UBSWhistleblowerGets $104 Million(Links to an external site.)The Wall Street JournalNow a Felon, Former Banker Told U.S. About Tax-Evasion Tactics by UBS and Its Wealthy ClientsA former UBS AG banker

6/11/2020 Credit Suisse Pleads Guilty in Criminal T ax Case - WSJ

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WASH IN GTO N — Cre d it S u is s e G ro u p A G beca m e t h e ﬁ rs t ﬁ nan cia l i n stit u tio n i n m ore

th an a d eca d e t o p le a d g u ilt y t o a c rim e M on day w hen t h e S w is s b an k a d m it te d i t

c o n sp ir e d t o a id t a x e v a sio n a n d a g re ed t o p ay $ 2.6 billi o n t o s e tt le a l o n g-r un nin g

pro b e b y t h e U .S . J u stic e D ep artm en t.

A tto rn ey G en era l E ric H old er, i n a n nou n cin g t h e c h arg es, s a id t h e b an k e n gag ed i n a n

"e x te n siv e a n d w id e-r a n gin g" s c h em e t o h elp w ea lt h y A m eric a n s h id e a ss e ts . ( R ea d

th e J u stic e D ep artm en t a n nou n ce m en t.)

T his c o py i s f o r y o u r p ers o n al, n on -c o m merc ia l u se o n ly . T o o rd er p re se n ta tio n -r e a d y c o p ie s f o r d is trib u tio n t o y o u r c o lle a g u es, c lie n ts o r c u sto m ers v is it

h tt p s:/ / w ww.d jr e p rin ts .c o m .

htt p s:/ / w ww.w sj.c o m /a rt ic le s/c re d it -s u is s e -t o p -b ra ss -d od g e-t a x-e va sio n -b u lle t-1 4 0 050 58 29

C re d it S uis s e P le a d s G uilt y i n C rim in al T ax

C ase

Agre es t o P ay $ 2.6 B illio n t o S ett le P ro b e b y U .S . J u stic e D ep art m en t

B y , a n d

U pdate d M ay 1 9 , 2 0 14 9 4 5 p m E T

A nd re w G ro ssm an Jo h n L etz in g D ev li n B arre tt 6/11/2020 Credit Suisse Pleads Guilty in Criminal T ax Case - WSJ

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The c rim in al c h arg e ﬁ le d M on day i n f e d era l c o u rt o u tli n ed a d eca d eslo n g, c o n ce rte d

a tte m pt b y C re d it S u is s e t o " k n ow in gly a n d w illf u lly " h elp t h ou sa n ds o f U .S . c li e n ts

o p en a cc o u n ts a n d c o n ce a l t h eir " a ss e ts a n d i n co m e f r o m t h e I R S." M r. H old er s a id t h e

ban k d estr o yed a cc o u n t r e co rd s s e n t t o t h e U .S . f o r c li e n t r e v ie w , c o n ce a le d

tr a n sa ctio n s a n d " fa ile d t o t a ke e v en t h e m ost b asic s te p s t o e n su re c o m pli a n ce w it h

ta x l a w s."

E ven a ft e r a U .S . c ra ck d ow n o n S w is s a cc o u n ts i n 2 0 08 le d C re d it S u is s e a n d r iv a l U BS

AG to t ig h te n r e str ic tio n s o n t h e k in ds o f s e rv ic e s t h ey w ou ld p ro vid e t o A m eric a n

cu sto m ers , t h ey c o n tin ued t o t a ke s te p s t h at h in dere d i n vestig ato rs , t h e ﬁ li n g s a id .

C re d it S u is s e d id n 't c o n du ct a t h oro u gh i n ven to ry o f t h e a cc o u n ts i t s m an ag ers

o vers a w , a n d s o m e m an ag ers h elp ed c li e n ts m ove t h eir a ss e ts t o o th er o ﬀ sh ore b an ks

so t h ey w ou ld r e m ain h id den t o t h e U .S ., a cc o rd in g t o t h e ﬁ li n g.

W hen i t b eca m e c le a r i n 2 0 10 t h at t h e J u stic e D ep artm en t w as i n vestig atin g t h e b an k's

c o n du ct, M r. H old er s a id C re d it S u is s e " fa ile d t o r e ta in k ey d ocu m en ts , a llo w ed

C EO B ra d y D ou gan , a d dre ss in g C re d it S uis s e 's a n nual s h are h old er m eetin g i n Z uric h o n

M ay 9 .

REU TE R S 6/11/2020 Credit Suisse Pleads Guilty in Criminal T ax Case - WSJ

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ev id en ce t o b e l o st o r d estr o yed , a n d

co n du cte d a n i n ad eq u ate i n te rn al i n qu ir y ."

" T his c o n sp ir a cy s p an ned d eca d es," M r.

H old er s a id . " C re d it S u is s e n ot o n ly k n ew

a b ou t t h is i lle g al, c ro ss -b ord er b an kin g

activ it y ; t h ey w illf u lly a id ed a n d a b ette d i t .

H un dre d s o f C re d it S u is s e e m plo yees,

in clu din g a t t h e m an ag er l e v el, c o n sp ir e d

to h elp t a x c h ea ts d od ge U .S . t a xes."

P ro se cu to rs h av e c h arg ed e ig h t f o rm er

C re d it S u is s e e m plo yees w it h h elp in g a id

t a x e v a sio n .

In a s ta te m en t, C re d it S u is s e C hie f

E xecu tiv e Br ad y D ou gan s a id " w e d ee p ly

r e g re t t h e p ast m is c o n du ct t h at l e d t o t h is

s e tt le m en t." T he b an k s a id t h e p en alt ie s

w ill s la sh i t s p ro ﬁ t i n t h e c u rre n t q u arte r

b y $ 1.8 billi o n b u t i t e x p ects n o " m ate ria l

im pact" o n o p era tio n s f r o m t h e s e tt le m en t.

T he b an k s a id i t w ou ld r e d u ce a ss e ts a n d s e ll r e a l e sta te t o r e ca p tu re i t s c a p it a l r a tio , a

k ey m ea su re o f t h e b an k's a b ili t y t o a b so rb l o ss e s. C re d it S u is s e 's c a p it a l b u ﬀ er i s

c lo se ly m on it o re d b y S w it z e rla n d's ﬁ nan cia l r e g u la to r, F in m a.

T he ﬁ nan cia l t e rm s o f t h e s e tt le m en t i n clu de a $ 10 0 m illi o n p ay m en t t o t h e F ed era l

R ese rv e, m ore t h an $ 715 m illi o n t o t h e N ew Y ork D ep artm en t o f F in an cia l S erv ic e s, a n d

ab ou t $ 1.8 billi o n t o t h e J u stic e D ep artm en t. C re d it S u is s e a lr e a d y h as s e t a sid e m ore

th an $ 80 0 m illi o n , o r a b ou t a t h ir d o f t h e t o ta l s e tt le m en t, t o d ea l w it h t h e i s s u e.

M ORE R EA DIN G

Rea d t h e D ep art m en t o f J u stic e A nnou nce m en t•

C EO D id n 't P on der R esig n in g•

W hat O sh ore A cco u nt H old ers N eed t o K now•

5 T ake aw ays f r o m t h e S ett le m en t•

S N B's J o rd an : T oo B ig t o F ail K ey I s s u e f o r S w is s

B an ks

•

L aw B lo g : D em is e o f t h e T ax Ha ve n •

M on ey B ea t : E uro p ea n s A ls o P ut S qu eeze o n S w is s

B an ks

•

M on ey B ea t : T actic s U se d b y C re d it S uis s e B an ke rs

t o Ha ndle i t s U .S . C usto m ers

•

P en alt ie s t o I n clu de $ 715 M illio n t o N .Y . R eg u la to r•

S ett le m en t t o C ut $ 1.8 B illio n F ro m 2 n d-Q uart e r

P ro it

•

L aw B lo g : C re d it S uis s e N ot t h e F ir s t B an k Hi t• 6/11/2020 Credit Suisse Pleads Guilty in Criminal T ax Case - WSJ

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While C re d it S u is s e i s n 't t u rn in g o ver n am es o f a cc o u n t h old ers a s p art o f t h e

ag re em en t, t h ey a re h an din g o ver i n fo rm atio n t h at D ep u ty A tto rn ey G en era l J a m es

C ole s a id w ou ld l e a d t o s p eciﬁ c a cc o u n t h old ers .

" T here 's g o in g t o b e a

s u bsta n tia l a m ou n t o f

in fo rm atio n t h at w e'r e

g o in g t o g et t h at w ill

e n ab le u s t o ﬁ nd o u t w ho

th e a cc o u n t h old ers a re

a n d t a ke t h e a p pro p ria te

a ctio n ," M r. C ole s a id .

T he S w is s c a b in et s a id i n a

s ta te m en t t h at i t i s

p le a se d t h at t h e

se tt le m en t w on 't c a u se

th e b an k t o l o se a n y

li c e n se s, a n d t h at C re d it

S u is s e d id n 't u lt im ate ly r e q u ir e e m erg en cy l e g is la tio n e n ab li n g i t t o s id este p b an k-

se cre cy l a w s i n o rd er t o p ro vid e c li e n t i d en tit ie s t o U .S . a u th orit ie s.

T he s e tt le m en t m ark s t h e J u stic e D ep artm en t's b ig gest v ic to ry i n i t s c ra ck d ow n o n t a x

ev a sio n s in ce U BS a g re ed t o p ay $ 78 0 m illi o n a s p art o f a d efe rre d -p ro se cu tio n

ag re em en t i n 2 0 09. A s p art o f t h at d ea l, U BS a ck n ow le d ged a id in g U .S . t a x e v a sio n b u t

did n 't p le a d g u ilt y .

S till, s o m e s a id t h e d ep artm en t d id n 't g o f a r e n ou gh .

Sen . C arl L ev in ( D ., M ic h ) s a id i t i s " a m yste ry t o m e w hy t h e U .S . g o vern m en t d id n 't

r e q u ir e a s p art o f t h e a g re em en t t h at t h e b an k c o u gh u p s o m e o f t h e n am es o f t h e U .S .

C re d it S uis s e C hie f E xe cu tiv e B ra d y D ou gan

REU TE R S 6/11/2020 Credit Suisse Pleads Guilty in Criminal T ax Case - WSJ

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cli e n ts w it h s e cre t S w is s b an k a cc o u n ts ."

S en . C harle s G ra ss le y ( R ., I o w a) s a id " it m ig h t t u rn h ea d s o n M ain S tr e et t h at t h is i s

c h ara cte riz e d a s a s h arp r e b u ke w hen t h e b ar h as b een s o l o w f o r W all S tr e e t f o r y ea rs .

M ay b e w e'l l s e e s o m e t o p i n div id u als h eld c rim in ally l i a b le a t s o m e p oin t b u t n ot

to d ay."

P ro se cu to rs t o ok s te p s t o l i m it t h e p ote n tia l r ip ple e ﬀ ects f r o m a g u ilt y p le a b y w in nin g

ass u ra n ce s f r o m s ta te a n d f e d era l r e g u la to rs n ot t o t a ke p u n it iv e m ea su re s t h at w ou ld

c rip ple t h e b an k, s u ch a s s tr ip pin g C re d it S u is s e o f i t s a b ili t y t o o p era te i n t h e U .S . T he

ban k's c h ie f e x ecu tiv e a n d c h air m an a re n 't e x p ecte d t o l o se t h eir j o b s o ver t h e c a se ,

d esp it e c a lls b y s o m e i n S w it z e rla n d f o r t h em t o l e a v e t h e ﬁ rm . C re d it S u is s e h asn 't

r e sp on ded t o t h ose c a lls .

In e x tr a ctin g a g u ilt y p le a , p ro se cu to rs a re g am bli n g t h at t h e c rim in al c h arg e w on 't

h arm t h e b an k i n u n an tic ip ate d w ay s. P ro se cu to rs h av e w on a d m is s io n s o f g u ilt b efo re ,

so m etim es w it h c a ta str o p hic o u tc o m es. J u n k-b on d p ow erh ou se D re x el Bu rn ham

L am bert I n c. u lt im ate ly c o lla p se d a ft e r p le a d in g g u ilt y t o s ix c o u n ts o f f r a u d i n 1 9 89

an d a cc o u n tin g g ia n t A rth u r A nders e n w as f e lle d b y a c rim in al i n dic tm en t.

A s C re d it S u is s e 's p ro b le m s ﬁ rs t a ro se , e x ecu tiv es g en era lly e x p ecte d a s e tt le m en t w as

p oss ib le f o r l e ss t h an $ 50 0 m illi o n , a cc o rd in g t o a p ers o n f a m ili a r w it h t h e b an k's

t h in kin g— a s u m t h at r e ﬂ ecte d t h e s iz e o f t h e b an k's b u sin ess w it h u n decla re d

A m eric a n a ss e ts c o m pare d w it h U BS 's . U BS w as c h arg ed w it h h elp in g A m eric a n s h id e

ab ou t $ 20 b illi o n i n a ss e ts f r o m t a x a u th orit ie s.

A s p okesm an f o r F in m a d ecli n ed t o c o m men t o n t h e p oss ib le i m pact o f t h e s e tt le m en t

on C re d it S u is s e 's s ta b ili t y . 6/11/2020 Credit Suisse Pleads Guilty in Criminal T ax Case - WSJ

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Still, C re d it S u is s e 's r e la tio n sh ip s w it h i t s

c li e n ts a n d p artn ers m ay t a ke a h it . M an y

pen sio n a n d m utu al f u n ds h av e g u id eli n es

th at p re v en t t h em f r o m d ea li n g w it h

in stit u tio n s t h at h av e p le a d ed g u ilt y t o

c rim in al c h arg es. O th er c li e n ts m ay s im ply

c h oose t o s te er c le a r o f a b an k p erc e iv ed t o

h av e t r o u ble , e x p erts s a y.

" If y o u 'r e a c u sto m er a n d y o u h av e a c h oic e

b etw een a b an k t h at h as a r e p u ta tio n al h it

v ers u s o n e t h at d oesn 't , y o u m ig h t d ecid e

to g o w it h t h e o n e t h at d oesn 't ," s a id

A ndre a Bo nim e-Bl an c, w ho r u n s G EC R is k A dvis o ry , a c o n su lt a n cy.

O th ers w ere m ore s a n gu in e.

"T he f a ct t h at [ C re d it S u is s e ] m ad e a m is ta ke d oesn 't n ece ss a rily d etr a ct f r o m b ein g a

w ell- m an ag ed c o m pan y," s a id E li Bu tn aru , c h ie f e x ecu tiv e o ﬃ ce r o f t h e U .S . o ﬃ ce o f

M ora W ea lt h M an ag em en t, a C re d it S u is s e c li e n t w it h d u al h ea d qu arte rs i n Z uric h a n d

M ia m i.

M r. Bu tn aru s a id h e h as n o i n te n tio n o f s to p pin g d oin g b u sin ess w it h t h e b an k. H is ﬁ rm

o w ns a f e w m illi o n d olla rs o f t h e b an k's s to ck f o r h ig h -n et-w orth i n div id u als a n d a ls o

tr a d es w it h C re d it S u is s e .

C re d it S u is s e s h are s, w hic h s li d 0 .5 % o n M on day, h av e f a lle n 4 .4 % s in ce t h e b eg in nin g

of t h e y ea r, w hen s p ecu la tio n a s e tt le m en t w as a t h an d b eg an p ic k in g u p. U BS , b y

co n tr a st, h as r is e n 4 .1 % .

PR EV IO USLY

C re d it S uis s e N ea rs G uilt y P le a i n $ 2.5 B illio n

S ett le m en t

•

Law sk y I s W rin kle i n B an k P ro b es•

Ho ld er T ig h te n s t h e S qu eeze o n B an ks•

C re d it S uis s e A ss u re s o n R eso lv in g U .S . T ax I s s u e•

C re d it S uis s e N ea rs R eco rd T ax P le a•

C rim in al C harg es E ye d f o r T w o B an ks• 6/11/2020 Credit Suisse Pleads Guilty in Criminal T ax Case - WSJ

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The e n d o f t h e c rim in al c a se w on 't m ea n t h e e n d o f t h e b an k's l e g al t r o u ble s o ver a n

alle g ed p atte rn o f h elp in g A m eric a n s h id e f u n ds f r o m t h e I n te rn al R ev en ue S erv ic e .

T he U .S . g o vern m en t s till i s s e ek in g t h e n am es o f a cc o u n t h old ers w ho m ay h av e

d od ged t a xes t h ro u gh t h e S w is s b an k, a cc o rd in g t o p eo p le w it h k n ow le d ge o f t h e c a se .

T hose e ﬀ orts a re c o m pli c a te d b y S w it z e rla n d's o w n b an k-s e cre cy l a w s, a s w ell a s t h e

p oss ib ili t y o f l a w su it s i n t h at c o u n tr y i f t h e b an k t r ie s t o t u rn o ver t h at i n fo rm atio n t o

U .S . i n vestig ato rs .

It a ls o d oesn 't e n d t h e g o vern m en t's b ro ad er t a x-e v a sio n p ro b e. R ou gh ly a d oze n S w is s

b an ks a re s till s u bje cts o f c rim in al i n vestig atio n s b y U .S . a u th orit ie s a n d m ore t h an 1 0 0

oth er b an ks i n t h e c o u n tr y a re t a k in g p art i n a s e lf -r ep ortin g p ro g ra m r u n b y t h e

Ju stic e D ep artm en t.

T he b an k h as b een n eg o tia tin g w it h A m eric a n a u th orit ie s f o r m on th s o ver d eta ils o f

th e s e tt le m en t, i n clu din g w hat s p eciﬁ c c o n du ct t h e b an k w ou ld a d m it , t h e s iz e o f t h e

ﬁ nan cia l p en alt ie s, a n d t h e p oss ib le a ft e re ﬀ ects o f s u ch a g u ilt y p le a .

In M arc h , a f o rm er C re d it S u is s e b an ker p le a d ed g u ilt y i n f e d era l c o u rt i n V ir g in ia t o

h elp in g U .S . c li e n ts h id e m on ey i n S w it z e rla n d a n d a g re ed t o c o op era te w it h t h e

in vestig atio n .

E arli e r t h is y ea r, M r. D ou gan a p pea re d b efo re a S en ate s u bco m mit te e a n d s a id h e

"re g re ts v ery d eep ly '' h av in g a id ed A m eric a n t a x e v a sio n b u t s a id t h e c o n du ct w as

li m it e d t o a s m all g ro u p o f e m plo yees.

In r e sp on se t o a g o vern m en t c ra ck d ow n o n A m eric a n s h id in g m on ey o vers e a s, m ore

th an 4 3,0 00 t a xp ay ers j o in ed a v o lu n ta ry I n te rn al R ev en ue S erv ic e d is c lo su re p ro g ra m

to a ck n ow le d ge p re v io u sly u n kn ow n a cc o u n ts a n d c o lle ctiv ely p aid m ore t h an $ 6

billi o n i n b ack t a xes, i n te re st, a n d p en alt ie s, a cc o rd in g t o a S en ate r e p ort r e le a se d

e a rli e r t h is y ea r. 6/11/2020 Credit Suisse Pleads Guilty in Criminal T ax Case - WSJ

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The r e p ort e stim ate d t h at i n 2 0 06, C re d it S u is s e h ad m ore t h an 2 2 ,0 00 U .S . c u sto m ers

w it h S w is s a cc o u n ts , t h ou gh i t w asn 't c le a r h ow m an y o f t h ose w ere h id den f r o m t h e

IR S. T he S en ate p an el c o n clu ded C re d it S u is s e a ctiv ely r e cru it e d w ea lt h y A m eric a n s t o

o p en s e cre t S w is s a cc o u n ts .

C re d it S u is s e 's e x p ecte d p le a d ea l i s o n e o f s e v era l b ig b an k c a se s t h at t h e J u stic e

D ep artm en t i s s e ek in g t o r e so lv e i n c o m in g m on th s.

F ed era l p ro se cu to rs a ls o a re n eg o tia tin g a m ult ib illi o n -d olla r s e tt le m en t w it h F re n ch

b an k BN P P arib as to e n d a n i n vestig atio n i n to a lle g ed e v a sio n o f s a n ctio n s, a cc o rd in g

to p eo p le f a m ili a r w it h t h e d is c u ss io n s. A s i n t h e C re d it S u is s e c a se , p ro se cu to rs a re

s e ek in g a g u ilt y p le a f r o m BN P P arib as a s p art o f a n y s e tt le m en t. BN P h as d ecli n ed t o

c o m men t o n t h e c a se .

W rit e to Jo h n L etz in g a t jo h n .l e tz in g@ wsj.c o m a n d D ev li n B arre tt a t

d ev li n .b arre tt @ wsj.c o m

h tt p s:/ / w ww.d jr e p rin ts .c o m .