Deputy Attorney General Lisa O. Monaco Delivers Remarks Announcing Charges in Connection with Multibillion-Dollar Collapse of Archegos Capital Management
U.S. Attorney Preet Bharara for the Southern District of New York and Acting Special Agent in Charge Shantelle P. Kitchen of the New York Field Office of the Internal Revenue Service- Criminal Investigation (IRS-CI) announced today the indictment of Martin Dunki, a former client advisor and Senior Vice President at a Swiss bank headquartered in Zurich, Switzerland (Swiss Bank No. 1), for conspiring with U.S. taxpayer-clients and others to hide hundreds of millions of dollars in offshore accounts from the IRS, and to evade U.S. taxes on the income earned in those accounts.
“As alleged, Martin Dunki went to great lengths to help his U.S. taxpayer clients secret away millions of dollars in Swiss bank accounts,” said U.S. Attorney Bharara. “With today’s Indictment, Dunki joins the ranks of many other individuals this Office has charged in connection with hiding money in offshore bank accounts from the Internal Revenue Service.”
“The vigorous pursuit of unreported income in hidden offshore accounts is a top priority for the Internal Revenue Service,” said Acting IRS-CI Special Agent in Charge Shantelle P. Kitchen. “As part of our strategy, we will continue to identify and investigate banking and finance professionals who advise U.S. clients about ways to conceal their assets from the U.S. Government.”
According to the allegations contained in the indictment, which was unsealed today in Manhattan federal court, and other publicly available information:
Between 1995 and 2012, Dunki helped U.S. taxpayers evade taxes and hide hundreds of millions of dollars in undeclared accounts at Swiss Bank No. 1. Dunki provided this advice and assistance to U.S. taxpayers in his capacity as a client advisor at Swiss Bank No. 1, where he was employed until early 2012.
One of Dunki’s co-conspirators was Edgar Paltzer, an attorney based in Zurich, Switzerland, who previously pleaded guilty in the Southern District of New York for his role in assisting U.S. taxpayers and others to evade taxes. In 1999, Dunki, Paltzer and an attorney from Santa Barbara, California (Attorney 1), began working together in the management of undeclared accounts at Swiss Bank No. 1 for a number of U.S. taxpayers (collectively, the Dunki/Attorney 1 Clients). The undeclared assets of the Dunki/Attorney 1 Clients were maintained in accounts held in the names of sham foreign foundations, rather than in the names of the clients individually, to help the clients conceal their ownership of these undeclared accounts from the IRS. Initially, the sham foundations that held the accounts were organized under the laws of Liechtenstein. In December 2008, however, Liechtenstein and the United States signed a Tax Information Exchange Treaty (TIEA), under which Liechtenstein agreed to provide the United States with access to certain bank and other information needed to enforce U.S. tax laws. As a result of the TIEA between Liechtenstein and the United States, and to prevent disclosure to the IRS of the undeclared accounts maintained by the Dunki/Attorney 1 Clients, Dunki and others transferred the undeclared assets of the Dunki/Attorney 1 Clients to new accounts at Swiss Bank No. 1, held by new sham foundations organized under the laws of Panama. Moreover, beginning in August 2009, in response to the investigation of another Swiss bank, UBS AG, for helping U.S. taxpayers maintain undeclared accounts in Switzerland, Dunki and others helped to further conceal the undeclared accounts of the Dunki/Attorney 1 Clients by using assets in those accounts to purchase gold and other precious metals. The gold and precious metals, which amounted to tens of millions of dollars, were then transferred to escrow accounts opened at Swiss Bank No. 1 and hidden, along with substantial sums of cash, in a vault in Switzerland for the benefit of the Dunki/Attorney 1 Clients.
In addition to opening, maintaining, and managing undeclared accounts at Swiss Bank No. 1 for the Dunki/Attorney 1 Clients, Dunki opened, maintained and managed undeclared accounts at Swiss Bank No. 1 for other U.S. taxpayers. For instance, between 2000 and 2012, Dunki helped one U.S. taxpayer hide nearly $300 million in assets at Swiss Bank No. 1, in undeclared accounts held in the names of sham Liberian corporations. Further, between 1995 and 2008, Dunki helped another U.S. taxpayer maintain approximately $70 million in an undeclared account at Swiss Bank No. 1. When Dunki met with this taxpayer in the United States, the account statements that Dunki brought with him were deliberately cut off at the top, to omit the account number and the name of Swiss Bank No. 1, because – as Dunki himself acknowledged to the taxpayer – Dunki had to be careful not to leave a trace when going through U.S. customs.
Dunki also helped U.S. taxpayers bring funds back to the United States in ways designed to ensure that U.S. authorities would not discover the existence of the taxpayers’ undeclared accounts at Swiss Bank No. 1. For example, on at least one occasion, Dunki met a U.S. taxpayer in the United States and provided the taxpayer with an envelope containing approximately $10,000 in cash, which represented a cash withdrawal from the taxpayer’s undeclared account at Swiss Bank No. 1. On other occasions, Dunki helped send money from a U.S. taxpayer’s undeclared account at Swiss Bank No. 1 to another account in Geneva, Switzerland, and, from there, to a diamond dealer in Manhattan. Once the money was received by the diamond dealer, the U.S. taxpayer would pick it up and give the diamond dealer a fraction of the money as a commission.
Dunki, 66, a Swiss citizen, resides in Switzerland and has not been arrested. Dunki is charged with one count of conspiracy to defraud the IRS, which carries a maximum sentence of five years in prison. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
U.S. Attorney Bharara praised the outstanding efforts of IRS-CI in the investigation, which he noted is ongoing. He also thanked the Justice Department’s Tax Division for their significant assistance in the investigation.
This case is being handled by the U.S. Attorney’s Office for the Southern District of New York Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Sarah E. Paul and Jason H. Cowley are in charge of the prosecution.
The charge and allegations contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.