Credit Suisse Services AG has pleaded guilty to conspiring with wealthy American taxpayers to hide more than $4 billion in offshore accounts, agreeing to pay nearly $511 million to settle the criminal case, the Department of Justice announced Monday. The UBS subsidiary admitted to helping "ultra-high-net-worth and high-net-worth individual clients" evade U.S. tax obligations between 2010 and 2021, breaching its previous 2014 plea agreement with the government.
What to Know:
- Credit Suisse concealed more than $4 billion in at least 475 offshore accounts for wealthy Americans, causing over $71 million in tax losses
- The company violated its 2014 plea agreement when it previously paid $2.6 billion for similar tax evasion assistance
- Whistleblowers who were former Credit Suisse bankers provided critical evidence that led to the guilty plea after a decade-long effort
The subsidiary also entered into a separate non-prosecution agreement regarding undeclared U.S. accounts held at Credit Suisse AG Singapore.
"Between 2014 and June 2023, Credit Suisse AG Singapore held undeclared accounts for U.S. persons, which Credit Suisse AG Singapore knew or should have known were U.S., with total assets valued at over $2 billion," according to Justice Department officials.
The financial firm generated more than $108.6 million in revenue from the accounts involved in the criminal conspiracy, prosecutors said. This marks the second time Credit Suisse has faced significant penalties for helping Americans hide assets offshore. In 2014, the company paid $2.6 billion in what was then the largest payment ever in a criminal tax case.
Whistleblowers' Critical Role in Uncovering the Scheme
The latest case follows a Senate Finance Committee investigation that concluded more than two years ago that Credit Suisse had been "complicit in ongoing tax evasion by ultra-wealthy Americans." That investigation uncovered what the committee described as "a previously unknown, ongoing and potentially criminal conspiracy" involving undisclosed offshore accounts holding nearly $100 million belonging to a single American family.
Jeffrey Neiman, a Florida attorney representing whistleblowers in the case, said his clients "uncovered and exposed this ongoing misconduct" of the company's violation of the original plea agreement. The whistleblowers, all former Credit Suisse bankers, had provided evidence to authorities for more than a decade despite significant personal risk.
"At great personal risk and potential prosecution by Swiss authorities, they provided the Government with detailed evidence: names, Social Security numbers, and passports of U.S.-linked account holders whose assets had been hidden for decades," Neiman said in a statement Monday. The whistleblowers also supplied internal documents including account statements and emails, and shared intelligence on banker movements that allowed federal agents to take swift action.
"For nearly a decade, the whistleblowers have waited for this moment," Neiman said. "Today, they feel vindicated — for telling the truth, for risking everything, and for standing up to one of the world's most powerful financial institutions."
Elaborate Concealment Methods Detailed in Charges
Court documents filed Monday outline numerous methods Credit Suisse employed to hide American ownership of accounts. The company falsified bank records, documented certain American account owners "as non-U.S. persons," processed fictitious paperwork, and maintained more than 100 accounts held by a Swiss lawyer for "the benefit of undeclared clients."
The charging document also details how Credit Suisse serviced "more than $1 billion worth of U.S. accounts without full documentation of tax compliance long after the accounts should have been closed." Among specific examples cited was the case of Dan Horsky, a former University of Rochester business professor.
Prosecutors allege Credit Suisse allowed Horsky to retain control of assets after changing beneficial ownership to a non-U.S. citizen relative, helping him avoid taxes. Horsky, whose overseas account contained $200 million, pleaded guilty to tax-related crimes in 2016. He was sentenced to seven months in prison in 2017 and paid a $100 million civil penalty.
Under the new plea agreement, Credit Suisse and parent company UBS are "required to cooperate fully with ongoing investigations and affirmatively disclose any information it may later uncover regarding U.S.-related accounts." The Justice Department emphasized that "the agreements provide no protections for any individuals."
Closing Thoughts
Credit Suisse's $511 million payment and guilty plea represent another major penalty for the financial institution caught helping wealthy Americans evade taxes. The case highlights both the persistent efforts of some financial institutions to facilitate tax evasion and the crucial role whistleblowers play in exposing financial misconduct. Despite previous penalties and agreements, the bank continued its illicit practices for years after promising to reform.