A former Credit Suisse banker, who has been on the run since 2011, has pled guilty in a US District Court to charges related to helping HNW American taxpayers evade their income taxes.

Michele Bergantino, 48, a citizen of Italy and a resident of Switzerland,  appeared in a federal court in the Eastern District of Virginia. He pled guilty to conspiring to defraud the US Government while working on Credit Suisse's North America desk.

Between 2002 and 2009, while working as a relationship manager for Credit Suisse in Switzerland, he oversaw a portfolio of accounts, largely owned by US taxpayers residing on the West Coast, which grew to approximately $700 million of assets under management. Bergantino admitted that the tax loss associated with his criminal conduct was more than $1.5 million but less than or equal to $3.5 million.

I'm your private banker, I'll hide all your money...

During his time as an RM, Bergantino helped many US clients by:

• assuring them that Swiss bank secrecy laws would prevent Credit Suisse from disclosing their undeclared accounts to US law enforcers;
• discussing business with clients only when they travelled to Zurich to meet him;
• structuring withdrawals from their undeclared accounts by sending multiple cheques, each in amounts below $10,000, to clients in the United States;
• facilitating the withdrawal of large sums of cash by US customers from their Credit Suisse accounts at Credit Suisse offices in the Bahamas, in Switzerland, particularly the Credit Suisse branch at the Zurich airport and at a financial institution in the United Kingdom;
• holding clients’ post from delivery to the United States;
• issuing withdrawal cheques from Credit Suisse’s correspondent bank in the United States; and
• taking steps to remove evidence of a US client’s control over an account because that US client intended to file a false and fraudulent income tax return.  

Moreover, Bergantino knew that a number of his US clients were concealing their ownership and control of foreign financial accounts by holding those accounts in the names of nominee tax-haven entities, or structures, which they frequently created in the form of foreign partnerships, trusts, corporations and/or foundations.

The Italian also admitted travelling to the United States one or two times a year to meet clients, taking careful steps to conceal the purpose of his visits from US law enforcers. He used private couriers to send clients’ account statements to the US hotels where he stayed so that he would not be caught travelling with clients’ statements in his possession. In addition, Bergantino obtained 'travel' account statements for each client he intended to visit which were devoid of Credit Suisse’s logo and account or customer identification information and used business cards that Credit Suisse provided that contained only his name and office number and did not carry the Credit Suisse name or logo.

The James Bond of banking

The devious nature of Bergantino's activities knew no bounds. He went to the wedding of a client's child, but his real purpose was to tell the client about his clandestine offshore investments. Sometimes, while dining with a client in a plush hotel, he would slip an anonymised statement over the table. In another meeting with a client, this time in Switzerland, he conducted the interview in a secret room accessible only by a lift that had no buttons. As Senator John McCain of the US Senate Permanent Subcommittee on Investigations once said, such behaviour belonged in a James Bond film rather than in banking relationship management.

Foreigners who enter the United States are not only subjected to iris scans, fingerprinting and body scans; they are also obliged to fill in lengthy forms about the purposes of their visits. Bergantino provided misleading information on his.

Illegal advice, illegal deposit-taking

He also provided illegal advice to US customers regarding investments in US securities. Neither Bergantino nor Credit Suisse were registered with the US Securities and Exchange Commission and both US law and Credit Suisse policy prohibited Bergantino and other Credit Suisse employees from providing investment advice in the United States. Nevertheless, the management of Credit Suisse pressurised its employees, including Bergantino, to make sales in the United States.

Two of Bergantino’s co-defendants, Andreas Bachmann and Josef Dörig, pled guilty to the superseding indictment in 2014 and were sentenced in March last year. Credit Suisse pled guilty in May 2014 for conspiring to aid and assist taxpayers in filing false returns and was sentenced in November 2014 to pay $2.6 billion in fines and restitution. Bergantino himself faces a maximum of five years in prison. He also faces monetary penalties and might have to pay restitution.