Michael Berlinka, Urs Frei and Roger Keller told clients that they were less vulnerable to a U.S. crackdown on offshore tax evasion because their bank didn’t have offices outside Switzerland, according to an indictment filed yesterday in federal court in Manhattan.
The bank was Wegelin, according to the person, who wasn’t authorized to speak about the matter and didn’t want to be identified. The indictment refers to “Swiss Bank A” and said all three worked at its Zurich branch. Wegelin “acknowledges” the U.S. justice authorities’ decision to press charges against three employees, Albena Bjorck, a spokeswoman for Switzerland’s oldest private bank, said in an e-mailed statement today.
The indictment comes amid U.S.-Swiss talks to resolve a U.S. probe of offshore tax evasion. Officials are trying to conclude negotiations on a civil settlement with Swiss banks, as well as criminal probes of 11 of them, including Wegelin, which is based in St. Gallen.
Prosecutors have filed tax charges against more than three dozen former U.S. clients of UBS AG (UBSN) and Credit Suisse Group AG (CSGN), Switzerland’s two biggest banks, and London-based HSBC Holdings Plc (HSBA), Europe’s biggest bank. At least 24 bankers, advisers and attorneys also have been charged.
U.S. prosecutors charged UBS in February 2009 with helping Americans hide assets from the Internal Revenue Service. UBS avoided prosecution by admitting it fostered tax evasion, paying $780 million and handing over data on 250 secret accounts. It later disclosed another 4,450 accounts, causing U.S. customers to seek new banks.
As those clients fled, Berlinka, Frei and Keller and “Managing Partner A” wooed them, according to yesterday’s indictment. The bank, which is principally owned by eight managing partners, also solicited accounts through a third-party website, “SwissPrivateBank.com,” prosecutors said.
The men told clients their undeclared accounts would stay hidden from the IRS because the bank “had a long tradition of bank secrecy, and, unlike UBS, did not have offices outside Switzerland,” making it “less vulnerable to United States law enforcement pressure,” according to the indictment.
“In or about 2008, the managing partners affirmatively decided to take advantage of the flight of U.S. taxpayers with undeclared accounts by opening new undeclared accounts for many of them at Swiss Bank A,” according to the indictment. “Swiss Bank A opened new undeclared accounts for at least 70 U.S. taxpayers.”
Berlinka, 41, began working at Swiss Bank A in 2008; Frei, 51, started in 2006; and Keller, 47, began in 2007, according to a statement by U.S. Attorney Preet Bharara. The men, who all live in Switzerland, face as long as five years in prison if convicted.
“Wegelin & Co. has in the meantime ceased all dealings with U.S. clients and the employees concerned have taken on other tasks within the bank,” Bjorck said. The bank “has authorized its lawyers in the U.S. to negotiate with the U.S. justice authorities to the extent possible under Swiss law,” she said. Wegelin declined to comment further by phone.
At least 17 others accused in the tax crackdown live outside the U.S. and haven’t responded in U.S. court to the charges.
The indictment details how Berlinka, Frei and Keller helped 23 U.S. clients open undeclared accounts at their bank. Kenneth Heller, a disbarred New York maritime attorney who pleaded guilty on June 27 to hiding more than $26.4 million in accounts at UBS and Wegelin, is also referred to in the indictment. He is scheduled to be sentenced Jan. 20.
The three bankers conspired with two other Swiss financial advisers already under indictment, Gian Gisler and Beda Singenberger, according to the charges filed yesterday.
The case is U.S. v. Berlinka, 12-cr-00002, U.S. District Court, Southern District of New York (Manhattan).