View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
  1. News
February 3, 2012updated 04 Apr 2017 3:43pm

US authorities charge Wegelin in $1.2bn fraud case

US authorities have charged Switzerlands oldest private bank Wegelin with helping US taxpayers hide more than $1.2bn from the Internal Revenue Service (IRS) The indictment by the US Department of Justice (DOJ) is the first time an overseas bank has been charged with facilitating US tax fraud

By Carlos Martin

US authorities have charged Switzerland’s oldest private bank Wegelin with helping US taxpayers hide more than $1.2bn from the Internal Revenue Service (IRS). They have also seized $16m in assets held in a US-based Wegelin account.

The indictment by the US Department of Justice (DOJ) is the first time an overseas bank has been charged with facilitating US tax fraud.

The civil case follows on from the criminal charges brought in January against three of Wegelin’s Zurich-based client advisers: Michael Berlinka, Urs Frei and Roger Keller. 

 

Accused of courting ex-UBS business

The US Attorney’s Office indictment accused the trio of trying to capture business lost by UBS and another unnamed Swiss bank, likely to be Credit Suisse.

The indictment alleged that Berlinka, Frei and Keller opened and serviced dozens of undeclared accounts for US taxpayers in 2008 and 2009 after it was reported that the IRS was investigating UBS for helping US taxpayers evade taxes and hide assets in Swiss accounts.

Berlinka, Frei and Keller are alleged to have told clients that their undeclared accounts would be safe at their bank because it had a long tradition of secrecy and had no offices outside Switzerland.

 

Scheme used personal email accounts

According to the DOJ, Wegelin allegedly created a scheme that allowed its US taxpayer-clients to obscure the source of their undeclared accounts in Switzerland and access them in US through a correspondent bank account that it held at UBS in Connecticut.

 

The DOJ also alleged that Wegelin:

 

  • opened and serviced undeclared accounts for US taxpayer-clients in the names of sham corporations and foundations formed under the laws of Liechtenstein, Panama, Hong Kong;

 

  • permitted certain US taxpayer-clients to open and maintain undeclared accounts at Wegelin using code names and numbers to minimise references to the actual names on Swiss bank documents;

 

  • ensured account statements and other mail for US taxpayer-clients were not mailed to them in the US;

 

  • communicated with some US taxpayer-clients using their personal email accounts to reduce the risk of detection by law enforcement.

 

Regulatory pressure forces sale

Pressure from US authorities in connection with the alleged tax fraud forced Wegelin to sell its non-US private banking business to Raifeissen Group last week.

Wegelin & Co will now be run as an independent private bank, Notestein Private Bank, within the Raifeissen group.

Wegelin had not responded to PBI’s request for comment at the time this story was posted.

 

NEWSLETTER Sign up Tick the boxes of the newsletters you would like to receive. A weekly roundup of the latest news and analysis, sent every Wednesday. The industry's most comprehensive news and information delivered every month.
I consent to GlobalData UK Limited collecting my details provided via this form in accordance with the Privacy Policy
SUBSCRIBED

THANK YOU

Thank you for subscribing to Private Banker International