Court defeat for US DoJ in Swiss banker trial

A former Swiss banker yesterday was acquitted in a Manhattan court of conspiracy to commit criminal tax evasion by helping US clients to hide funds and assets offshore, in a decision which will be seen as a blow for US prosecutors.

Stefan Buck had been head of private banking at Zurich-based Bank Frey & Co, which ceased trading in October 2013, due to the US investigation that led to Buck’s trial in the US, Bloomberg and other media organisations reported on Tuesday.

Buck had been charged in April 2013 on the conspiracy charges alongside Edgar Paltzer, a US citizen and former partner of the Swiss law firm Niederer Kraft & Frey, the media reports said.

The pair were said to have conspired with US taxpayers to move funds out of Swiss banks under investigation in the US, including now-defunct bank, Wegelin, thereby depriving US Treasury coffers of taxes owed on those sums.

The alleged criminal conduct included arranging for cash withdrawals and purchases of jewellery, opening new undeclared accounts and filing false statements of beneficial ownership.

While Palzer pleaded guilty, Buck declared himself innocent, and on Tuesday a Manhattan jury preferred his version of events to that of prosecutors.

The jury deliberated for less than a day, asking only for a transcript of Palzer’s evidence, before returning to announce the “not guilty” verdict, to cheers from Buck’s friends and family in the public gallery, journalists who were present said.

A spokesperson for the Manhattan US Attorney’s office, James Margolin, declined to media requests for comment.

‘A responsible Swiss banker’

Buck’s lawyer Marc Agnifilo told reporters that the evidence showed that his client was “at all times a responsible Swiss banker” who had followed his bank’s policies, the directions of his Swiss regulator and Swiss law.

“He looks forward to returning to Switzerland an innocent man to resume his personal and professional life,” added Agnifilo.

Buck agreed to come to the United States voluntarily from Switzerland in November 2016 to face trial, despite the fact that the US has no extradition treaty with Switzerland.

Buck declined to testify on his own behalf but his legal team called three witnesses, including a Zurich-based US tax lawyer who, reports the Bloomberg newswire, told jurors that Buck referred dozens of clients to him to help them disclose undeclared accounts to the IRS.

A former Bank Frey employee testified that Buck was “simply a low-level employee” who couldn’t open accounts without the blessing of compliance officials and executives.

The prosecutors had called five US clients for Bank Frey, who said that Buck had advised them on ways to conceal their assets from the tax authorities, such as by hiding their identities by using vehicles registered in such offshore tax havens as Lichtenstein and Panama, and by buying Swiss watches and jewels, in order to be able to move their wealth out of the US without detection, according to reports.

Seen as potential embarrassment 

The acquittal will be seen as an embarrassment for the US authorities, who have made no secret of their relish for pursuing European, especially Swiss, banks when they believe them to have colluded with US residents and taxpayers to evade tax.

In September, International Investment cited research that revealed Europe’s banks have paid a disproportionate share of the fines levied by the United States’ regulators, “with the average fine for European banks being ten times the amount US banks have been served”.

Last month, as reported, the Zurich-based insurer, Swiss Life, announced that it could face possible fines in the US after it was approached by the DoJ over its cross­-border business with US clients, some of whom it is alleged to have helped to avoid their US tax obligations.

The announcement was seen to have come in the wake of a widening by the US prosecutors of their ongoing probe into Swiss banks to include insurance companies, and was said to be related to the use of Swiss Life “insurance wrappers” sold in the US from 2006 to 2012.

Bank Frey was said to be another purveyor of these wrappers to American clients, according to reports, which noted that in 2013, it had returned funds to hundreds of US clients who had invested in insurance wrappers.

ABOUT THE AUTHOR
Eugene Costello
Eugene Costello has been a journalist for some 20 years, and has written for a wide variety of UK and international newspapers and magazines.

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