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Credit Suisse Agrees to Plead Guilty in Tax Case Says Prosecutor

This content was published on May 20, 2014 - 15:30

May 19 (Bloomberg) -- Credit Suisse AG representatives appeared in a Virginia federal court to plead guilty on behalf of the Swiss firm to helping Americans cheat on their taxes, making it the first bank in more than a decade to admit to a crime in the U.S.

The prosecution marks a tougher stance by the Justice Department, which has faced criticism that it avoided pursuing large banks after the 2008 financial crisis because of the potential economic fallout. U.S. prosecutor Mark Lytle today said the bank would enter a plea.

Credit Suisse is said to have reached an agreement to pay $2.5 billion to resolve the case, concluding the three-year U.S. probe, a person familiar with the matter has said. The penalty includes a $715 million payment to New York’s Department of Financial Services, a person with knowledge of the matter said. The state banking regulator also called for the termination of certain employees and an independent monitor, the person said.

Credit Suisse AG is the bank subsidiary of the ultimate parent, Credit Suisse Group AG. Credit Suisse AG in turn has dozens of subsidiaries that conduct most of the business of the firm, according to its most recent annual report.

The financial institution was charged by the U.S. along with two subsidiaries earlier today. Credit Suisse assisted U.S. clients in using sham entities to disguise undeclared accounts, failed to maintain U.S. account information and destroyed records sent to U.S. clients, according to court papers.

The bank also helped clients withdraw money from accounts by providing hand-delivered cash or using Credit Suisse’s correspondent bank accounts in the U.S., the government said. The bank structured such transactions in a way that would evade currency reporting requirements, according to the filing.

To contact the reporter on this story: David Voreacos in federal court in Newark, New Jersey, at dvoreacos@bloomberg.net

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net

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