Tag Archives: Wegelin

And The Walls Came Tumbling Down – Switzerland Helping IRS Find Tax Evaders

30 Aug

swiss flagNo more small potatoes million dollars here and million dollars there indictments. The big times will roll. The biggest net is now being thrown and the biggest fish are about to be caught. This is a big step in tightening the noose around the tax evaders. And I do not hesitate to predict, based on who these criminals have been in the past, that they WILL NOT BE EXPATS LIVING AND WORKING ABROAD. They will be prominent, seemingly law abiding citizens living in the United States, who secretly stash their illegally untaxed dollars in accounts outside the United States

Switzerland and the United States reached a watershed deal on August 29, 2013 to punish Swiss banks that helped wealthy Americans stash money in hidden offshore accounts, closing the door on an era of bank secrecy and tax evasion.

The formal agreement, which was announced on Thursday by the Justice Department in Washington and will be presented by Swiss authorities on Friday, outlined formulas for Swiss banks to pay up to billions of dollars in fines and disclose information about American account holders, a joint statement said.

The deal calls for stiff measures that lift the veil of Swiss secrecy. Banks will be required to provide the details on accounts in which American taxpayers have an interest through treaty channels, inform on other banks that transferred money into secret accounts or that accepted money when secret accounts were closed, disclose all cross-border activities, and close the accounts of Americans who are evading taxes.

Significantly, the deal does not cover 14 Swiss banks and Swiss branches of international banks that are under criminal investigation by the United States authorities, including Credit Suisse, Julius Baer and several regional banks. Instead, it effectively covers the rest of the Swiss banking industry, home to a tradition of bank confidentiality and laws that have not considered tax evasion a crime. By some estimates, Switzerland is home to more than $2 trillion in overseas deposits.

“This program will significantly enhance the Justice Department’s ongoing efforts to aggressively pursue those who attempt to evade the law by hiding their assets outside of the United States,” Eric H. Holder Jr., the attorney general, said in a statement.

He added that the program, outlined over 11 pages, “is intended to enable every Swiss bank that is not already under criminal investigation to find a path to resolution.”

The agreement said that Swiss banks that follow the program will be eligible to enter non-prosecution agreements that do not involve guilty pleas or criminal penalties.

Mr. Holder’s statement suggested that some unidentified Swiss banks were not cooperating and thus could face indictment. The agreement, he said, “creates significant risks for individuals and banks that continue to fail to cooperate, including for those Swiss banks that facilitated U.S. tax evasion but fail to cooperate now, for all U.S. taxpayers who think that they can continue to hide income and assets in offshore banks, and for those advisers and others who facilitated these crimes.”

The agreement will also turn up the heat on American clients who have not already entered voluntary disclosure programs with the Internal Revenue Service.

Banks that enabled tax evasion after the United States authorities began their investigation will face more severe punishment. Banks that held accounts as of Aug. 1, 2008, will pay a fine equal to 20 percent of the top dollar value of all non-disclosed accounts. The fine increases to 30 percent for secret accounts opened after that date but before March 2009, and to 50 percent for accounts opened after that.

American officials were angered that some Swiss banks accepted clients who were fleeing UBS, the largest Swiss bank, about 2009, when it averted indictment by reaching a $780 million deferred prosecution agreement with United States officials.

The Justice Department has not put a final tally on the amount that Swiss banks will pay in fines under the deal, an American government official said, in part because it does not yet know the number. Both sides signed the final deal after the Swiss Federal Council on Wednesday instructed the country’s finance officials to put the finishing touches on the agreement.

Switzerland has been locked in thorny negotiations with Washington over the tax evasion issue since 2009. Scores of Swiss bankers, lawyers and American taxpayers have been indicted in recent years, including Wegelin & Company, the oldest Swiss bank, which went out of business. Negotiations took a turn for the worse in recent years amid conflicts between Justice Department officials and Michael Ambuehl, the former top Swiss negotiator who stepped down in May.

A previous attempt by the Swiss government to arrange a deal failed in June when Parliament balked, reflecting concerns about privacy and complaints that the agreement was being negotiated in secret. Legislators then called on Eveline Widmer-Schlumpf, the Swiss finance minister and president of the Federal Council, to work out an agreement with Washington.

A stumbling block may still exist. The deal calls for both sides to use information exchange channels outlined in existing treaties. But the United States has not yet ratified a 2009 treaty protocol that would ease that disclosure, with Senator Rand Paul, Republican of Kentucky, blocking approval, arguing that it would give the I.R.S. too much power and violate Americans’ right to privacy.

The IRS Continues to Connect The Dots

25 Aug

IRS vs EXPATS connect the dotsThe IRS has caught another thief, and this time, another big one who is the lynchpin to many millions of dollars being hidden by Americans who are tax evaders. But before we address this group of thieves, let me emphasize that they are, as far as is know to me, NOT EXPATS. They are American Persons who reside in America. Nonetheless, their attempted, and up until now successful, evasion of taxes by using foreign bank accounts, will result in the IRS more aggressively pursuing the thieves and in the process, cause we EXPATS a great deal of grief through FATCA, FBAR, and the like. To be truthful, there is, that we know of, one expat involved in this case, and that is the lynchpin himself, who holds dual citizenship in Switzerland, where he lives, and in the United States.

According to the indictment listed on the Federal Court website, Edgar Paltzer, this Swiss lawyer has pleaded guilty to charges of conspiring to defraud the United States of America in collection of revenue, stating that he “intentionally formed foundations and corporations which permitted these U.S. Taxpayers to hide from the IRS these accounts and the income earned in these accounts. I assisted these taxpayers in violating their legal duties. I was aware that this conduct was wrong.” When some Swiss banks were closing offshore accounts, he helped these thieves move their money to his bank, which is only referred to as Bank No. 1 in the indictment. Wouldn’t you know it? Paltzer is the law partner of the founder and chairman of the board of directors of Swiss Bank No.1. And 44% of the Assets Under Management of this bank belonged to U. S. citizens living in the United States.

Paltzer had control of, and access to, bank vaults in Zurich, where U.S. taxpayers had stashed assets and valuable. He helped dozens of US Persons maintain undeclared Swiss accounts with millions and millions of dollars in undeclared assets. The indictment also includes another Swiss Bank No 1 official Stefan Buck who told one of these American thieves that he did not need to reveal his account to U.S. Authorities because Swiss Bank No 1 operated exclusively in Switzerland and the U.S. tax rules did not apply to Swiss Bank No 1.

We know about Wegelin, the Swiss bank that was indicted for helping American thieves evade taxes. But Swiss bank No. 1 was part of this web of thieves. One of Wegelin’s partners was a managing director of Swiss Bank No. 1. Wegelin provided “back office” transfers for the thieves who had set up sham foundations set up in Liechtenstein, Panama, British Virgin Islands, among other places, in order to conceal the ownership of these accounts by the thieves, as well as income generated in these accounts. On July 31, Liechtensteinische Landesbank AG, the oldest bank in Liechtenstein, avoided prosecution by the United States by agreeing to pay $23.8 million and admitting it helped clients hide as much as $341 million from the IRS.

It is quite clear that the American thieves who were the clients of Paltzer and Buck will be arrested, indicted, tried, fined and no doubt, some even imprisoned. We hope that the IRS will realize that there are two types of US Persons that should not be lumped together. The first are typified by these clients of Paltzer and Buck are Americans who live in the United States and send their illegal millions of dollars to hide in Swiss banks and other offshore accounts. These are the thieves that are evading taxes and defrauding the United States of America of revenues. The second type of US Person is those Americans who live and work overseas and are referred to as EXPATS. This type is law abiding and does not willfully conceal income in an attempt to evade taxes. As long as this differentiation is not made, many small fish EXPATS will continue to be hounded and harassed by the IRS. Here, some of the big fish thieves were caught. But how many continue to stay out of the reach of the IRS is completely unknown. We applaud the efforts of the US authorities who flush out the big fish, the non-EXPATS who live in the United States and send their stolen dollars out of the country in an attempt to defraud the country of revenues that are due to it.

Link for indictment: