August 16, 2013 / 4:22 PM / in 4 years

Swiss lawyer pleads guilty in U.S. tax evasion case

NEW YORK, Aug 16 (Reuters) - A Swiss lawyer accused of helping U.S. clients conceal millions of dollars in offshore accounts pleaded guilty to conspiracy to commit tax fraud in federal court in New York on Friday.

Edgar Paltzer, 57, a dual U.S.-Swiss citizen, admitted to opening bank accounts in Switzerland in the name of entities he formed for U.S. citizens, knowing they intended to evade taxes.

“I was aware that this conduct was wrong,” he said, pleading guilty to newly filed criminal charges as part of a plea agreement.

As part of his plea, Paltzer agreed to forfeit any fees he earned and cooperate with the U.S. government. “His cooperation is complete and without any limitation,” Thomas Ostrander, Paltzer’s lawyer, said after the hearing.

Paltzer, a former partner of Swiss law firm Niederer Kraft & Frey who is licensed to practise in New York, was first charged in April on one count of conspiracy alongside Stefan Buck, then head of private banking at Bank Frey & Co AG.

That indictment accused them of conspiring with U.S. taxpayers from 2000 through at least 2012 to help them hide their Swiss accounts from the Internal Revenue Service.

The case shined a light on Bank Frey, one of the smaller Swiss private banks with just 1.9 billion Swiss francs ($1.54 billion) under management last year.

Prosecutors say the bank gained U.S. clients as the Justice Department pursued other banks.

U.S. authorities say that by the third quarter of 2012, about 44 percent of the bank’s assets under management were for U.S. taxpayers. The number had grown 300 percent between February 2009 and February 2012 amid prosecutions of rival banks UBS AG and Wegelin & Co.

UBS agreed in February 2009 to pay $780 million and entered into a deferred prosecution agreement to resolve a Justice Department investigation.

Wegelin, the oldest Swiss bank, announced it would close after pleading guilty in January to helping wealthy U.S. citizens avoid paying taxes, ultimately resulting in orders that it pay around $74 million.

In Bank Frey’s annual report for 2012, Chairman Markus Frey said “the bank has also been affected by the issue of client relationships with U.S. persons,” adding the bank had engaged in “intensive efforts” to ensure it didn’t hold untaxed U.S. assets.

The bank had as recently as May been considering applying for a license to open in the United States to avoid a U.S. investigation.

Frey, the bank’s founder, had also been a partner in Niederer Kraft & Frey. But he resigned on April 25, with Niederer Kraft at the time saying it “concluded that it was in the best interests” of the law firm.

More than a dozen Swiss banks, including Credit Suisse Group AG and Julius Baer, continue to be investigated for their roles in helping Americans evade taxes. Swiss banks have hoped to cooperate, but have been stymied by strict Swiss secrecy laws.

The Swiss government unveiled a plan in July that could potentially allow the banks to cooperate with U.S authorities, who are seeking penalties of as much as $10 billion.

U.S. prosecutors haven’t just targeted offshore tax evasion in Switzerland.

In July, Liechtenstein’s oldest bank, Liechtensteinische Landesbank AG, agreed to a $23.8 million settlement to avoid criminal charges for opening and maintaining undeclared bank accounts for U.S. citizens.

The case is U.S. v. Paltzer et al, U.S. District Court, Southern District of New York, No. 13-cr-282.

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