Swiss banker and lawyer indicted in Swiss bank probe

On Thursday, the U.S. took the next step in its battle against tax evaders by indicting a Swiss banker and a lawyer, Hansruedi Schumacher, on fraud charges. Schumacher led Swiss Neue Zuercher Bank's (NZB) private banking business until he was fired yesterday after the indictment, a spokeswoman told the AP. Schumacher moved to NZB from UBS (UBS) in 2002.

Matthias Rickenbach, a lawyer who worked with Schumacher, was also indicted. Both face a single charge of conspiring to defraud the U.S., which carries a potential five-year prison sentence.
In a statement issued with the indictment, the U.S. Justice Department said that "the defendants encouraged their clients to transfer assets from UBS, a large Swiss bank, to NZB, a smaller bank in Switzerland. The defendants told their clients that their assets and identification would be safer at NZB because they had no presence in the United States and was therefore less likely to be pressured by the American authorities to disclose the identities of their United States clients."

NZB bank closed down its private banking business earlier this year and urged U.S. clients to declare their assets to the U.S. by Sept. 23, which is when the amnesty period ends for tax evaders. Clearly, information gathered from the UBS case and the amnesty applications is already helping to expose a much broader tax evasion operation. As reported yesterday, smaller Swiss banks are being drawn into the case because people applying for amnesty must list all their current and former accounts, including all banks and the dates during which any money was deposited with those banks.

In the indictment, the Justice Department explained how Schumacher and Rickenbach worked: "[They] helped wealthy American clients conceal their assets by establishing sham and nominee offshore entities to hide their U.S. clients' assets and income while allowing these clients to still control the assets and make investment decisions."

This suit was filed just one day after the Swiss and U.S. governments agreed to release the names of about 4,450 wealthy Americans with suspicious banking practices. The agreement was carefully crafted so it does not break Swiss banking secrecy law. Once the IRS gets those names, the Americans included on the list will no longer be eligible for amnesty. Further, when someone files an amnesty application, his or her name is checked against a list of names already received from UBS.

So, if you haven't reported offshore holdings, you may want to take advantage of the amnesty. You'll still have to pay significant penalties, taxes and interest, but you won't risk the possibility of being charged criminally as long as you come forward before the IRS gets your name.

Lita Epstein has written more than 25 books including The Complete Idiot's Guide to Tax Breaks and Deductions.

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