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US tax probe Wegelin private bank pleads guilty



The name of the traditional bank is set to disappear once the case is settled in the US

The name of the traditional bank is set to disappear once the case is settled in the US

(Keystone)

Switzerland’s oldest private bank, Wegelin, has pleaded guilty to helping wealthy United States taxpayers dodge taxes through offshore accounts. The bank was indicted last February on charges of conspiracy and fraud.

Otto Bruderer, an official at the St Gallen-based bank, appeared in Manhattan federal court on Thursday to enter a plea on the company’s behalf to a single count of conspiracy.

“From 2002 to 2010, Wegelin conspired with certain US taxpayers to evade US taxes,” Bruderer told the court.

Under a proposed plea agreement, the bank will pay a total of $57.8 million (SFr53.2 million) - $20 million in restitution to the US authorities - forfeit $15.8 million, representing fees on undeclared accounts, and pay a fine of $22 million.

Last year, the US authorities separately seized just over $16 million in Wegelin funds which the bank is ready to forfeit. 

The deal requires the approval of US district judge Jed Rafkoff. Sentencing is set for March 4.

The indictment accused Wegelin of hiding assets worth more than $1.2 billion from the Internal Revenue Service. The bank itself says $20 million in tax revenue were withheld from the authorities.

Wegelin said it had set aside money to pay the fine, restitution and forfeiture.

“Once the matter is finally concluded, Wegelin will cease to operate as a bank,” a statement said.

UBS clients

Prosecutors said that from 2002 to 2011, more than 100 US taxpayers conspired with Wegelin and at least three named bankers. The indictment mentions accounts for at least 70 US taxpayers.

The defendants are accused of wooing US clients fleeing Switzerland’s largest bank UBS which avoided prosecution in 2009 by admitting it aided tax evasion, paying $780 million and handing over data on about 250 accounts. It later disclosed information on about 4,450 accounts.

Wegelin was the first Swiss bank charged in a US crackdown on offshore firms suspected of helping Americans evade taxes.

In the past Bank Wegelin repeatedly failed to appear for a hearing in a New York court. The bank argued that the summons had not been delivered correctly.

Crackdown

In a separate civil law suit last year, another district judge entered a default judgment against the bank, ordering it to forfeit about $16.2 million held in its US accounts.

About a dozen banks in Switzerland are being targeted by US tax investigators in a row over American client’s undeclared assets.

Wegelin, which was founded in 1741, split and sold its non-US operations to retail bank Raiffeisen in 2011 in a bid to protect its assets from the charges.

Ratification of a revised tax deal between Switzerland and the US has been on hold amid opposition by a Republican senator.

swissinfo.ch and agencies


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