Recently by Bob Bauman: Doctor No Comes Into His Own
For sound asset protection and ease of investment you need an offshore bank account. But as I pointed out last week, Americans must be very careful about which bank they choose and what advice they accept.
For those interested in offshore financial activity there is no need to re-run the sad details of the UBS tax evasion scandal that ended decades of absolute statutory Swiss bank secrecy and tarnished that countrys good reputation in the process.
But as I told you some months ago, UBS is not the only target of the U.S. Internal Revenue Service. I explained then that the second largest Swiss bank, Credit Suisse, was also in the IRS cross hairs, along with Swiss cantonal banks.
Since 2008 when the IRS cracked down on the two largest Swiss banks, UBS and Credit Suisse, both have suffered huge cash outflows. UBS paid a $780 million fine in 2009 and agreed to turn over 4,450 names of American clients. Much of the U.S. and European client money was assumed to have gone to banks in the Far East but tens of billions of dollars may have ended up in Swiss cantonal banks.
Today the New York Times reports that a senior private banker at Credit Suisse has been arrested in the United States in connection with a federal investigation into the Swiss banks work with questionable offshore accounts.
The banker, Christos Bagios, a Greek citizen, was arrested in New York and transferred to Fort Lauderdale, Fla., where he has been charged with conspiracy and fraud. Bagiso heads an SEC registered private banking unit that is part of Credit Suisse Private Advisors based in Zurich.
DOJ Pressure Tactic
An arrest such as this is a highly unusual move and seen as proof that the U.S. Justice Department is zeroing in on Credit Suisse and the possibility that the bank may have helped wealthy American clients to evade taxes.
It was not clear whether Mr. Bagios was cooperating with the DOJ investigation, a move that would increase pressure on the bank.
In 2008, a former top UBS executive, Martin Liechti, was arrested and detained in Miami in connection with the major federal investigation of UBS. Mr. Liechti, a Swiss citizen who was UBSs top private banker for the Americas, was allowed to return to Switzerland after several months and cooperated with the IRS in its investigation of the UBS tax evasion scandal.
In a possible repeat of the UBS mess, the U.S. Department of Justice probably will demand names of Credit Suisse American clients under the terms of the Swiss-U.S. tax treaty.
This latest chapter in the U.S.-Swiss tax evasion story comes just days after the Swiss government announced plans to relax still further the conditions for the release to the U.S. and other governments of tax and other information on foreign bank account holders.
I repeat: the Swiss government has come a long way in a short time; from defending absolute financial privacy under the 1934 Bank Secrecy Act, (still the law a year ago) to who knows what today?
Americans with Credit Swiss accounts are about to discover the answer to that question. Rumors have it that the Swiss division of HSBC is also high on the current IRS hit list.
Reprinted with permission from the Sovereign Society.
Robert E. Bauman is a former Member of the United States House of Representatives from Maryland, (19731981). He is also a former federal official and state legislator; Member, Washington, DC Bar; Graduate of the Georgetown University Law Center (1964) and the School of Foreign Service (1959), Washington, DC. Robert currently serves as legal counsel for the Sovereign Society.