U.S. prosecutors accused three Swiss bankers on Tuesday of conspiring with wealthy U.S. taxpayers to hide more than $1.2 billion in assets from tax authorities, and sources briefed on the matter said the three worked for Wegelin & Co, one of Switzerland's oldest private banks.
The office of the Manhattan U.S. Attorney said in a statement that the indictment charges the bankers with trying to capture business lost by UBS AG and another large international Swiss bank in the wake of widespread news reports that the Internal Revenue Service was investigating UBS in 2008 and 2009.
While Wegelin was not identified in the indictment filed against Michael Berlinka, Urs Frei and Roger Keller, the three men, who reside in Switzerland, worked for Wegelin and sold tax evasion services from the bank's Zurich office, the sources said.
The charges, which come amid a broad criminal investigation by U.S. authorities into Swiss and Swiss-style banks that sold tax evasion services to rich Americans, signal that U.S. authorities are moving closer to criminal charges against some of those banks, the sources said.
Wegelin does not have a United States presence, and the bank carried out its work for U.S. clients through a Stamford, Conn., branch of UBS AG, the giant Swiss bank, according to the indictment. Wegelin directly accessed the U.S. banking system through a correspondent bank account held at UBS AG, which the indictment said was in Stamford, Conn.
Wegelin could not immediately be reached for comment.
U.S. authorities, who suspect that tens of thousands of Americans have been using Swiss banks to avoid paying billions of dollars in taxes, are investigating scores of Swiss banks and international banks with Swiss operations.
The investigations, an outgrowth of scrutiny of UBS, are focused on Credit Suisse AG, HSBC Holdings Plc and Basler Kantonalbank, among others. In 2009, UBS paid $780 million to settle Justice Department criminal charges that the bank helped thousands of U.S. clients hide $20 billion in their accounts.
Swiss authorities want a global civil settlement with U.S. authorities in which the entire Swiss banking industry would pay a fine and shutter their undisclosed private banking services for Americans.
If convicted, the bankers face a maximum prison term of five years under the conspiracy charge.
(Reporting by Lynnley Browning in New Haven, Connecticut, and Grant McCool in New York; Editing by Bernard Orr and Howard Goller)