This post appeared on the RenounceUScitizenship blog.
2012 – Wegelin – Sowing The Seeds of U.S. Terror
Wegelin's Fall to Tax-Haven Poster Child http://t.co/MgsdWsERwm – thought it was out of the reach of US bc it had no branches in the U.S.
— U.S. Citizen Abroad (@USCitizenAbroad) December 14, 2013
This article includes:
Two months ago, Wegelin pleaded guilty, even though it had “little to gain” by doing so, it said in court documents. Wegelin said it was seeking “closure.” An attorney for Wegelin declined to comment.
Legal experts said the U.S.’s tactics may offer a blueprint for future actions against foreign banks. Assistant U.S. Attorney Daniel Levy wrote in a sentencing memo that the prosecution of Wegelin would send “a strong message to those who would believe that, without a physical presence in the U.S., they cannot be reached by U.S. law enforcement.”
“Americans who still have these undeclared accounts need to realize the world is shrinking,” Jeffrey Neiman, a former assistant U.S. attorney, said in an interview. He prosecuted UBS, UBSN.VX -0.31% the Swiss bank, for offenses similar to Wegelin’s.
But the legal theories the U.S. used in prosecuting Wegelin haven’t been tested under these specific circumstances. Had Wegelin gone to trial, legal experts said, it could have argued that it had no criminal intent because it didn’t believe it was responsible for adhering to U.S. laws. In Thursday’s court filing, Wegelin said it went to great lengths to attempt to comply with U.S. laws and that it didn’t know it would be punished for “what it was legally entitled to do under Swiss law.” It added: “Swiss banking privacy and its potential for concealing tax evasion by U.S. persons has never been a secret.”
An interesting Wikipedia summary of the story appears here.
It seems clear that the real purpose of Wegelin was to terrorize Swiss banks and to provide a precedent for so doing.
Swiss bank Wegelin ordered to pay in U.S. tax evasion case http://t.co/8xI9n1hdXD – Precedent 4 Swiss bank guilt plea for conduct in Switz
— U.S. Citizen Abroad (@USCitizenAbroad) December 14, 2013
2013 – OVDP For Swiss Banks – Reaping The Harvest of Terror
Swiss Banks Disclosure Of Americans, Many More Expected By End Of Year http://t.co/CF25slx59G via @forbes – To #OVDP or not to #OVDP
— U.S. Citizen Abroad (@USCitizenAbroad) December 14, 2013
The background, decision and link to Wegelin are described by lawyer Robert Wood and the Economist. The Economist sets the stage follows:
AMERICANS never made up a large portion of Swiss private banks’ international client base, but the price to be paid for allowing some of them to evade tax is proving to be steep—and could be ruinous for some smaller wealth managers. By December 9th most of Switzerland’s 300 or so banks were required to tell their regulator whether they would participate in a voluntary-disclosure programme crafted by the Department of Justice, under which those that have handled untaxed accounts for American clients can wipe the slate clean in exchange for fines. Swiss authorities have urged banks to sign up to avoid the fate of Wegelin, a venerable private bank that closed after being indicted in New York for aiding tax dodgers.
Banks have four choices. They can declare themselves “category two” institutions (those with foreign clients who broke American tax laws), “category three” (those whose foreign clients were clean), “category four” (mostly domestic) or they can choose not to take part. “Category one” comprises 14 large banks, including Credit Suisse and Julius Bär, which cannot participate because they were already under investigation when the programme was set up. They will have to negotiate individual settlements with the American authorities. The only large bank that has already done so is UBS, which paid $780m and handed over information on more than 4,700 American accounts.
As Swiss banks scramble to enter the Department of Justice program for Swiss banks, there is much reference to Wegelin Bank of Switzerland. Rightly or wrongly Wegelin agreed with U.S. prosecutors that it conspired with U.S. taxpayers to hide money from the IRS. In other words, it entered into a plea bargain. It’s unclear what the result would have been if Wegelin had pleaded not guilty and the case had gone to trial. I predict (if the law had been applied) that the U.S. would have lost.
Leaving aside the jurisdictional issues (does U.S. law apply in Switzerland) the point is that Wegelin – on is website – specifically agreed that it was assisting U.S. taxpayers evade taxes.
Swiss banks should NOT participate in this U.S. shakedown created by the Department of Justice.
The top 10 reasons include:
1. Wegelin has absolutely NOTHING to do with the circumstances of the vast majority of Swiss banks. The Wegelin situation is analogous to the Swiss banks in category 1 that are NOT eligible to participate (time will show that the Category 1 banks will do better outside the program).
2. The program is being interpreted so idiotically by the Department of “Justice” that almost all the Swiss banks are forced into Category 2 where they agree to pay fines because they can’t prove their American customers were innocent. In other words: You pay “US” because, well just because.
3. The history of OVDP and OVDI has shown that the U.S. simply cannot be trusted. Remember the “Bait and Switch” in OVDP 2009.
4. The U.S. reserves the right to interpret the terms of the program making it impossible for the banks to even know what they are agreeing to. (Incredibly an article in Geneva Launch suggested that Post Finance – a bank owned by the Swiss Government – was entering OVDP because the terms of the program were NOT clear. As one commenter asked: Who is advising these people?)
5. OVDP for Swiss banks is another U.S. program that punishes more innocents (banks and Americans abroad) than it hurts the guilty (who aren’t eligible anyway). Innocent Americans Abroad are being victimized by this program. It is one more example of U.S. immorality!
6. The simple fact is that there are 300 banks in Switzerland – the vast majority are guilty of one and only one thing – Having an American citizen as a client. (Some of which don’t even know they are Americans.) Let the Department of Justice come to Switzerland and prove its case.
7. The administrative costs are too expensive to the banks. Participation makes no business sense.
8. Participation is a betrayal of Swiss citizens of U.S. origin (Countries considering FATCA IGAs take note!) who have no practical connection to the U.S. Some of these Swiss citizens may not even know the U.S. considers them to
part of their penalty base U.S. citizens. (We know that the IRS believes that those who did NOT know they were U.S. citizens should pay 5% of their net worth to the IRS in OVDP.)
9. Participation is a betrayal of ALL Swiss citizens because it assumes that the U.S. and not Switzerland makes laws for Switzerland. Remember that the behavior the U.S. doesn’t like is perfectly legal in Switzerland. The banks are being punished for “acting correctly under Swiss law“.
10. I predict that those who do NOT participate will end up with a better deal.
Closing comments and a dose of sanity from Swiss lawyer Douglas Hornung:
The Swiss French-language newspaper “Les Temps” has an opinion editorial by Douglas Hornung, an attorney, who advises Swiss banks NOT to take part in the “plead guilty deal” agreed between the US and Swiss governments. The opinion piece is titled “La majorité des banques suisses doit refuser le «US Program»” and is behind a pay-wall.
Below is a rough translation of the first paragraphs:
“Only banks that have actively solicited clients on American soil have an interest to participate. Bankers who take the time to learn will learn the intricacies of “U.S. Program ” that Swiss diplomats have not seen.
by Douglas Hornung
More and more banks are considering whether to participate in the U.S. “Program” and FINMA , the Federal Supervisory Authority for Financial Markets, is applying pressure to convince banks to participate in the “U.S. Program .” The Swiss authorities and the Swiss Bankers Association emphasize that banks that fail to participate in “U.S. Program”, are liable to criminal prosecution for “conspiracy” that threaten their very existence. The example of the Wegelin bank is highlighted.
In fact, this fear and this example are ruled out: in fact, the United States can not threaten to open a criminal investigation “conspiracy” against most Swiss banks. They can not do that against those who actually had a policy of attracting a major U.S. customer and have in that particular efforts to have this type of clients. In these cases, but in these cases only the United States can put the bank itself at risk by threatening criminal prosecution for “conspiracy ” if it does not cooperate.
For all other Swiss banks , there is no reason to fear of being accused of “conspiracy” because they have nothing ” conspired ” and have only managed the assets of some U.S. customers, often elderly, who represent only a small part of their regular customers. They have not had proactive activities on American soil (organization of cultural events, sports) and have been content to treat clients who come to them naturally. They could also defend themselves vigorously, and successfully, in case – although unlikely – that such a threat materializes.”
The April 6, 2012 Truth-Out article, which describes Kathryn Keneally’s confirmation hearings to become Asst Attorney General, points out her ivory tower view of the world and disregard (contempt?) for the middle and lower classes. What else could be expected from an Asst Attorney General with a 5th Avenue residence on Manhattan:
“Despite candidate Obama’s message of change, his is a well-connected administration that appears willing to allow America’s most vulnerable citizens to bare the burden of the 2008 financial crisis.
And if the past ties of the president’s DOJ Tax Division Assistant Attorney General nominee are any indication, tax law is another area of the legal arena in which administration officials might be ready to turn a blind eye to the interests of the lower and middle classes. The nominee, Kathryn Keneally, is currently a partner at New York-based firm Fulbright and Jaworski and a decorated tax law specialist who has represented a diverse array of clients, including the estate of Bob Marley and Ferdinand Marcos. That clientele also includes well-heeled financial institutions with a less than stellar record of adhering to federal tax law.”
Even if he is a liar, Robert Stack may be a comparatively nice guy compared to this abomination.
Is there any indication as to whether Swiss USP’s are entering OVDP (Cadillac) or Streamlined (Chevy)?
Thanks for the background on Keneally.. Sounds like she is one of those elites that rule the world.
“Is there any indication as to whether Swiss USP’s are entering OVDP (Cadillac) or Streamlined (Chevy)?”
I’m not plugged in enough to give an answer. The 106 banks in category 2 appear to be pushing VD as they try to avoid the 20% to 50% penalty, based on highest balance and when the account was opened, if they cannot demonstrate that the account holder was US tax compliant. A comment made several months ago from someone who should know was that many families with a long-term US emigrant in the family and accidental Americans were walking away from doing anything after learning about the 27.5% asset penalty plus taxes, interest and penalties on income. A possible risk to these families is that the banks will sue them for damages if the banks have to pay the 20% to 50% penalty on their bank accounts, (although in some cases that might be less expensive than paying the the 27.5% asset penalty in their assets are in their house and business). Some banks are freezing account balances of USPs until they show that they are compliant with the implicit threat that 20% to 50% of the account balance will be seized if they fail to demonstrate compliance.
Switzerland is known abroad for its banks and wealth. The fact of the matter is that it is mostly an industrial country (20% of GDP vs. 13% for US/ Canada, although 25% for Germany). Its banks contribute 6.5% to GDP, similar to US at 6.0%, although 10 years ago Switzerland banks contributed around 10% of GDP. It has the highest average (mean) wealth per adult as measured in USD but its median wealth per adult is similar to Canada’s and far lower than Australia and, for example, France:
Mean Wealth per Adult:
Median Wealth per Adult:
Source: 2013 Credit Suisse Global Wealth Databook
The high mean wealth figure for Switzerland is driven by concentrated wealth as evidenced by its very high Gini wealth index, which is nearly identical to the US, but also from an overvalued currency. There was a newspaper report this week that around 10% of estates formed in 2013 had a negative net worth. The country, like Germany, does not have a minimum wage. It is still attracting net immigrants, skilled and unskilled, at 1% of population per year, higher than Germany and Russia and around three times the rate of the US.
Banks in Switzerland agreeing to the US Programme to avoid prosecution need to complete the below questions. They make sense for the banks that actively solicited US customers, e.g., private banks, but make little sense for retail banks in Switzerland that provided normal banking services to resident Americans. As a public service, I’ve answered the questions for a hypothetical retail bank in the French-speaking area:
“The bank must provide information regarding how it structured, operated, and supervised its cross-border business:”
There are many French who cross the border each day to work in industry, e.g., watchmakers, and also in the gastro business. Since they work here some have accounts at our bank. This is the vast majority of our so-called “cross-border” business. There are also a few Germans who commute to work and bank with us. The US Persons that we have identified live in our area and, under a normal definition of “cross-border”, as we understand the term, we do not consider them to be “cross-border” customers since they live here and do not commute from America. We do not offer special accounts or supervision to cross-border customers or US Persons. As all of our documents are in French, it is important that our customers speak this language.
“The name and function of the individuals responsible for that business”:
Our normal employees support our customers. We do not offer services in English or Spanish, the languages of America.
“How account holders were attracted and serviced by the bank”:
To attract customers, like many retail banks worldwide, we advertise in newspapers and support clubs and events to make our name known to potential customers. We offer a standard service to all customers, irrespective of where they were born or their nationality. Also, Swiss law does not permit us to discriminate based on ethnicity.
The US Programme is a “one-size fits all” approach that fails to distinguish between those banks which actively solicited US customers and those that did not.
The situation in Switzerland for everyday US emigrants is absolutely tragic and the fleecing the banks and it’s US customers are getting at the hands of the DOJ is shameful. I guess the plus side for the taxpayer is that once they have entered OVDP, they can choose to opt out or be moved to Streamlined, which the IRS is currently doing for the 2011 OVDI participants. Buy the Cadillac to be assured a luxury ride, and downgrade to Chevy once you’re within eyesight of your destination. What a waste of resources all around.
The truly frightening thing to me is that there is absolutely no difference in the behaviour of many of these Swiss banks than most other banks in the world that have US customers where they operate. What is different is how the DOJ views the country they are located in, and if Switzerland is any example, we know how capricious and uncooperative the DOJ can be once you’ve crossed its path. Would the US do to Canada what it’s done to Switzerland if it hadn’t inked an IGA on FATCA and refused to cooperate and hand over its citizens? I can now see why our leaders in Canada are so happy about the so-called concessions it received in the FATCA IGA – we could easily end up like Switzerland with nothing.
Update — May . 2014.
Pictet & Cie Bank —- List of Crimes.
1996 —– F.S.A— Breach in London.
2003 —– F.S.A. — States rogues operating in Pictet’s London office. Ivan Pictet
states that documents were forgeries but were later proved to be genuine in
the British Courts. He had documents destroyed in their London office —
hoping to hide the crimes.
2007 .- – – The Securities and Exchange Surveillance issued a recommendation
that the Prime Minister and The Commissioner of the FSA to take disciplinary action against Pictet Asset Management – Japan Ltd.
2008 .– Dec. – Pictet Bank state – ” We have never chosen any funds linked to Madoff.
2011 – – – Madoff Trustees sue Pictet & Cie. Bank for $156 ,000,000.
2011- – – Pictet & Cie abetted a Bribery Scheme – Oil company sues Pictet for $350,000,000.
2012 – – – April – Geneva Bank Pictet used in Offshore Tax Scheme. ( USA.)
2012 — – June. — Published in Anglo INFO .Geneva.— USA Trust Fund Investors were sent false and fraudulent documents by Pictet Bank in order to collect large fees. ( Like MADOFF)
Even after the SEC in the USA uncovered the fraud Pictet continued to charge fees and drain whatever was left in these accounts. Estimated that $90,000,000 million lost in this Pictet Ponzi scheme.
2012 – – – July. — De – Spiegel. — states – Pictet Bank uses a letterbox company in
Panama and a tax loophole involving investments in London to gain
German millionaires as clients.
2012 – – – August —- German Opposition Leader accuses Swiss Banks of “organised crime.”
2013 — Jan.— Swiss MP’ table motion to freeze Tiab Mahmud’s assets of ” criminal origins”
held in Swiss banks – $18,000,000. held in 5 accounts at Pictet & Cie. Bank. Bahamas.
Ironically the Pictet & Cie.Bank partners are bigger criminals than the criminals who have accounts in the their bank.
The bank is now seeking to re-structure — to cut the partners liability – hoping to off load their decades of criminal responsibilty – and protect their personal ill gotten wealth.. The Germans are right — the bankers should go to prison if found guilty of financial crimes..
SWISS BANK PARTNERS IN CRIMES.
Pictet & Cie Bank.
Jacques de Saussure.
Jean – Francois Demole.
Renaud de Planta.
Pictet & Cie.- claim they are the “Rolls Royce”of Swiss banks.
Swiss Banks or more correctly Swizz banks.
Swizz. —- “ a great disappointment.” or a “ fraud.”
Fraud. —“ an intentional deception or dishonesty.”— “a crime.”
Crime. —“ an act committed or omitted in violation of a law.”
Serious Crimes .
Conspiring to pervert the Course of Justice.
Perverting the Course of Justice.
Contempt of Court.
Pictet & Cie Bank –Partners –(1996—2014)—guilty
Peters &Peters – Partners.— (1999—2014)— guilty.
The bank and it’s officials/lawyers deliberately withheld crucial documents requested under a High Court order. The bank and it’s officials/lawyers deliberately withheld evidence from the Police, and one of it’s account managers Susan Broadhead gave a false witness statement to the Police.
Another one of it’s managers Nicholas Campiche ( Now Head of Pictet – Alternative Investments.) concocted a letter pretending to be a client and closed his account. The senior partner (Ivan Pictet.) sought to have numerous documents destroyed,along with those copies held in their London office’s of Pictet Asset Management. Initially stating that they were forgeries then their lawyers Peters & Peters – Monty Raphael Q.C.–and the barrister Charles Flint.Q.C. later had to admit in Court that the documents were genuine.
British Parliament. Hansard .29th March 2007.
Barry Sheerman .M.P.—quote.
———“ Constituents of mine have lost £2 million through fraud. The fraudster used Pictet & Cie – – a French Bank – – and Pictet Asset Management to back the fraud being perpetrated.””
(1) It is a criminal offence for a bank to knowingly act for an undischarged criminal bankrupt in so far as it seeks to assist that criminal bankrupt in the fraudulent movement of monies. ( Money Laundering.)
(2) It is a criminal offence for a bank to lie to the police and the bankrupts trustee in bankruptcy in so far as any knowledge of, or dealings with the bank was refuted .
(3) A bank can be guilty of Contempt of Court if it fails to comply fully with the Courts order for discovery .
(4) The banks contempt is further compounded if it fails to address its error after it is specifically drawn to the to its solicitors attention. ( Monty Raphael Q.C.).
(5) It is a criminal offence under the Financial Services Act to seek to destroy evidence that might be relevant to an investigation .
(6) It is a criminal offence not to relinquish control of funds to the Trustee immediately the fact of the bankruptcy is drawn to the banks attention.
(7) It is a criminal offence to lie or otherwise obfuscate the lawful and proper enquiries of the F.S.A.
In the F.S.A. cover up , they concluded that there had been “ Rogue” elements in Pictet & Cie’s , London operations . They had been moved from their London Office so who was there left to prosecute. “ Unbelievable.”
*** We thank –David Cameron. M.P. ( Canary Wharf Speech.)
(1) Bankers who behave irresponsibly should face professional consequences.
(2) If anyone is found to have behaved criminally they must be prosecuted.
(3) The F.S.A and the Serious Fraud Office should be following up every lead,
investigating every suspect transaction .
(4) We need to make it 100% clear –those who break the law should face
(5) That we make sure we root out any wrongdoing that may have happened, whoever
is involved, however high or well connected they may be.
Both Ivan Pictet and Monty Raphael.Q.C. conspired to withhold crucial documents requested by the High Court – the FSA — and the Police Fraud Squad.
Written Parliamentary Questions received by the table office ..
(1) To ask the secretary of state what steps he is taking to ensure that Swiss Banks such as Pictet & Cie do not evade criminal prosecution under EU law even when the illegal act is committed by a London based subsidiary.
(2)To ask the secretary of state what steps he is taking to protect the rights of UK citizens who seek redress following criminal activities by Swiss banks with subsidiary offices located in London.
Quote. ( America’s Top Lawyer .)
You can be the richest man in the world with the best lawyers that money can buy but you cannot win against a man who has got nothing left to lose and is telling the truth.
*** We note that there has been a sharp increase in Peters & Peters partners leaving to go to other practices. Moving does not alleviate them of any responsibility from any illegalities that may have occurred at Peters & Peters during their partnership tenure. From 1999 onwards.
The consensus of opinion is the Pictet & Cie should be prosecuted , and that their U.K. banking licence should be taken away.
Their Solicitors at Peters & Peters .London “ struck off and prosecuted..”
*** Started campaign — June 6th.2008.
5years —- approx 10 .5 million e-mails – – – but still no writs, injunctions or threats of litigation – – – WHY – – – because it is all true.
*** . The bigger they are — the harder they fall.!!!
In America —- they would have all been in prison for the last seven years.
Feb 2013,— Pictet & Cie Bank Partners remove their unlimited liability.
They realise that all their personal wealth is at risk , the people they have conned might want their money back.
” Google ” .or “Yahoo”
Insert– ( Charles Pictet. Banker.
Insert– ( Ivan Pictet.Banker.
Insert– ( Jacques de Saussure.Banker.
Insert– ( Nicolas Pictet. Banker.
Insert– ( Jean-Francois Demole.Banker.
Insert — ( Philippe Bertherat. Banker.
Insert– ( Renaud de Planta. Banker.
Interesting read on the New York times DealB%k today, about the Federal Prosecutors in Virginia that perused the Credit Suisse Case. It gives a view into the practices of using the “flimsiest” of excuses to assert jurisdiction.
Business as usual in Switzerland?
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The Death of the Swiss Pictet & Cie.Bank.
Once called the Rolls Royce of Swiss Private Banks , a member of the Swiss Private Bank Association. An association that has shrunk by 25% since the financial crash. The member banks Wegelin and Hottinger were lost through bankruptcy.
Pictet & Cie Bank and Lombard Odier Bank seeing the collapse of both Wegelin Bank and Hottinger Bank were advised to become limited liability companies to avoid the same fate has both Wegelin and Hottinger. Other members are also considering this course of action.
Pictet Bank by becoming a Limited liability company thus relieves the bank and its seven partners of their two hundred years unlimited liability. This basically means that the seven partners have been advised that their own monies invested in their bank is at risk. I’ll bet they haven’t informed all their investors / clients of the risks.
Pictet have a long list of outstanding litigable offences against them , which if they were outside the banking fraternity would be criminal and result in major prison sentences. It is quite obvious why Pictet do not have a bank in America. They have one in every other major financial centre. The reason being the USA they imprison corrupt bankers.
Ivan Pictet in particular operated like a modern day Don Corleone , being in positions of power ( Chairman of this and CEO of that.) a philanthropist with other peoples money . He even had an Auditorium Built in Geneva and named after him with monies illegally obtained. In 2013 he was given the Legion of Honour which was quite apt — seeing that Franco – – Hitler — Mussolini —- Himmler have one.
He was an exponent of the — bare faced lie — he had crucial incriminating documents destroyed —– he said the bank had no involvement with MADOFF —- in fact they let Madoff con people then they stole the money off him.
Madoff was sent to prison for 150years — Ivan Pictet got a medal. The lawyers in the Madoff case sued Pictet bank for $135 million dollars.
The Swiss newpaper the Anglo exposed a Pictet Ponzi scheme that robbed USA investors of some $90 million dollars.
The Bank had the top lawyer in Britain take me to Court but one week before the case I let Monty Raphael Q.C that lawyer have sight of the evidence I was putting before the Court . I went to Court with my legal team — Monty Raphael.Q.C. never turned up. The judge was furious — my barrister suggested it was contempt of court. The Judge made sure my legal costs were adequately re- imbursed .
Full Story —- Google —- ivan pictet/monty raphael.