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Julius Baer settles U.S. tax case as ex-bankers plead guilty

NEW YORK (Reuters) - Two former Julius Baer bankers pleaded guilty on Thursday to helping American clients dodge taxes, as U.S. prosecutors announced the settlement for $547 million of a criminal case against the Swiss bank itself.

Daniela Casadei and Fabio Frazzetto, former Julius Baer client advisers, pleaded guilty to conspiracy charges in Manhattan federal court, while a U.S. judge approved a deferred prosecution agreement with the bank.

The proceedings followed a long-running investigation into Switzerland’s third-largest bank that spilled out of a U.S. crackdown on offshore tax evasion by wealthy Americans utilizing undeclared Swiss bank accounts.

Under the deal, a criminal case charging that the company’s Bank Julius Baer & Co, Ltd unit conspired to defraud the United States and to file false tax returns would be dismissed after three years if various conditions are met.

Julius Baer admitted helping U.S. clients evade their tax obligations, agreed to cooperate with authorities and close out any remaining undeclared taxpayer accounts, prosecutors said.

Casadei, 52, and Frazzetto, 42, in court said that while they believed their actions were consistent with Swiss law and the bank’s policies, they knew they were helping U.S. citizens evade taxes.

“I was aware my conduct was in violation of U.S. law and therefore wrong,” Frazetto said.

Casadei and Frazzetto were previously indicted in 2011 for helping U.S. taxpayers hide more than $600 million in offshore accounts and evade paying taxes.

Both normally would be beyond the reach of U.S. extradition, as Switzerland does not extradite its citizens. They agreed to cooperate in further investigations, potentially earning them leniency at sentencing.

U.S. foreign tax investigations have already resulted in a number of bankers, lawyers and advisers being charged and billions of dollars in bank settlements.

The U.S. Justice Department last week announced the final settlement in a program that resulted in 80 banks paying $1.36 billion to avoid prosecution.

Banks already under criminal investigation like Julius Baer were not eligible for the program, which required the banks to provide detailed information on the accounts of U.S. taxpayers under investigation.

In 2014, Credit Suisse pleaded guilty to conspiring to assist U.S. taxpayers in filing false tax returns in a $2.6 billion settlement.

Rival UBS AG in 2009 agreed to pay $780 million as part of a deferred prosecution deal.

Wegelin & Co, once the oldest Swiss private bank, was meanwhile forced to close after agreeing in 2013 to plead guilty and pay $74 million.

The case is U.S. v. Casadei, U.S. District Court, Southern District of New York, No. 11-cr-00866.

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