Swisspartners Ends U.S. Tax Probe With Non-Prosecution Agreement

May 09, 2014 7:52 pm ET

May 10 (Bloomberg) -- Swisspartners Group, a Zurich-based money-manager, resolved a U.S. criminal tax probe by paying $4.4 million for helping American clients use secret accounts to evade taxes. In return, the government agreed not to prosecute the firm, citing its “extraordinary cooperation.”

The agreement resulted from Swisspartners’ voluntary production of the files for about 110 U.S. taxpayer clients, according to the Justice Department and Manhattan U.S. Attorney Preet Bharara.

“The extraordinary cooperation of Swisspartners has enabled us to identify U.S. tax cheats who have hidden behind phony offshore trusts and foundations,” Deputy Attorney General James Cole said today in a statement. “In this and other cases around the world we will continue to provide substantial credit for prompt and full cooperation.”

The accord is part of a broad investigation by U.S. authorities to find taxpayers who evade their obligations by hiding money overseas. Charges have been brought against more than 70 U.S. taxpayers while 43,000 more avoided prosecution since 2009 by voluntarily disclosing offshore accounts and paying back taxes and penalties. Three dozen offshore bankers, lawyers and advisers have also been charged and 14 Swiss banks are under criminal investigation.

Credit Suisse

Credit Suisse Group AG is trying to settle a U.S. tax evasion probe that could include a penalty of more than $1 billion, and prosecutors are pressing for a guilty plea from the parent company in a break with past practice, people familiar with the situation said this week.

The Swisspartners deal, called a non-prosecution agreement, includes four Swisspartners entities: Swisspartners Investment Network AG, Swisspartners Wealth Management AG, Swisspartners Insurance Company SPC Ltd. and Swisspartners Versicherung AG. The agreement “does not apply to any other subsidiaries of Swisspartners Investment Network AG or any individuals” not named.

The firm has agreed to continue to cooperation with American prosecutors for at least three more years, Bharara’s office said. If the government determines the firm has violated terms of the agreement it can face prosecution, according to the agreement.

Swisspartners Group voluntarily took steps in 2008 to stop helping U.S. clients evade income taxes, according to papers filed today Manhattan federal court. Four years later, the firm, although not under investigation, reported its conduct to U.S. officials, according to the government agreement.

‘Earned’ Credit

Those actions by the firm “earned the credit it received today,” Robert Tarun, a partner at Baker & McKenzie LLP, who represented the company in the accord, said in a phone interview.

Swisspartners Group acknowledged it knew some U.S. clients were maintaining undeclared foreign bank accounts with its assistance in order to evade taxes.

The major crack in Swiss bank secrecy opened in February 2009, when prosecutors charged UBS AG with conspiring to cheat the IRS. UBS, the largest Swiss bank, avoided prosecution by paying $780 million, admitting it fostered tax evasion and handing over data on thousands of clients.

As part of the accord, the money manager will forfeit $3.5 million, representing the fees it earned for the services, and $900,000 in restitution, according to court documents.

The case is U.S. v. $3.5 Million in U.S. Currency, 14- CV-3385, U.S. District Court, Southern District of New York (Manhattan).