobody defends Wegelin and many Swiss and Swiss politicians are appalled by the behavior of that bank and especially by the behavior of one of the partners, Dr.Hummler.

[zinxeb]

06:40 PM on 02/13/2012

Well, our foreign policy under the republican neocons has irritated everyone else, so we might as well start irritating our allies and neutral countries...especially if the neocons get another 4 or 8 years. You know, it won't take much to go from "Bomb Iran" to "Bomb Pakistan" to "Bomb Switzerlan"!

[zinxeb]

08:46 PM on 02/13/2012

Did Wegelin misbehave, or is that what Swiss banks are supposed to do? I was always under the impression that a Swiss bank account was a place where people could hide their money so they wouldn't have to pay taxes. Weren't the Swiss banks prosperous because of the confidentiality that they provided for their customers?

[MichaelMcKLA]

04:51 PM on 02/12/2012

It's time to move my last $74.13 into that bank for safekeeping.

[Louis Sipher]

03:34 PM on 02/12/2012

Sanctions! We need to punish those that evade taxes and screw our country. This Swiss need to comply.

http://online.wsj.com/article/SB10001424052970203537304577029910012951288.html
http://news.bbc.co.uk/2/hi/124540.stm

[Flight]

12:24 PM on 02/12/2012

The Swiss bank is no more of a 'fugitive' than the lot of Wall St. banks, along with the Fed, that are running and ruining our country. The criminals are still be allowed to do their jobs at screwing us with the govt's blessing.

[Olderandwiser55]

01:29 PM on 02/13/2012

Not exactly true. Romney moved his money from UBS bank for a reason...

[Rochelle MacDonald]

12:23 PM on 02/12/2012

Even if nothing happens, this incident will make it unattractive for Swiss banks t do business with Americna clients. They may even change their business policy to exclude Americans entirely.

[aforbes808]

03:00 PM on 02/12/2012

Not likely. It's worth the risk. Especially, when no one can touch you.

[Michael GE]

03:44 PM on 02/12/2012

see below please. It is already happening.

[Michael GE]

03:38 PM on 02/12/2012

Already happened as of 01/01/2012

http://www.spiegel.de/international/business/0,1518,803742,00.html

"Americans in Europe may have difficulties finding banks who want their business."

"several European banks have elected to no longer serve American securities investors due to stricter reporting requirements pushed through last year" "The reason for the sudden reticence to serve American clients is the Foreign Account Tax Compliance Act (FATCA)" "estimated that total cost of compliance in Germany alone could amount to €10 billion. Furthermore, some German privacy laws may actually prevent some institutions, particularly insurance firms, from compliance"

"HypoVereinsbank has informed its customers that it will no longer offer certain services to its US-based clients or to US citizens"

"Deutsche Bank told the paper that it already cancelled such accounts held by American citizens in the middle of 2011"

"Commerzbank, is considering a similar move"

"British banking giant HSBC has also reported that it will no longer serve US investors as has the Swiss bank Credit Suisse"

[ezer]

04:55 PM on 02/12/2012

Yes. It is even affecting people that are accidental Americans. People who have never lived in the US, sometimes even do not speak English, but that have one American parent or where born in the US when their foreign parents were students for example.
They have their bank accounts closed and their mortgage canceled.

[atexasdem]

10:00 AM on 02/12/2012

All this secret Swiss bank account stuff is so out of date. If you really want to learn where the secret bank accounts are find out where the Drug Lords and The foreign dictators hide their money. If your a drug lord or a Middle East or African despot dictator having billions secretly stashed is mandatory. Countries like Panama, Cayman Islands and others with major secret depositors are in no way going to cooperate with the American IRS. All this Swiss bank account stuff is pure politics. You really want to see the secret accounts look elsewhere except that's just not going to happen.

[lonbwoy]

01:32 PM on 02/12/2012

You are correct, there is probably more money in the carribean than switzerland now and its easier to hid it there.

[Olderandwiser55]

01:42 PM on 02/13/2012

No, Romney moved his money from UBS in 2010. Many UBS customers moved accounts to this "private bank". Wegelin had an account in Connecticut-in UBS.

And Panama-the new "free trade" agreement includes banking transparency. Thus, the desperation on the right. No place to hide...

[MANOFCOMMONSENSE]

09:56 AM on 02/12/2012

If i was the Swiss Government.. I would ask for a trade.. Bush/Shady for the Bankers... Hell that cost America in the Trillions

[Elyriaohio]

07:38 AM on 02/12/2012

The 1% makes socialism look appealing. Karl Marx would be proud. The very thing the GOP rants about, they endorse with their policies.

[AlanBannacheck]

01:54 AM on 02/12/2012

This whole conundrum begs the question of whether Switzerland would be so successful without such slack bank rules. It is unfortunate that some of our fellow citizens, especially the very wealthy ones, would avoid paying taxes despite the fact they would hurt the least. For those of you like me, who are required to pay "payroll taxes", we could actually use the extra funds for something like being able to eat more (I only consume one meal per day).

[ezer]

02:04 AM on 02/12/2012

I wonder if we are missing the bigger picture. One of our states conducts massive off-shore banking: Florida. I haven't heard the people here being outraged. The US has a banking system not unlike that of Switzerland with secretive off shore accounts (as long as it is owned by a non-US person or entity). Billions of "dirty" money pour into these accounts from Latin America, Asia and the Middle East -tax free.
The obsession is with Switzerland when even according to a US senate report, there is at least $1,200 billion stashed abroad by US people but less than $30 billion in Switzerland according to the same report. So you wonder why the US is ignoring the obvious (Singapore, Hong Kong, Panama etc...). But I guess Switzerland has no ally and is not strategic.

[AlanBannacheck]

02:31 AM on 02/12/2012

Good Point. I personally am in awe over their policy of neutrality for i possess such idealism

[collettethehedgehog]

04:39 AM on 02/12/2012

Switzerland was very poor for most of it's 400 years of democracy. So poor that the only thing they had to sell were it's young men as mercenaries for other countries armies. There seems to be a misconception that the only reason people bank with Switzerland is to hide money. The fact is the Swiss Franc which is backed by gold is very attractive to those who want to keep their money safe. The hidden accounts became a by-product because the Swiss believe very strongly in minding their own business. However for years they have been looking at money that might be illegal and turning it out. Most tax dodgers and money laundering has moved to places like the Cayman islands for that reason. This is rather a matter of going after Switzerland because people perceive it as the problem and the DOJ perceives it as vulnerable.

[ezer]

05:13 AM on 02/12/2012

True. It is an easy target. Nobody is going to feel bad for them and defend them. Not the EU for sure thy did not join.The UK is rejoicing as they could eliminate a competitor, using Guernsey and the channel islands as captive offshore center.
It is interesting that Luxembourg and Austria that are tax havens and part of the EU but have been spared by be benevolent United States. Same for Hong Kong that has a powerful protector.

[No Can Do]

12:06 AM on 02/12/2012

If those banks rat me out I'll withdraw every billion.