U.S. Indicts Two in Switzerland on Tax Charges

U.S. Indicts Two in Switzerland on Tax Charges
By LYNNLEY BROWNING
Copyright by The New York Times
Published: August 21, 2009
http://www.nytimes.com/2009/08/22/business/global/22tax.html?ref=global-home


The Justice Department indicted a Swiss private banking executive and a Swiss lawyer on Thursday, accusing them of selling tax evasion services to wealthy clients. The move opens a new front in Washington’s challenge to Switzerland’s tradition of bank secrecy.

The indictment, filed in United States District Court in Fort Lauderdale, Fla., charged Hansruedi Schumacher, a director at NZB Neue Zürcher Bank of Zurich, and Matthias W. Rickenbach, a Swiss lawyer, with one count each of conspiring to defraud the United States. It was filed a day after the giant Swiss bank UBS said that it had agreed to disclose 4,450 American client names and account details, and it indicated that American authorities were starting to pursue smaller players who might have helped Americans hide money. Smaller Swiss banks have expressed confidence that they could continue to work with American clients and find new ways to protect their privacy.

“These conspiracy charges show that Justice is widening the net beyond UBS to include other banks, and that it is also going beyond individual account holders to the professionals who assist them,” said Lee Sheppard, a tax lawyer in New York and a writer for Tax Analysts, a trade publication.

Mr. Schumacher is a former top private banker for UBS who left around 2002 to establish and oversee NZB’s private banking operations. He worked at NZB until at least last month, the indictment said. Mr. Rickenbach is a partner of the Rickenbach & Partner law firm, with offices in Zurich and Geneva.

A Justice Department statement said that the two men “helped their clients obtain offshore credit cards and created sham loan documents.” It said they “falsified bank documents to generate the appearance that assets of their U.S. clients belonged to Swiss citizens, and they falsified documents to disguise their United States clients’ repatriation of offshore funds as inheritances from foreign citizens.”

The statement said the defendants told clients “that their assets and identification would be safer at NZB because they had no presence in the United States” and were “less likely to be pressured by the American authorities to disclose the identities of their United States clients.”

Mr. Schumacher and Mr. Rickenbach could not be reached for comment. On Friday, Franziska Gumpfer, a spokeswoman for NZB, said that Mr. Schumacher had been fired. “NZB has acknowledged the charge brought by the U.S. and decided to part company with Mr. Schumacher,” she said.

Ms. Gumpfer said the bank decided to close its United States private banking business this spring in light of the legal dispute involving UBS. She said Mr. Schumacher then told the bank that he planned to leave in September.

American authorities appear to be widening their attack on Swiss banking secrecy. Switzerland is the world’s largest repository of hidden wealth, estimated to hold nearly one-third of the $7 trillion in assets that are believed to be held offshore. Charges filed this summer against two American UBS clients, Jeffrey P. Chernick and John McCarthy, included references to their dealings with Mr. Schumacher, Mr. Rickenbach and NZB, but did not name them.

The new indictment charges the two Swiss men with helping Mr. McCarthy evade taxes, in part through entities in Hong Kong linked to his UBS account.

Around 2007, the complaint says, Mr. Rickenbach’s father hand-carried $5,000 to New York to deliver to an unidentified client, illustrating one way that the Swiss lawyer surreptitiously moved money across borders.

NZB was established in 2000 by former senior executives from Bank Julius Baer, a prominent Swiss private bank. Over 2007 and 2008, Sarasin Group, another Swiss private bank, acquired a 40 percent stake in NZB, while NZB employees own the rest.

The indictment on Thursday said that Mr. Schumacher, who was referred to but not identified by name in the Chernick papers, was a former manager of UBS’s cross-border private banking division, the unit under scrutiny for having helped Americans evade taxes.

Mr. Schumacher left UBS around 2002 to join NZB and help clients of UBS and other firms to evade taxes, according to the charges against him.

The indictment said that Mr. Schumacher and Mr. Rickenbach paid $45,000 to a “high-ranking Swiss government official” in 2008 to learn whether Mr. Chernick, their client, was on a list of 285 names to be disclosed to American authorities in February in a broad settlement with UBS. Mr. Chernick paid the fee.

Mr. Schumacher, the Chernick filing said, told Mr. Chernick that because the smaller bank had not entered into a special disclosure program with the Internal Revenue Service, it would be subject to less scrutiny by United States tax officials than UBS.

NZB’s executives include senior names in private banking. Martin Eberhard, the chief executive, was previously a senior executive at Julius Baer in charge of Swiss brokerage operations, and Marco Bacchetta, the head of institutional sales, previously led the brokerage team at Pictet & Cie Bank in Zurich, another well-known private bank.

Frank Gut, the chief financial officer, previously oversaw the Swiss brokerage operations at Bank Julius Baer in Zurich. NZB’s Web site describes the bank as “a financial institution which focuses on the brokerage business with institutional investors from Switzerland and abroad, and on asset management and investment advisory services for private clients.”

The Justice Department established a special prosecutors’ team in 2007 that is focused on Swiss banks that help Americans evade taxes, said a person briefed on it who was not authorized to speak publicly. Douglas Shulman, the I.R.S. commissioner, said Wednesday that the agency was looking at other banks and intermediaries in Switzerland.

Julia Werdigier contributed reporting.