Wegelin & Co, based in St. Gallen, Switzerland and founded in 1741 has been deemed a fugitive after failing to appear in a U.S. Court to answer to criminal charges of Tax Evasion. Along with the company, three of Wegelin’s client managers at the Zurich branch, Michael Berlinka, Urs Frei and Roger Keller were also indicted.
The indictment claims that the managers serviced “undeclared accounts” for American taxpayers, helping them hide income from the American Internal Revenue Service. Prosecutors claim that $1.2 billion in assets have been hidden by the bank for more than 100 U.S. taxpaying clients.
Allegedly, the scheme involved wooing U.S. clients who were actively removing their funds from UBS AG – the largest Swiss bank – when reports surfaced of the IRS investigating the bank. In 2009 UBS admitted that it aided in tax evasion and paid $780 million and disclosed information on over 4,500 accounts as part of its agreement with the U.S. Justice Department. The Wegelin client managers are accused of then opening new undeclared accounts for clients wanting to remove their funds from UBS. According to prosecutors this was just a part of ongoing tax evasion conspiracy performed by the defendants and their clients to hide money from the U.S. Revenue Service from 2002 until 2011.
According to the prosecutors, this is the first time the U.S. has accused a foreign bank, rather than individuals, of aiding U.S. taxpayers in committing tax fraud. Wegelin has no branches outside of Switzerland and has effectively broken up by selling its non-U.S. operations to Raiffeisen, another Swiss bank. Wegelin moved $22.9 billion of its assets as well as most of its workers and clients to Notenstein Privatbank which was subsequently bought by Raiffeisen.
The U.S. Justice department is also currently probing other Swiss banks including Credit Suisse and Basler Kantonbank.
Source: Oracle Capital Group