U.S. indicts 2 Swiss men over tax evasion; US Accuses 2 Swiss men of assisting tax evasion

U.S. indicts 2 Swiss men over tax evasion; U.S. accuses 2 Swiss men of assisting tax evasion; Expanding challenge to banking secrecy moves beyond clients

LYNNLEY BROWNING. International Herald Tribune. Paris: Aug 22, 2009. pg. 13

Abstract (Summary)

The indictment, filed Thursday in U.S. District Court in Fort Lauderdale, Florida, charged Hansruedi Schumacher, a director at NZB Neue Zurcher Bank of Zurich, and Matthias W. Rickenbach, a Swiss lawyer, with one count each of conspiring to defraud the United States. It was filed a day after the giant Swiss bank UBS said that it had agreed to disclose the names of 4,450 American clients and account details, and it indicated that the American authorities were starting to pursue smaller players who might have helped Americans hide money. Smaller Swiss banks have expressed confidence that they could continue to work with American clients and find new ways to protect their privacy.

A Justice Department statement said the two men "helped their clients obtain offshore credit cards and created sham loan documents." It said they "falsified bank documents to generate the appearance that assets of their U.S. clients belonged to Swiss citizens, and they falsified documents to disguise their United States clients' repatriation of offshore funds as inheritances from foreign citizens."

The indictment said that Mr. Schumacher and Mr. Rickenbach paid $45,000 to a "high-ranking Swiss government official" in 2008 to learn whether Mr. [Jeffrey P. Chernick], their client, was on a list of 285 names to be disclosed to the American authorities in February in a broad settlement with UBS. Mr. Chernick paid the fee.

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Copyright International Herald Tribune Aug 22, 2009

A private banking executive and a lawyer are accused of providing tax evasion services sold to wealthy clients, opening a new front in Washington's crackdown on Swiss banking secrecy.

The U.S. Justice Department has indicted a Swiss private banking executive and a Swiss lawyer, accusing them of selling tax evasion services to wealthy clients. The move opens a new front in Washington's challenge to Switzerland's tradition of bank secrecy.

The indictment, filed Thursday in U.S. District Court in Fort Lauderdale, Florida, charged Hansruedi Schumacher, a director at NZB Neue Zurcher Bank of Zurich, and Matthias W. Rickenbach, a Swiss lawyer, with one count each of conspiring to defraud the United States. It was filed a day after the giant Swiss bank UBS said that it had agreed to disclose the names of 4,450 American clients and account details, and it indicated that the American authorities were starting to pursue smaller players who might have helped Americans hide money. Smaller Swiss banks have expressed confidence that they could continue to work with American clients and find new ways to protect their privacy.

"These conspiracy charges show that Justice is widening the net beyond UBS to include other banks, and that it is also going beyond individual account holders to the professionals who assist them," said Lee Sheppard, a tax lawyer in New York and a writer for Tax Analysts, a trade publication.

Mr. Schumacher is a former top private banker for UBS who left around 2002 to establish and oversee NZB's private banking operations. He worked at NZB until at least last month, the indictment said. Mr. Rickenbach is a partner of the Rickenbach & Partner law firm, with offices in Zurich and Geneva.

A Justice Department statement said the two men "helped their clients obtain offshore credit cards and created sham loan documents." It said they "falsified bank documents to generate the appearance that assets of their U.S. clients belonged to Swiss citizens, and they falsified documents to disguise their United States clients' repatriation of offshore funds as inheritances from foreign citizens."

The statement said the defendants told clients "that their assets and identification would be safer at NZB because they had no presence in the United States" and were "less likely to be pressured by the American authorities to disclose the identities of their United States clients."

The American authorities appear to be widening their attack on Swiss banking secrecy. Switzerland is the world's largest repository of hidden wealth, estimated to hold nearly one-third of the $7 trillion in assets that are believed to be held offshore. Charges filed this summer against two American UBS clients, Jeffrey P. Chernick and John McCarthy, included references to their dealings with Mr. Schumacher, Mr. Rickenbach and NZB, but did not name them.

The new indictment charges the two Swiss men with helping Mr. McCarthy evade taxes, in part through entities in Hong Kong linked to his UBS account.

Around 2007, the complaint says, Mr. Rickenbach's father hand-carried $5,000 to New York to deliver to an unidentified client, illustrating one way that the Swiss lawyer surreptitiously moved money across borders.

NZB was established in 2000 by former senior executives from Bank Julius Bar, a prominent Swiss private bank. Over 2007 and 2008, Sarasin Group, another Swiss private bank, acquired a 40 percent stake in NZB, while NZB employees own the rest.

The indictment Thursday said that Mr. Schumacher, who was referred to but not identified by name in the Chernick papers, was a former manager of UBS's cross-border private banking division, the unit under scrutiny for having helped Americans evade taxes.

Mr. Schumacher left UBS around 2002 to join NZB and help clients of UBS and other firms to evade taxes, according to the charges against him.

The indictment said that Mr. Schumacher and Mr. Rickenbach paid $45,000 to a "high-ranking Swiss government official" in 2008 to learn whether Mr. Chernick, their client, was on a list of 285 names to be disclosed to the American authorities in February in a broad settlement with UBS. Mr. Chernick paid the fee.

Mr. Schumacher, the Chernick filing said, told Mr. Chernick that because the smaller bank had not entered into a special disclosure program with the Internal Revenue Service, the U.S. tax collection agency, it would be subject to less scrutiny by U.S. tax officials than UBS.

Douglas Shulman, the I.R.S. commissioner, said Wednesday that the agency was looking at other banks and intermediaries in Switzerland.