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UPDATE 1-Ex-Swiss banker may be helping US in tax probe-lawyers
October 17, 2012 / 10:10 PM / in 5 years

UPDATE 1-Ex-Swiss banker may be helping US in tax probe-lawyers

* Bagios pleads not guilty but sets plea-change hearing

* Former banker’s case part of wide-ranging U.S. probe

By Lynnley Browning and Kevin Gray

Oct 17 (Reuters) - A former Swiss banker accused of helping rich Americans dodge taxes may be cooperating with a broad U.S. government investigation of Swiss banks for providing tax evasion services, lawyers said on Wednesday.

Speculation that Christos Bagios is working with the United States arose after the ex-employee of Swiss banks Credit Suisse AG and UBS AG arranged a change-of-plea hearing following his pleading not-guilty in a U.S. federal court to new charges of aiding tax evasion.

Bagios is a central figure in the probe by the U.S. Department of Justice into offshore tax evasion services sold by Swiss and Swiss-style banks.

Some lawyers said he is likely preparing to plead guilty as part of a cooperation deal with the DOJ, a move that could pile pressure on Swiss banks targeted by the investigation.

“The fact that he has waived his right to indictment means it is very likely he will change his plea” to guilty next week, said Lawrence Brown, a tax lawyer in Fort Worth, Texas, with offshore clients. Brown added that the move would help the government’s investigation.

Robert Katzberg, a white-collar criminal defense lawyer in New York with foreign bank clients, said that “from all indications, it appears as though Bagios is cooperating with the U.S. government.”

Katzberg added “if that is the case, it will push Credit Suisse further toward having to deal with the U.S. government.”

Bagios, a Greek citizen and Swiss resident, was a senior private banker at Credit Suisse at the time of his arrest by U.S. authorities in January 2011.

A month later, U.S. authorities filed charges against him, accusing him of conspiracy and fraud in connection with allegedly helping 150 Americans hide up to $500 million from the Internal Revenue Service while he worked at UBS from 1999 to 2005.

Authorities fleshed out their allegations against Bagios on Tuesday in new charges that effectively override the earlier, 2011 charges, and that shortened the time covered at UBS.

Bagios pleaded not guilty on Wednesday to the new charges before Judge Barry Seltzer of Federal District Court in Fort Lauderdale, Florida. Court papers showed Bagios is scheduled for a change-of-plea hearing on Oct. 26.

Jack Grone, a spokesman for Credit Suisse in New York, declined to comment.

Karina Byrne, a spokeswoman for UBS in New York, was not immediately available for comment, according to an associate.

BAGIOS TOLD CLIENTS TO “WASH” ASSETS

Credit Suisse, Switzerland’s second-largest bank, disclosed in July 2011 that it was being investigated by the Justice Department. The investigation swelled after UBS, Switzerland’s largest bank, paid $780 million and entered into a deferred-prosecution agreement, now ended, with U.S. authorities in 2009.

Eleven banks are under investigation, and dozens of Swiss bankers and American clients have been indicted in recent years.

The new charges against Bagios assert that he told one U.S. client to sign UBS documents falsely declaring that the client was a Malaysian national, not a U.S. citizen.

Bagios and his co-conspirators, court papers alleged, also told some UBS clients wishing to sneak hidden money back into the United States that they needed to “wash” their undisclosed assets back into the banking system, by transferring small, undetectable amounts into their declared UBS accounts.

LENGTHY DETENTION

Bagios has been detained for nearly two years, an unusual action against a foreign banker by U.S. authorities. He has repeatedly waived his right to indictment, spurring speculation over whether he might be cooperating.

The fresh charges asserted that Bagios worked with a group of co-conspirators. They include Hansruedi Schumacher, a former top UBS private banker who later worked at Neue Zurcher Bank and was indicted in the United States in 2009; Renzo Gadola, a former top UBS private banker who pleaded guilty to charges of fraud and conspiracy in December 2010; and Martin Lack, a former top UBS private banker who was indicted in August 2011.

At the time of his arrest in New York and subsequent transfer to Florida, Bagios was head of Credit Suisse’s Relationship Management West Coast group, a private banking unit, according to the bank’s website.

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