Manhattan U.S. Attorney Charges Three Swiss Bankers With Conspiring To Hide More Than $420 Million In Swiss Bank Accounts
Preet Bharara, the United States Attorney for the Southern District of New York, and Toni Weirauch, the Special Agent-in-Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced today the indictment of STEPHAN FELLMANN, OTTO HUPPI, and CHRISTOF REIST, three former client advisers at a certain Swiss Bank (“Swiss Bank No. 1”), for conspiring with United States taxpayer-clients and others to hide more than $420 million in offshore accounts from the IRS, and to evade U.S. taxes on the income earned in those accounts.
According to the allegations contained in the Indictment filed today in Manhattan federal court:
FELLMANN, HUPPI, and REIST worked as client advisers at Swiss Bank No. 1, which is headquartered in Switzerland and provides private banking, asset management, and other services to clients around the world. FELLMANN worked at the bank from at least 2008 to 2009, and HUPPI and REIST worked at the bank from at least 2003 to 2009. As client advisers, the defendants conspired with various U.S. taxpayers and others to ensure that their clients could hide their Swiss bank accounts, and the income generated in those accounts, from the IRS. U.S. taxpayers are required to report on their individual tax returns the existence of any foreign bank account that holds more than $10,000 at any time during a given year, as well as any income earned in such account.
In furtherance of the scheme, FELLMANN, HUPPI, and REIST opened and managed undeclared accounts for U.S. taxpayers at Swiss Bank No. 1 using code names, such as “Raincity” and “Kakeycat,” or in the names of sham corporate entities, to help conceal their taxpayer-clients’ ownership of the accounts. Additionally, HUPPI traveled to the United States to meet with clients at a hotel in Newark, New Jersey, to set up undeclared accounts at Swiss Bank No. 1. HUPPI and others provided their U.S. taxpayer-clients access to their hidden funds by mailing them checks drawn on a correspondent bank account maintained by Swiss Bank No. 1 at a financial institution in Manhattan, and did so in a manner designed to reduce the risk that the undeclared accounts would be discovered by the IRS. HUPPI also advised a client not to disclose the client’s undeclared account to U.S. authorities and told the client that other clients who had disclosed their accounts now regretted having done so. Further, FELLMAN advised a U.S. taxpayer-client with an undeclared account at Swiss Bank No. 1 that, unlike UBS AG, Swiss Bank No. 1 did not have offices in the United States and was therefore less vulnerable to pressure from U.S. law enforcement authorities.
The maximum value of the assets in undeclared accounts beneficially owned by U.S. taxpayer-clients of FELLMANN, HUPPI, and REIST and others client advisors at Swiss Bank No. 1 was over approximately $420 million.
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FELLMANN, HUPPI, and REIST all reside in Switzerland. HUPPI is a U.S. citizen. They have not been arrested.
FELLMANN, HUPPI, and REIST are each charged with one count of conspiring with United States taxpayer-clients and others to hide more than $420 million in offshore accounts from the IRS and to evade U.S. taxes on the income earned in those accounts. They each face a maximum sentence of five years in prison, a maximum term of three years of supervised release, and a fine of the greatest of $250,000, or twice the gross pecuniary gain derived from the offense or twice the gross pecuniary loss to the victims.
Mr. Bharara praised the outstanding efforts of IRS-CI in the investigation, which he noted is ongoing. He also thanked U.S. Department of Justice's Tax Division for their significant assistance in the investigation.
This case is being handled by the Office’s Complex Frauds Unit. Assistant U.S. Attorneys Daniel W. Levy, David B. Massey, and Jason H. Cowley are in charge of the prosecution.
The charge and allegations contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.