Swiss Bankers Skirt Jail Time in U.S. Tax Evasion Case Thanks To ‘Cooperation Agreement’

A combined fine of $225,000 and five years of unsupervised probation without jail time was handed down to two former bankers of Credit Suisse AG. Josef Dörig and Andreas Bachmann, both Swiss nationals, received the reduced sentence due to their cooperation with U.S. authorities.

Their crime: helping U.S. citizens evade taxes. Just one year ago, Credit Suisse pleaded guilty to “knowingly and willfully” assisting numerous American clients to commit tax evasion. How? By helping its U.S. clients open accounts and then hide the income generated by those accounts from the IRS. The penalty – which is considered to be the “cornerstone” of plea agreements when a company is the defendant in a tax evasion case – did not come without a price. In order to make “peace” with the U.S. government, Credit Suisse had to agree to pay a whopping $2.6 billion dollars.

A welcome piece of news for a beleaguered Justice Department, which has often come under fire for failing to curb Wall Street’s transgressions, this latest development is another example of the U.S. government’s resolve against powerful foreign financial institutions. It is, in fact, the first time that the Justice Department was able to obtain a guilty plea from a foreign bank in over a decade.

Robert Henoch, Mr. Dörig’s attorney, described a broken system that focused and penalized a few nominally responsible people in a much larger and organized system without focusing on the American citizens who wanted to evade taxes. “Foreign bankers and trust-company officials” are being unfairly targeted and maligned. “Mr. Dörig had advised his U.S. clients to disclose their accounts to the IRS from the very beginning,” he said.

Mr. Dörig received a heftier fine even though he was in his seventies, having admitted to assisting American clients divert money through clandestine methods into Swiss banks in order to keep it from being taxed. He said that he was “deeply sorry for what [he] did,” and added, “It will not be repeated.” Judge Gerald Bruce Lee agreed that while the normal sentence for a crime such as this was five years, Mr. Dörig’s service record and age made the reduced punishment “sufficient.”

These lenient sentences would not have been possible without the recommendation of Assistant U.S. Attorney Mark D. Lytle, the prosecutor for the case. But it was not out of the “goodness” of Mr. Lyrtle’s heart that he made this recommendation. Both men were expected to do something in exchange, namely live up to their end of a cooperation agreement. Very simply, Mr. Backmann and Mr. Dörig were expected to cooperate – to the fullest extent possible – in the U.S. government’s investigation into Credit Suisse.

And cooperate is exactly what Mr. Dörig and Mr. Backmann did. Understanding the backdrop against which a cooperation agreement was brokered often sheds light not only on the purpose, but on the spirit of such agreements. These cooperation agreements were struck at a time when the Justice Department was under heavy criticism for not taking action against banks.

The two flew from Switzerland to the United States for their sentencing.

Courts have found over a 100 account holders guilty of having undeclared offshore accounts, with almost as many middlemen and banks involved, since 2009.

Bachmann and Dörig are only two out of eight other Credit Suisse employees (since 2011) who have become ensnared within the coils of the Justice Department’s crusade to target what the government has dubbed “enablers,” or those who assist U.S. persons to evade their U.S. taxes.

Backmann and Dörig now join a list of other prominent Swiss bank executives to be convicted for assisting U.S. clients to evade taxes. Martin Lack, an executive at Swiss bank UBS AG, pleaded guilty to the very same offense, and was sentenced to five years’ probation. And a federal court in Atlanta sentenced Gregg Kaminsky, an online entrepreneur, to four months in jail and two months of home confinement for hiding money he made on the online virtual game “Second Life” using a UBS bank account.

Original Post By:  Michael DeBlis

As a former public defender, Michael has defended the poor, the forgotten, and the damned against a gov. that has seemingly unlimited resources to investigate and prosecute crimes. He has spent the last six years cutting his teeth on some of the most serious felony cases, obtaining favorable results for his clients. He knows what it’s like to go toe to toe with the government. In an adversarial environment that is akin to trench warfare, Michael has developed a reputation as a fearless litigator.

Michael graduated from the Thomas M. Cooley Law School. He then earned his LLM in International Tax. Michael’s unique background in tax law puts him into an elite category of criminal defense attorneys who specialize in criminal tax defense. His extensive trial experience and solid grounding in all major areas of taxation make him uniquely qualified to handle any white-collar case.


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