Swiss Bank facing criminal charges in tax case fails to show up for US court hearing The USA Times

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Friday, May 25, 2012

Swiss Bank facing criminal charges in tax case fails to show up for US court hearing

NEW YORK, N.Y. - The U.S. Justice Department called Switzerland's largest private bank a fugitive from justice on Friday after it didn't send any representatives to a court hearing in New York, where it has been charged with conspired with American clients to hide $1.2 billion from the Internal Revenue Service.

Wegelin & Co. is accused of helping at least 100 U.S. clients conceal huge sums of money from the IRS in overseas accounts. Federal prosecutors said the bank recruited American customers who were concerned about possible prosecution for tax violations at home, including some that had already pulled money out of other Swiss banks because of growing pressure from U.S. law enforcement. Three of the bank's client advisers were indicted in January. The bank was added as a defendant in the case on Feb. 2

U.S. officials, however, have yet to find a way to move the case forward. The three Wegelin advisers charged in the case, Michael Berlinka, Urs Frei and Roger Keller, have not been arrested and the Justice Department has decided that any attempt to extradite them from Switzerland is unlikely to succeed.

The bank was summoned to appear before a federal judge in New York on Friday at 3 p.m. local time, but neither a bank officer nor a lawyer showed.

In a statement issued in Switzerland after the court hearing, the bank said it had not been properly served with the criminal summons, and was therefore under no obligation to appear in court.

As for the charges, the bank suggested that there was a conflict between US and Swiss law.

"The circumstances create a clear dilemma for Wegelin & Co: If it were to adhere to current US legal practice aimed at Swiss banks, it would have to breach Swiss law," the statement said.

The bank added that it would "make every effort to resolve this matter within the boundaries of respectful co-operation."

It is unclear what prosecutors can do next. Wegelin doesn't have an office in the U.S. Federal authorities have frozen $16 million that the bank had in a correspondent account in the U.S., but that amount is tiny compared to the large sums involved.

U.S. District Judge Jed Rakoff, who is presiding over the case, asked prosecutors to make a proposal on how to move the prosecution forward, and suggested involving the State Department, but the hearing ended without any immediate resolution.