US & Switzerland Deferred Prosecution

US & Switzerland Deferred Prosecution 

US & Switzerland Deferred Prosecution: Several Swiss Foreign Financial Institutions have entered into Deferred Prosecution Agreements with the U.S. The purpose of the Deferred Prosecution Agreement is to entice Swiss Banks and Financial Institutions to proactively get into compliance  with the US Government, in order to both avoid prosecution and provide the US with the names of US Person Account Holders with numbered bank accounts and other secret accounts at these banks who have not reported their accounts to the IRS. In 2021, the latest bank in Switzerland (Rahn + Bodmer) has succumb to the pressure, and entered into a deferred prosecution Agreement.

As provided by the DOJ:

Zurich’s Oldest Private Bank Admits To Helping U.S. Taxpayers Hide Offshore Accounts From IRS

• Rahn+Bodmer Enters into Deferred Prosecution Agreement for Criminal Misconduct; Agrees to Pay $22 Million

• Audrey Strauss, United States Attorney for the Southern District of New York, Stuart M. Goldberg, Acting Deputy Assistant Attorney General for the Department of Justice’s Tax Division, and James C. Lee, Chief of the Internal Revenue Service-Criminal Investigation (“IRS-CI”), announced the filing of a criminal Information against RAHN+BODMER CO. (“R+B”), a financial institution located in Zurich, Switzerland.  The Information charges R+B with one count of conspiring to help U.S. accountholders evade their U.S. tax obligations, file false federal tax returns, and otherwise defraud the Internal Revenue Service (“IRS”) by hiding hundreds of millions of dollars in offshore bank accounts at R+B.

• Ms. Strauss, Mr. Goldberg, and Mr. Lee also announced a deferred prosecution agreement with R+B (the “Agreement”), under which R+B admits to its unlawful conduct in assisting U.S. accountholders in violating their legal duties.  R+B’s admissions are contained in a detailed Statement of Facts attached to the Agreement.  The Agreement requires R+B to provide ongoing assistance to the Department of Justice and to pay a total of $22 million in restitution, forfeiture, and penalties.  If R+B abides by all of the terms of the Agreement, the Government will defer prosecution on the Information for three years and then seek to dismiss the charge.

• Manhattan U.S. Attorney Audrey Strauss said:  “As Rahn+Bodmer now admits, it aided U.S. taxpayers in evading their tax responsibilities to the tune of more than $16 million.  This venerated banking institution knowingly offered banking services that assisted its U.S. customers in evading their tax obligations, and affirmatively schemed to conceal from the IRS the assets and income of U.S. accountholders.  Now Rahn+Bodmer will pay $22 million and commit to helping the Justice Department uncover tax evasion by U.S. customers.”

• Acting Deputy Assistant Attorney General Stuart M. Goldberg said:  “Under today’s resolution, Rahn+Bodmer is paying $22 million for helping U.S. accountholders evade their taxes, and  has agreed to fully cooperate with investigations into those taxpayers.  With the April 15 tax filing date fast approaching, there is a clear message for those intending not to pay their fair share – nothing remains hidden forever.”

• IRS-CI Chief James C. Lee said:  “Through a years-long scheme, the R+B bank hid the assets of U.S. accountholders to shield them from their tax obligations.  Today’s admission and agreement provide a clear path to recovery of funds owed to the U.S. government, and sends a strong signal that offshore accounts are not beyond the reach of special agents with IRS CI.”

• According to the Agreement, the accompanying Statement of Facts, and other documents filed today in Manhattan federal court:

• From at least in or about 2004 and continuing until at least in or about 2012, R+B conspired with certain of its U.S. accountholders and others to defraud the United States with respect to taxes, file false federal tax returns, and commit tax evasion.  R+B’s bankers assisted U.S. accountholders in concealing their ownership and control of assets and funds held in undeclared R+B accounts, which enabled those U.S. accountholders to evade their U.S. tax obligations.  R+B admitted to holding undeclared accounts on behalf of approximately 340 U.S. taxpayers, who collectively evaded approximately $16.4 million in U.S. taxes between in or about 2004 and in or about 2012.  The assets under management that R+B held for undeclared U.S. accountholders increased from approximately $391 million in 2004 to approximately $550 million in 2007, its peak year for undeclared assets under management.

• In furtherance of the scheme to help U.S. taxpayers hide assets from the IRS and evade taxes, R+B undertook the following actions, among others:

  • • R+B opened “numbered” or “pseudonym” accounts for U.S. accountholders in order to reduce the risk that U.S. tax authorities would learn their identities.

    • R+B opened and maintained accounts for U.S. accountholders in the names of non-U.S. corporations, foundations, trusts, or other legal entities, thereby helping U.S. taxpayers conceal their beneficial ownership of the accounts.

    • R+B agreed to hold bank statements and other account-related mail in Switzerland, rather than send them to the U.S. accountholders in the United States, which helped ensure that documents reflecting the existence of the accounts remained outside the United States and beyond the reach of U.S. tax authorities.

    • After Liechtenstein and the United States signed a Tax Information Exchange Treaty in December 2008, R+B transferred the undeclared assets of certain U.S. taxpayers from accounts held in the names of sham foundations organized under the laws of Liechtenstein to new accounts held in the names of new sham foundations organized under the laws of Panama, in an effort to further conceal the accounts from U.S. tax authorities.

    • R+B allowed U.S. accountholders and third-party asset managers to make withdrawals by check from undeclared accounts in amounts of less than $10,000, in an apparent attempt to conceal transactions from U.S. authorities.

    • On occasion, R+B opened accounts for U.S. taxpayers who were exiting UBS AG and other Swiss banks, and allowed these U.S. taxpayers to continue to conceal their undeclared assets at R+B.  R+B additionally opened “escrow” accounts on behalf of a Swiss attorney to facilitate the transfer of undeclared assets of U.S. accountholders that had been converted to gold and other precious metals held in a vault at UBS.

    • R+B helped U.S. accountholders to repatriate funds to the United States in a manner designed to ensure that U.S. tax authorities did not discover the undeclared accounts, including by transferring the funds of one U.S. accountholder in increments of approximately $100,000 to another Swiss bank before the U.S. accountholder routed the funds to a diamond dealer in Manhattan, where the U.S. accountholder ultimately received them.

    • R+B, through its bankers, made regular visits to the United States to solicit, open, and service undeclared accounts of U.S taxpayers.

• Under today’s resolution, R+B is required to cooperate fully with the Department of Justice and affirmatively disclose new information it may later uncover regarding U.S.-related accounts.  R+B is also required to disclose information consistent with the Department’s Swiss Bank Program relating to accounts closed between January 1, 2009, and December 31, 2019.

• As part of the resolution, R+B will pay a total of $22 million, which has three parts.  First, R+B has agreed to pay $4.9 million in restitution to the IRS, which represents the estimated unpaid taxes resulting from R+B’s participation in the conspiracy.  Second, R+B has agreed to forfeit $9.7 million to the United States, which represents the approximate gross fees that R+B earned on its undeclared U.S.-related accounts between 2004 and 2012.  Finally, R+B has agreed to pay a penalty of $7.4 million.

• The penalty takes into consideration that R+B conducted a thorough internal investigation and provided a substantial volume of documents to the Department, as well as implemented remedial measures to protect against the use of its services for tax evasion in the future.

Current List of Swiss Deferred Prosecution Agreements

Here is a list of the most recent Swiss Deferred Prosecution Agreements (the DOJ page has not been updated yet to include Rahn + Bodmer.

Deferred Prosecution Agreements are Still Active

In conclusion, the US Government still pursues foreign banks and other financial institutions and pressures them to get them to enter into deferred prosecution agreements in order to uncover US Account Holders with secret or hidden accounts. If you are in this situation, you may consider entering into an offshore disclosure before it is too late.

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