The Historic US Indictment of The Swiss Wegelin Bank Lays The Foundation For Additional Cases

Wegelin and Co. was the oldest private bank in Switzerland but they were unable to escape US indictment. They became the first non-US bank to be indicted by the US government because they facilitated tax evasion by US taxpayers. They were accused of conspiring to hide $1.2 billion dollars from the US Internal Revenue Service.

A key to the case was a Wegelin correspondent account held in Connecticut at a UBS branch. These correspondent accounts are held by banks at another bank to handle the financial intuitions transactions with each other. The United States Justice Dept. alleged that the account held by Wegelin did not have that legitimate purpose.

Although Wegelin did not have a physical location in the US, it used their UBS account so their United States customers could access their Swiss held funds. The Wegelin indictment alleged that millions flowed through the account to US citizens who were evading taxes. A default was entered against Wegelin and they were ordered to forfeit $16.2 million from the correspondent account.

Only days before the indictment was returned, the bank was dissolved by the owners. Their operations and assets were sold to the Raiffesein Bank in Switzerland. Wegelin now only exists to finalize United States relationships with clients and to negotiate with the United States Justice Department. The correspondent account is alleged to be used by 2 or more other Swiss banks for the same purpose.

This indictment was ground-breaking for the United States. Since this case, the United States has begun to intensify the legal pressure they put on financial institutions in Switzerland. The Swiss and the Americans have not been able to reach an agreement on the disclosure of US account holders.
Wegelin is said to have recruited US clients that were leaving UBS in 2008 when there was news of tax fraud at USB. Wegelin saw this as a great business opportunity. Managers were instructed to approach customers and tell them about an alternative that was safe for tax evaders.

In late 2011, Wegelin did not take any more new customers from the US but it was too late by then to avoid the Justice Department’s scrutiny. Their illegal conduct became apparent when the IRS put forth the Offshore Voluntary Disclosure Initiative.

The smaller banks in Switzerland are still not affected by United States enforcement efforts. However, the United States can target any Swiss banks with correspondent accounts in the US. There are many jurisdictional issues that still have to be answered.

IRS Wins Foreign Account Case Over Former Mobil Senior Executive

IRS (Internal Revenue Service) has achieved a great victory over the former Mobil senior executive Bryan Williams. He was alleged in a case of offshore tax evasion. He concealed foreign bank accounts of him holding millions from IRS.

In between 1993 and 2000 this former executive opened two Swiss offshore in order to hush up his financial activities. He was also accused for purposely failing to fill out documents like foreign bank and financial account forms aka FBAR.

In recent years IRS has become more stringent about the regulations. Different cases like   this have prompted them to take such an action.  The authority has been petitioning for more financial resource so that they can expand the tax evasion programs effectively. Their focus is now to catch and prosecute law breakers.

Initially the judgement was in favor of Williams. But in the year of 2003 Williams was convicted in a separate case. His case involved fraud and conspiracy. He pleaded guilty for this case. This year finally the fourth circuit court of appeals in Richmond,Virginia ruled in favor of IRS (Internal Revenue Service). According to the court documents he has committed a fraud.

Now IRS will impose heavy penalties on Williams for committing such crime. He will have to pay a huge amount  for each year of evasion.

This is  a great lesson for taxpayers. This is the high time everyone should be concerned about the consequences of such fraud. So it’s better to avoid the ways to take the help of abusive tax shelter. Going with legal tax shelter is quite beneficial way to reduce the taxable amount. Charitable donation is a perfect way of legal tax shelter. Apart from this you can go for investments. Investments in real estate or health insurance are also considered as a better way of tax shelter.

If you are holding an illegal foreign account, then you should stop such a financial activity. Any day and any time IRS authority can accuse for doing such frauds. And the rest you know.