IRS vs Credit Suisse and HSBC "Deja Vu All Over Again" By:
Bill E. Branscum
In my June 2010 update to my 2009 article discussing the agreement between the United States government and UBS AG requiring that UBS identify 52,000 US tax cheats utilizing undisclosed offshore accounts, I announced that Swiss authorities had finally put their imprimatur on the deal. In that update, I suggested that the wide ranging implications of that development would be huge. The article, and the various updates, are available here:
In that last update, I referenced the fact that about 15,000 people with offshore accounts had chosen to take advantage of a voluntary disclosure opportunity offered by the IRS and predicted that the government would take full advantage of the new agreement with Swiss authorities to go after the other major players in the field. I observed that Credit Suisse and HSBC (Hongkong Shanghai Banking Company) were two of the most obvious wealth management target entities.
On Wednesday, February 23, 2011, the Department of Justice announced the indictment of four Swiss bankers. The Announcement, and a copy of the Indictment are appended below.
According to the Announcement of their indictment, Marco Parenti Adami, Emanuel Agustino, Michele Bergantino and Roger Schaerer, were identified as bankers employed by an international bank that the government did not name, saying only that the, “international bank is incorporated, and has its headquarters, in Zurich, Switzerland, with offices worldwide, including New York City and Miami.” The government also described this international bank as one of the biggest banks in Switzerland and largest wealth managers in the world, providing wealth management, asset management, and investment banking services around the globe.
Although the government chose not to name the international bank, government sources have confirmed that the international bank is Credit Suisse.
This whole thing should prove to be very interesting for those of us involved in financial cases. This isn't about four investment advisors giving people advice and assistance about tax evasion, this is about the government of the United States putting Credit Suisse on notice that they are next, vis-a-vis the experience of UBS.
For those who did not follow the UBS case, it began in May 2008 with the indictment of UBS whistleblower Bradley Birkenfeld, followed the indictment UBS Banker Raoul Weil in November 2008. Both of those Indictments are appended below. Note that the current Indictment of the Credit Suisse bankers is almost a boilerplate copy.
Next came a settlement between UBS and the US for $780 million, providing for the release of names of United States account holders suspected of tax evasion - that was unprecedented, and there was a lot of international politics involved, but now that Swiss law makers have agreed, the precedent is set.
Now, we have the Indictment of Credit Suisse bankers which references the involvement of a Hong Kong bank. You don't have to be a rocket scientist to have a good idea who the Hong Kong banks is - HSBC stands for Hongkong Shaghai Banking Company.
While we are looking at the virtually identical UBS/Credit Suisse developments, and basking in Deja Vu, be aware that HSBC is dealing with a very painful "here we go again" situation of its own.
In the UBS article I outlined the client records data theft perpetrated by Heinrich Kieber, who used his IT position and unfettered access to financial records, to steal several DVD's worth of client files in 2002, which wound up in the hands of tax enforcement authorities who are reported to have paid him millions of dollars for the information.
Now, HSBC has their own, very similar situation. Hervé Falciani, who was also an IT employee, is alleged to have used his position to steal client files in 2006 and 2007 and then attempted to sell it to several governments. Who knows who actually has that information, and what they are doing with it, now?