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(Bloomberg) -- A former Swiss banker was acquitted of helping U.S. clients dodge taxes, dealing prosecutors a dramatic loss in their efforts to hold individuals responsible after the government successfully targeted financial institution.

The trial of Stefan Buck was an unusual courtroom showdown in the decade-old fight by the U.S. against tax evasion aided by financial institutions in Switzerland. While more than three dozen bankers, financial advisers and lawyers have been indicted by American prosecutors, Swiss authorities have no extradition treaty with the U.S., and Buck is one of just a handful that have chosen to cross the Atlantic and face charges.

The not-guilty verdict Tuesday on a single count of conspiracy sparked shouts of joy from Buck’s supporters in the gallery in Manhattan federal court. Buck, 37, once head of the private banking desk at Bank Frey & Co. in Zurich, was acquitted after a three-week trial that included testimony from former clients who described how he helped them hide assets after other Swiss banks refused to deal with them.

"I’m just relieved and happy that my friends and family were supporting me," a smiling Buck said after the verdict was read.

Swiss Banker’s Return to U.S. Cited as Proof of Innocence

Dawn Dearden, a spokeswoman for the Manhattan U.S. Attorney’s office, declined to comment on the verdict.

The Department of Justice has had a spotty record prosecuting more than three dozen offshore bankers, lawyers and advisers charged with enabling tax evasion by U.S. clients. While several of those charged have pleaded guilty, at least three, including Buck, have been acquitted by jurors. The rest remain overseas.

In November 2014, former UBS Group AG global wealth-management chief Raoul Weil was cleared of tax conspiracy charges despite the bank’s historic admission that it helped thousands of U.S clients cheat the Internal Revenue Service. Jurors in Florida reached their verdict after deliberating only 90 minutes.

The Weil verdict followed a Los Angeles jury’s decision to acquit a retired senior vice president at Israeli-based Mizrahi Tefahot Bank Ltd. on charges he helped U.S. customers conceal assets. Shokrollah Baravarian, then 82, was acquitted after all six taxpayers who testified against him said they didn’t conspire with him to cheat on their taxes.

The U.S. crackdown began in 2007, when former UBS AG banker Bradley Birkenfeld told investigators how his employer had helped thousands of Americans evade taxes. The bank later discontinued offshore accounts for U.S. citizens, paid a $780 million penalty to settle the probe and handed over information on about 4,700 accounts.

The UBS settlement led more than 56,000 taxpayers to voluntarily disclose their offshore accounts to the IRS and pay about $10 billion in taxes and penalties. The U.S. government also reached deals with 80 Swiss banks who paid $1.36 billion in penalties in exchange for not being prosecuted.

Hiding Assets

During Buck’s trial, jurors heard from five U.S. residents who eventually revealed their Swiss accounts. They testified that Buck counseled them on ways to hide their assets from the IRS, such as concealing their identities through randomly named corporate entities headquartered in tax havens like Lichtenstein and Panama and buying Swiss watches and jewels to move the money out of the country without detection.

Swiss lawyer Edgar Paltzer and asset manager Peter Amrein described how they worked with Buck to move clients’ assets to Bank Frey. They were indicted in 2013, pleaded guilty and cooperated with prosecutors.

Buck didn’t testify. His lawyers called three witnesses, including a Swiss lawyer who told jurors that Buck referred dozens of clients to him to help them disclose undeclared accounts to the IRS. A Bank Frey employee testified that Buck was simply a low-level employee who couldn’t open accounts without the blessing of compliance officials and executives.

The jury of seven women and five men deliberated for a little more than a day before reaching its verdict, asking only for a transcript of Paltzer’s testimony.

"We’re thrilled with the verdict," said Buck’s attorney, Marc Agnifilo. "Stefan showed he’s a man who deals with hardship head on. I think he deserves tremendous credit for coming to the U.S., to stand trial in a system that’s not his own legal system."

The case is U.S. v Buck, 13-cr-00282, U.S. District Court, Southern District of New York (Manhattan).

(Updates with Buck’s comment in fourth paragraph.)

To contact the reporters on this story: Chris Dolmetsch in New York State Supreme Court in Manhattan at cdolmetsch@bloomberg.net, David Voreacos in federal court in Newark, New Jersey, at dvoreacos@bloomberg.net.

To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Joe Schneider

©2017 Bloomberg L.P.

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