Daily Management Review

Probe Over Undeclared Accounts Faced by Credit Suisse


11/22/2016




Probe Over Undeclared Accounts Faced by Credit Suisse
U.S. investigators want to know why the Swiss bank Credit Suisse AG neglected to tell them about $200 million in undeclared assets owned by an American client even after the bank had promised to help the U.S. root out suspicious accounts when it  had pleaded guilty in 2014 to helping Americans cheat on their taxes, reported the media.
 
Pleading guilty on Nov. 4 of conspiring to defraud the Internal Revenue Service was the client, Dan Horsky, a citizen of the U.S., U.K. and Israel. Five people who weren’t authorized to discuss the case publicly reportedly told the media that investigators examining whether the bank helped clients with ties to Israel evade U.S. taxes were being helped by that person.
 
The media said that by using methods like those that led to Credit Suisse’s guilty plea, the Bottom of Form
Horsky accounts, that were considered "toxic” on the bank’s Israel desk, were hidden from the IRS.
 
The sources said that Credit Suisse could face a new civil or criminal case based on the Horsky probe.
 
“If they didn’t provide information about this account when they had it in their files, there was either gross negligence or more likely some kind of conspiracy at the bank to avoid disclosing this account,” said Larry Campagna, a Houston tax attorney, when informed about the new Credit Suisse inquiry.
 
When asked about the U.S. investigation into the bank’s handling of Horsky’s accounts, Anna Sexton, a spokeswoman for Credit Suisse Group AG, the parent of the unit that pleaded guilty, declined to comment.
 
The bank has set aside more than 2 billion Swiss francs ($2 billion) in general litigation reserves. Horsky’s lawyers declined to comment.
 
The media reported that whether it was a lapse in internal controls or a crime involving bankers who acted with approval of managers, with regards to the bank’s failure to reveal Horsky’s accounts, is being probed by prosecutors - the U.S. Securities and Exchange Commission and the IRS. The sources said that Credit Suisse is the bank  that wasn’t identified in Horsky’s guilty plea.
 
Credit Suisse helped American customers hide as much as $10 billion in assets from the IRS, a U.S. Senate committee found in February 2014. Only a small group of bankers helped U.S. clients cheat on their taxes, Credit Suisse executives told skeptical lawmakers at the time.
 
Hundreds of employees handled American accounts, both declared and undeclared to the IRS, Credit Suisse AG had said pleaded guilty that May. Among 85 Swiss banks that admitted helping Americans evade taxes, its $2.6 billion fine was a record. Credit Suisse pledged to help flush out U.S. accounts not declared to the IRS.
 
With regards to abuses in residential mortgage-backed securities, Credit Suisse is separately in settlement talks with the Justice Department and U.S. states. After the 2014 tax plea, a monitor appointed by the New York Department of Financial Services scrutinizes the bank. The monitor, Neil Barofsky, declined to comment on the new investigation.
 
(Source:www.bloomberg.com)
 






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