Post by ukipa on Feb 26, 2014 19:07:41 GMT 4
DOJ lax on Swiss Bank fraud.
Remote-control elevators hiding clients visiting their Swiss bankers; banking statements hidden in Sports Illustrated magazines; and a clandestine bank office in a Swiss airport for quick and easy access to hidden pots of cash.
Those are just a few of the tax evasion schemes Credit Suisse, Switzerland’s second-largest bank, is alleged to have deployed to help rich Americans hide well over $10 billion in more than 22,000 accounts, according to the final report of a two-year Senate panel investigation released Tuesday.
But the report doesn’t label just Credit Suisse the villain. It also points the finger at an entity closer to home: the Justice Department.
The department’s more than half-decade quest to root out offshore tax evasion is not only falling short, but the “lack of determination to pursue the cases,” identify U.S. tax cheaters and hold people accountable has also actually enshrined Swiss secrecy — not fixed the problem — a bipartisan probe by the Senate Permanent Subcommittee on Investigations found.
“The Department of Justice has been dragging its feet in going after” Swiss banks and tax cheaters, said panel chairman Sen. Carl Levin (D-Mich.). “Negotiations have gone on for years, and still there are no commitments to provide names of account holders.”
Five years after Swiss bank UBS first admitted it helped Americans evade taxes, setting off a firestorm and igniting law enforcement investigations, Justice has little to show for its efforts, the panel’s 175-page report concludes.
Justice for years has been investigating more than a dozen Swiss banks for conspiring against IRS tax collection but has closed only two investigations. It’s also prosecuted only about 70 tax evaders, and most of the 34 Swiss bankers and tax professionals who have been indicted have yet to face trial.
The Justice Department defended itself Tuesday, arguing that its actions have encouraged tax compliance.
“The prospect of U.S. prosecution has been forceful enough to cause 43,000 taxpayers to self-report and pay nearly $6 billion in taxes and penalties” through an IRS tax evasion amnesty program, a Justice spokesman said in a statement.
The panel’s investigation zeroes in on Credit Suisse as a case study, noting that Justice has uncovered only about 230 tax cheat names — about 1 percent of account holders — after probing for three years.
The bank’s CEO and other executives will testify before Levin’s subcommittee Wednesday, along with Deputy Attorney General James Cole.
The report says the Justice department has also “failed to hold accountable” the majority of the more than 4,500 people whose names were turned over by UBS several years ago during its settlement.
“The Department of Justice’s ineffective response allowed this conduct to persist,” said Sen. John McCain of Arizona, the panel’s ranking Republican.
He said offshore tax evasion has cost the United States more than $337 billion in tax revenue since 2011.
Levin and McCain blasted Justice’s new Swiss bank program, which allows financial institutions to confess they enabled tax evasion in return for immunity from prosecution — without disclosing the name of a single account holder. Instead, the banks pay a fine and hand over data showing how much is in each account and where the money went.
“That’s not enough,” McCain said, arguing that “we must see penalties that reflect the severity of the wrongdoing.”
The Justice Department has called the program a success, announcing in January that more than 100 Swiss banks are seeking to join.
The agreements, the report says, “surrendered the right of the United State to obtain U.S. client names from the banks given non-prosecution agreements.”
Levin said the bank amnesty program sets Justice on a “treasure hunt”: “What they disclose are hints, bits and pieces and say, ‘You go on a treasure hunt and try to identify them.’ That’s just a wild goose chase.”
The panel also chastised Justice for not prioritizing the names of tax cheats in its work with Switzerland. Even when Wegelin, Switzerland’s oldest bank, plead guilty to helping facilitate U.S. tax evasion, the Justice Department did not ask for the names of the customers, the panel says.
During the UBS case in 2009, the department used a civil proceeding called a “John Doe summons” to get the names of more than 4,500 UBS U.S. account holders, but it has not done the same with Credit Suisse.
The Justice Department has also failed to enforce a grand jury subpoena that could be used to get the names of Credit Suisse account holders as well, the report found, instead taking a roundabout way to request the information through a tax treaty request that was eventually denied by a Swiss court.
Two years later, Justice has received only 230 names from Credit Suisse.
The report says this is reflective of a “larger failure by the United States to obtain from the Swiss the names of tens of thousands of U.S. persons who opened undeclared accounts in Switzerland and have not yet paid taxes on their hidden assets.”
The report says the United States has “not enforced a single Grand Jury subpoena directed at the 17 targeted banks,” nor tried John Doe summons that worked in the case of UBS.
The lawmakers on Wednesday will question Justice investigators about why they “did not use any of the authorities and remedies available to [them] in U.S. court” to get the names of tax cheaters.
Of course, Switzerland hasn’t made it any easier. The country that prides itself on its banking secrecy has laws against disclosing account information, punishable by several years in prison. It also passed a law in 2012 creating a higher threshold for Justice Department requests for account information.
And, as recently as January, a Swiss court barred another Swiss bank under investigation from turning over account data and names.
Still, the panel maintains there is a way around Swiss law through U.S. courts.
To show what they say is the Justice Department’s lack of progress, the committee focused on the Credit Suisse case study, reviewing 100,000 documents, interviewing 40 people and issuing a 178-page report complete with 900 footnotes.
The report says Credit Suisse helped American tax cheats by sending bankers on more than 150 trips to the U.S. to meet with clients between 2002 and 2008 under the guise of going on vacation — even filing false visa applications claiming to come to the U.S. as tourists.
They treated clients to golf tournaments and the annual Swiss Ball in New York, pulling them aside to whisper in their ears about opportunities awaiting them in the land known for its chocolate and cheese.
They were covert in their actions, encouraging Americans to not withdraw their money in excess of $10,000 — which would trigger an automatic report to the U.S. Treasury, according to the report. Rather, the bankers helped them divide their needed sum into smaller chunks under that threshold, which is illegal.
Levin called the bank’s efforts a “James bond environment,” adding that such actions aren’t unique to Credit Suisse but are likely taken by other Swiss banks.
One former customer told the panel a Credit Suisse banker met him at the Mandarin Oriental Hotel for breakfast and handed the customer bank statements hidden in a Sports Illustrated magazine.
Another former customer with $7 billion hidden in secret Swiss bank accounts was escorted from a Credit Suisse lobby to a covert remote-controlled elevator with no buttons to meet his banker in a nondescript conference room — not to the banker’s actual office. There, he viewed his statement, then signed a document promptly giving the bank permission to destroy the statement.
Clients were expected to abide by certain “rules of engagement”: no emails, no faxes, no written correspondence. Untraceable verbal communication was key, including phones, couriers or even trips to Switzerland to check on accounts.
The bank even kept a branch office at the Zurich airport, code-named “SIOA5,” where it worked with about 10,000 American accounts, many more than the office designated to work with American customers.
“That desk was created in order to make it convenient for U.S. clients who wanted to fly into the country, do their banking at the airport, and leave,” the report says.
Bankers also kept “side business” accounts for “Ultra High Net Worth Individual” clients.
Top bank executives in the past have said they didn’t know what was going on, but McCain scoffed at such a notion that this was the work of a few dozen bankers. The report, in fact, says more than 1,800 bankers served U.S. clients
Source: www.politico.com/story/2014/02/swiss-bank-fraud-doj-103950_Page2.html#ixzz2uRMz1fPM
Remote-control elevators hiding clients visiting their Swiss bankers; banking statements hidden in Sports Illustrated magazines; and a clandestine bank office in a Swiss airport for quick and easy access to hidden pots of cash.
Those are just a few of the tax evasion schemes Credit Suisse, Switzerland’s second-largest bank, is alleged to have deployed to help rich Americans hide well over $10 billion in more than 22,000 accounts, according to the final report of a two-year Senate panel investigation released Tuesday.
But the report doesn’t label just Credit Suisse the villain. It also points the finger at an entity closer to home: the Justice Department.
The department’s more than half-decade quest to root out offshore tax evasion is not only falling short, but the “lack of determination to pursue the cases,” identify U.S. tax cheaters and hold people accountable has also actually enshrined Swiss secrecy — not fixed the problem — a bipartisan probe by the Senate Permanent Subcommittee on Investigations found.
“The Department of Justice has been dragging its feet in going after” Swiss banks and tax cheaters, said panel chairman Sen. Carl Levin (D-Mich.). “Negotiations have gone on for years, and still there are no commitments to provide names of account holders.”
Five years after Swiss bank UBS first admitted it helped Americans evade taxes, setting off a firestorm and igniting law enforcement investigations, Justice has little to show for its efforts, the panel’s 175-page report concludes.
Justice for years has been investigating more than a dozen Swiss banks for conspiring against IRS tax collection but has closed only two investigations. It’s also prosecuted only about 70 tax evaders, and most of the 34 Swiss bankers and tax professionals who have been indicted have yet to face trial.
The Justice Department defended itself Tuesday, arguing that its actions have encouraged tax compliance.
“The prospect of U.S. prosecution has been forceful enough to cause 43,000 taxpayers to self-report and pay nearly $6 billion in taxes and penalties” through an IRS tax evasion amnesty program, a Justice spokesman said in a statement.
The panel’s investigation zeroes in on Credit Suisse as a case study, noting that Justice has uncovered only about 230 tax cheat names — about 1 percent of account holders — after probing for three years.
The bank’s CEO and other executives will testify before Levin’s subcommittee Wednesday, along with Deputy Attorney General James Cole.
The report says the Justice department has also “failed to hold accountable” the majority of the more than 4,500 people whose names were turned over by UBS several years ago during its settlement.
“The Department of Justice’s ineffective response allowed this conduct to persist,” said Sen. John McCain of Arizona, the panel’s ranking Republican.
He said offshore tax evasion has cost the United States more than $337 billion in tax revenue since 2011.
Levin and McCain blasted Justice’s new Swiss bank program, which allows financial institutions to confess they enabled tax evasion in return for immunity from prosecution — without disclosing the name of a single account holder. Instead, the banks pay a fine and hand over data showing how much is in each account and where the money went.
“That’s not enough,” McCain said, arguing that “we must see penalties that reflect the severity of the wrongdoing.”
The Justice Department has called the program a success, announcing in January that more than 100 Swiss banks are seeking to join.
The agreements, the report says, “surrendered the right of the United State to obtain U.S. client names from the banks given non-prosecution agreements.”
Levin said the bank amnesty program sets Justice on a “treasure hunt”: “What they disclose are hints, bits and pieces and say, ‘You go on a treasure hunt and try to identify them.’ That’s just a wild goose chase.”
The panel also chastised Justice for not prioritizing the names of tax cheats in its work with Switzerland. Even when Wegelin, Switzerland’s oldest bank, plead guilty to helping facilitate U.S. tax evasion, the Justice Department did not ask for the names of the customers, the panel says.
During the UBS case in 2009, the department used a civil proceeding called a “John Doe summons” to get the names of more than 4,500 UBS U.S. account holders, but it has not done the same with Credit Suisse.
The Justice Department has also failed to enforce a grand jury subpoena that could be used to get the names of Credit Suisse account holders as well, the report found, instead taking a roundabout way to request the information through a tax treaty request that was eventually denied by a Swiss court.
Two years later, Justice has received only 230 names from Credit Suisse.
The report says this is reflective of a “larger failure by the United States to obtain from the Swiss the names of tens of thousands of U.S. persons who opened undeclared accounts in Switzerland and have not yet paid taxes on their hidden assets.”
The report says the United States has “not enforced a single Grand Jury subpoena directed at the 17 targeted banks,” nor tried John Doe summons that worked in the case of UBS.
The lawmakers on Wednesday will question Justice investigators about why they “did not use any of the authorities and remedies available to [them] in U.S. court” to get the names of tax cheaters.
Of course, Switzerland hasn’t made it any easier. The country that prides itself on its banking secrecy has laws against disclosing account information, punishable by several years in prison. It also passed a law in 2012 creating a higher threshold for Justice Department requests for account information.
And, as recently as January, a Swiss court barred another Swiss bank under investigation from turning over account data and names.
Still, the panel maintains there is a way around Swiss law through U.S. courts.
To show what they say is the Justice Department’s lack of progress, the committee focused on the Credit Suisse case study, reviewing 100,000 documents, interviewing 40 people and issuing a 178-page report complete with 900 footnotes.
The report says Credit Suisse helped American tax cheats by sending bankers on more than 150 trips to the U.S. to meet with clients between 2002 and 2008 under the guise of going on vacation — even filing false visa applications claiming to come to the U.S. as tourists.
They treated clients to golf tournaments and the annual Swiss Ball in New York, pulling them aside to whisper in their ears about opportunities awaiting them in the land known for its chocolate and cheese.
They were covert in their actions, encouraging Americans to not withdraw their money in excess of $10,000 — which would trigger an automatic report to the U.S. Treasury, according to the report. Rather, the bankers helped them divide their needed sum into smaller chunks under that threshold, which is illegal.
Levin called the bank’s efforts a “James bond environment,” adding that such actions aren’t unique to Credit Suisse but are likely taken by other Swiss banks.
One former customer told the panel a Credit Suisse banker met him at the Mandarin Oriental Hotel for breakfast and handed the customer bank statements hidden in a Sports Illustrated magazine.
Another former customer with $7 billion hidden in secret Swiss bank accounts was escorted from a Credit Suisse lobby to a covert remote-controlled elevator with no buttons to meet his banker in a nondescript conference room — not to the banker’s actual office. There, he viewed his statement, then signed a document promptly giving the bank permission to destroy the statement.
Clients were expected to abide by certain “rules of engagement”: no emails, no faxes, no written correspondence. Untraceable verbal communication was key, including phones, couriers or even trips to Switzerland to check on accounts.
The bank even kept a branch office at the Zurich airport, code-named “SIOA5,” where it worked with about 10,000 American accounts, many more than the office designated to work with American customers.
“That desk was created in order to make it convenient for U.S. clients who wanted to fly into the country, do their banking at the airport, and leave,” the report says.
Bankers also kept “side business” accounts for “Ultra High Net Worth Individual” clients.
Top bank executives in the past have said they didn’t know what was going on, but McCain scoffed at such a notion that this was the work of a few dozen bankers. The report, in fact, says more than 1,800 bankers served U.S. clients
Source: www.politico.com/story/2014/02/swiss-bank-fraud-doj-103950_Page2.html#ixzz2uRMz1fPM