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Former Credit Suisse banker pleads guilty

Chris Hamblin, Editor, London, 24 July 2017

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Susanne Rüegg Meier, a Swiss ex-banker, has pled guilty to conspiring to defraud US tax authorities while heading up a team of bankers at Credit Suisse.

In her plea agreement, Rüegg Meier admitted that between 2002 and 2011, while in charge of Credit Suisse’s North American desk in Switzerland, she participated in a wide-ranging conspiracy to help HNW Americans evade their income taxes by concealing assets and income in secret Swiss bank accounts. Rüegg Meier was ultimately responsible for something between 1,000 and 1,500 relationships between the bank and clients. She was also personally responsible for handling the accounts of 140 or 150, the overwhelming majority of whom were Americans residing primarily in New York, Chicago and Florida, holding assets under management of about $400 million. Rüegg Meier admitted that the tax loss associated with her criminal conduct was between $3½ and $9½ million.

Rüegg Meier took the following steps to help clients to hide their Swiss accounts:

  • retaining all mail related to each account in Switzerland;
  • 'structuring' withdrawals (in contravention of the US Bank Secrecy Act 1970) in the forms of multiple cheques, each payable in amounts of less than $10,000 that then went by courier to clients in the United States; and
  • arranging for US customers to withdraw cash from their Credit Suisse accounts at Credit Suisse locations outside Switzerland, such as the Bahamas.

Moreover, Rüegg Meier admitted that 20 or 30 HNWs concealed their ownership and control of foreign financial accounts by holding those accounts in the names of nominee tax haven entities or other structures "that were frequently created" in the form of foreign partnerships, trusts, corporations or foundations.

In the 'noughties Rüegg Meier traveled about twice a year to the United States to meet 50 or so clients at a time, sometimes at Credit Suisse's representative office in New York. To prepare for her journeys - and to throw the authorities off the track - she used to obtain 'travel' account statements that contained no Credit Suisse logos or information about her customers, as well as business cards that bore no Credit Suisse logos and had the wrong address for her office.

After Credit Suisse began closing US customers’ accounts in 2008, Rüegg Meier went on helping her clients keep their assets away from the prying eyes of the Internal Revenue Service. For example, when one was informed that the bank planned to close his account, Rüegg Meier helped him do so by withdrawing approximately $1 million in cash. Rüegg Meier advised the client to find another bank simply by walking along the street in Zurich and locating a bank that would be willing to open an account for the client. The customer put the cash into a paper bag and left. Rüegg Meier also recommended that a few US clients should open new accounts at other specific banks, such as Bank Frey and the now-defunct Wegelin & Co, and transfer their assets there.

At one point, according to Bloomberg, her statement claims: “It was Ruegg Meier’s understanding that the legal and compliance department was not interested in hearing about clients’ conduct that might violate the laws of countries other than Switzerland.”

Sentencing is scheduled for 8th September. Rüegg Meier faces a statutory maximum sentence of five years in prison, followed by a period of supervised release, restitution and monetary penalties.

Credit Suisse, for its part, pled guilty to conspiring to help taxpayers send in false returns in May 2014 and was sentenced to pay $2½ billion in fines and restitution, the highest ever payment in a criminal tax case. Rüegg Meier was one of eight of its ex-employees who had been charged in connection with the misconduct at that time.

End of a campaign

It was in December last year that the US Department of Justice reached final resolutions with banks that had met the requirements of its aggressive "Swiss Bank Programme" which gave Swiss banks an opportunity to avoid criminal liability in the United States by paying the US Government varying amounts and helping the DoJ investigate further. The DoJ claimed it as a major victory against offshore tax evasion, adding: “We are now in the legacy phase of the programme, in which the participating banks are cooperating, and will continue to cooperate, in all related civil and criminal proceedings and investigations."

US authorities have also stopped paying regulatory visits to Swiss banks in categories 3 and 4. In 2013 the DoJ asked all Swiss banks (a shrinking number, now somewhere around 270) to categorise themselves according to its own criteria, on pain of punishment. Category 1 included Swiss banks (such as Credit Suisse) already under investigation - these were not allowed to participate. Category 2 consisted of banks that thought they "had reason to believe" that they had committed tax-related criminal offences in connection with undeclared US accounts. Category 3 banks were those that had established, with the help of independent internal investigations of their cross-border activities, that they did not commit tax offences and were making effective compliance efforts. They had to send the DoJ reports containing statements from witnesses, file reviews, factual findings and the like, with a DoJ cross-examination in every case. Category 4 banks had to prove that they met certain criteria for "deemed-compliance" under the Foreign Account Tax Compliance Act 2010 or FATCA.

Between March 2015 and January 2016, the DoJ signed non-prosecution agreements with 80 Category 2 banks and collected more than $1.36 billion in penalties.

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