Josef Dörig, 72, of Switzerland, pleaded guilty today to conspiring to defraud the Internal Revenue Service (IRS) in connection with his work as the owner of a trust company in Switzerland. Deputy Attorney General James Cole, Assistant Attorney General Kathryn Keneally for the Justice Department’s Tax Division, U.S. Attorney Dana J. Boente for the Eastern District of Virginia and IRS-Criminal Investigation Chief Richard Weber made the announcement after the plea was accepted by U.S. District Judge Gerald Bruce Lee. Dörig was charged in a one count superseding indictment on July 21, 2011. Sentencing is set for Aug. 8, 2014, and Dörig faces a statutory maximum sentence of five years in prison.
“Today’s plea further pulls back the curtain on efforts by Swiss banks to help U.S. taxpayers evade taxes through the use of sham trusts and foundations,” said Deputy Attorney General Cole. “Rest assured, the days of bank secrecy for U.S. tax cheats in Switzerland – and around the world – are numbered.”
“This plea sends a strong message to those who use or help others use offshore bank accounts to evade U.S. taxes,” said Assistant Attorney General Keneally. “We are receiving information from a variety of sources and are committed to investigating and prosecuting this wrongdoing.”
“We will continue to investigate and prosecute banks and individuals who assist U.S. citizens in the evasion of income taxes with overseas accounts,” said U.S. Attorney Boente. “The doors are quickly closing on this illegal activity.”
“Assisting American taxpayers to evade their tax obligations with the use of secret bank accounts held in sham entities violates the law, and we will find those who are doing it,” said Chief of IRS-Criminal Investigation Richard Weber. “IRS-CI will pursue those who use anonymous offshore accounts to avoid paying their fair share. IRS Criminal Investigation is proud to have shared our hallmark expertise in following the money trail in this and other increasingly sophisticated criminal schemes.”
In a statement of facts filed with the plea agreement, Dörig admitted that between 1997 and 2011, while owning and operating a trust company, he engaged in a wide-ranging conspiracy to aid and assist U.S. customers in evading their income taxes by concealing assets and income in secret bank accounts held in the names of sham entities at a financial institution referred to in the superseding indictment as International Bank (IB), one of the biggest banks in Switzerland and one of the largest wealth managers in the world.
According to the statement of facts, from 1972 to 1996, Dörig worked for a subsidiary of IB. The subsidiary formed, managed and maintained nominee tax haven entities. Individuals concealed their assets by holding their accounts at IB in the names of these tax haven entities. During this time, the subsidiary managed and maintained over 100 sham entities for U.S. taxpayers committing tax evasion.
Also included in the statement of facts, in 1997, executives at the subsidiary devised a plan to spin off all of these sham entities into a new trust company, Dörig Partner AG, to be owned and operated by Dörig, who was then an employee of the subsidiary. Dörig was required to make his best efforts to keep the existing accounts at IB open and to ensure that any clients referred to him by IB would open new accounts at that institution.
According to the statement of facts, IB promoted Dörig Partner as a provider of various entity structures. The phone list used in IB’s New York representative office identified Dörig Partner as an external trust expert. Dörig Partner also sublet space from IB in an office tower where a private bank owned by IB was the major tenant.
As part of the conspiracy, Dörig traveled to the United States to introduce himself to new clients he had obtained as part of the spin-off. In the following years, he traveled to the United States with bankers from IB, including his co-defendants Markus Walder, Marco Parenti-Adami and Michele Bergantino, to meet with existing and prospective clients who already had undeclared accounts at IB but had been identified by the IB’s bankers as potential candidates for the use of a structure.
According to the statement of facts, although Dörig ostensibly controlled both the structure and the account at IB, in practice, many of the U.S. taxpayers with undeclared accounts controlled the assets in those accounts by dealing directly with IB bankers, often without either the knowledge or consent of Dörig.
According to the statement of facts, in 2008, IB ordered Dörig Partner to close accounts for the structures they managed. Dörig turned to an asset manager at a financial services firm in Zurich for assistance. The financial services firm maintained a master account in its own name at a private bank in Gibraltar, and then opened sub-accounts for Dörig’s clients at that bank to which Dörig transferred the funds from the clients’ undeclared accounts at IB. The financial services firm provided the Gibraltar bank only with the number associated with each sub-account and did not inform the bank of any information regarding the owners of the assets in the sub-accounts.
This case is being investigated by IRS-Criminal Investigation. Assistant U.S. Attorney Mark D. Lytle and Trial Attorneys Mark F. Daly and Nanette L. Davis of the Tax Division are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found at the division website.