Charged in tax-evasion case, Credit Suisse to pay $2.6B

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Holder

Associated Press

WASHINGTON

The Justice Department on Monday charged Credit Suisse AG with helping wealthy Americans avoid paying taxes through offshore accounts. The bank, Switzerland’s second-largest, pleaded guilty to criminal charges and agreed to pay about $2.6 billion in penalties.

It was the largest penalty imposed in any criminal-tax case, according to department officials, who said it reflected serious misconduct.

Credit Suisse “engaged in an extensive and wide-ranging conspiracy ... to help tax cheats dodge U.S. taxes,” Attorney General Eric Holder said.

The conspiracy spanned decades, Holder said. Bank employees destroyed records and obscured the paper trail of violations, even after being notified of an investigation in 2010, he said.

The penalties will be paid to the Justice Department and the Internal Revenue Service.

The settlement resolves a yearslong criminal probe into allegations that the bank recruited U.S. clients to open Swiss accounts, helped them conceal the accounts from the IRS and enabled misconduct by bank employees. The case is part of an Obama administration crackdown on foreign banks believed to be helping U.S. taxpayers hide assets.

Holder, criticized last year after telling Congress that large banks had become hard to prosecute, appeared to foreshadow the guilty plea in a video message earlier this month in which he said no financial institution was “too big to jail.”

The criminal case follows a Senate subcommittee investigation that found the bank provided accounts in Switzerland for more than 22,000 U.S. clients totaling $10 billion to $12 billion. The report said Credit Suisse sent Swiss bankers to recruit American clients at golf tournaments and other events, encouraged U.S. customers to travel to Switzerland and actively helped them hide their assets. In one instance, a Credit Suisse banker handed a customer bank statements hidden in a Sports Illustrated magazine at a breakfast meeting in the U.S.

Credit Suisse CEO Brady Dougan has said previously that senior executives at the bank were not aware that some Credit Suisse bankers were helping U.S. customers evade taxes. More than a half-dozen former bankers have been charged for their role in aiding the tax evasion. The case was filed in federal court in Alexandria, Va., where individual bankers have been charged.

The administration’s action against Credit Suisse, a banking fixture on Wall Street, comes amid public outrage that boiled over from the financial crisis that plunged the economy into the deepest recession since the Great Depression of the 1930s. Calls for holding big Wall Street banks accountable, and sending top executives to jail, have come from consumer advocates, lawmakers and others.

The Credit Suisse case is part of a broader crackdown on foreign banks believed to be helping U.S. taxpayers hide assets. In 2009, Switzerland’s largest bank, UBS, entered a deferred prosecution agreement with the Justice Department in which it agreed to pay $780 million in fines and turn over the names of thousands of customers suspected of evading U.S. taxes.