US indicts Swiss bank on tax charges

The United States has indicted the oldest bank of Switzerland on charges of conspiracy to hide more than USD 1.2 billion.

Significantly, this is the first time an overseas bank has been charged by the US for allegedly facilitating tax fraud by US taxpayers; which comes at a time when a country like India is struggling to address the issue of billions of Indian rupees stashed in various Swiss banks.

The Justice Department yesterday announced that it has also seized more than USD 16 million from Wegelin & Co's correspondent bank account in the US, in accordance with a civil forfeiture complaint and seizure warrant.

Wegelin, founded in 1741, is Switzerland's oldest bank. "As alleged, Wegelin Bank aided and abetted US taxpayers who were in flagrant violation of the tax code," said Preet Bharara, US Attorney for the Southern District of New York.

"And they were undeterred by the crystal clear warning they got when they learned that UBS was under investigation for the identical practices," he said.

"Today's indictment makes clear that we will seek to punish not only those US taxpayers who violate the law in an effort to avoid paying their fair share of taxes, but also the individuals and entities who facilitate their crimes," said Preet Bharara, an Indian American.

From 2002 through 2011, Wegelin, Berlinka, Frei and Keller conspired with various US taxpayers and others to hide the existence of bank accounts held at Wegelin and the income generated in those secret accounts from the IRS, the Justice Department said.

Berlinka, Frei, and Keller, 41, 51 and 47, respectively, reside in Switzerland.

They each face a maximum term of five years in prison, a maximum term of three years of supervised release and a fine of the greatest of USD 250,000, or twice the gross gain derived from the offense or twice the gross loss to the victims.

Among other things, in 2008 and 2009, Wegelin, Berlinka, Frei and Keller opened and serviced dozens of undeclared accounts for US taxpayers in an effort to capture clients lost by UBS in the wake of widespread news reports that the IRS was investigating UBS for helping US taxpayers evade taxes and hide assets in Swiss bank accounts.

By mid-2008, UBS had stopped servicing undeclared accounts for US taxpayers, it said.