CEO And Chairman Of International Pulp Mill Company Pleads Guilty In Manhattan Federal Court To Hiding Over $8.4 Million In Secret Swiss Bank Accounts
Preet Bharara, the United States Attorney for the Southern District of New York, and Thomas E. Bishop, the Acting Special Agent-in-Charge of the New York Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced that GEORGE LANDEGGER pled guilty on January 16, 2015, to willfully failing to file Reports of Foreign Bank and Financial Accounts (“FBARs”) with the IRS regarding secret Swiss bank accounts that he maintained and controlled at a Swiss private bank headquartered in Zurich, Switzerland (the “Swiss Bank”). LANDEGGER, the Chairman and CEO of an international pulp mill company, maintained his undeclared accounts at the Swiss Bank from at least the early 2000s up until 2010. During that time, LANDEGGER’s undeclared assets reached a high value of over $8.4 million. LANDEGGER entered his guilty plea before U.S. Magistrate Judge Debra Freeman.
Manhattan U.S. Attorney Preet Bharara said: “As he admitted, George Landegger maintained secret Swiss bank accounts he repeatedly failed to declare to the IRS, and he took steps to conceal his ownership of the accounts. The benefits of citizenship or residency in the United States come with certain obligations, including, as George Landegger well knew, the legal requirement to report foreign bank accounts. He will now pay for his illegal conduct.”
IRS Acting Special Agent-in-Charge Thomas E. Bishop said: “The Internal Revenue Service has made uncovering hidden offshore accounts and income a top priority and, working with the Department of Justice, we continue to demonstrate our success in doing so. The prosecutions of individuals who decide to keep their foreign assets concealed and of those who advise and assist them serve as clear warnings to anyone who doubts the U.S. Government’s resolve.”
According to the Information filed today in Manhattan federal court:
From at least the early 2000s, up until 2010, LANDEGGER maintained undeclared bank accounts on his own behalf at the Swiss Bank. In 2005, a representative of the Swiss Bank (“Swiss Bank Representative-1”) recommended to LANDEGGER that for the protection of LANDEGGER and the Swiss Bank, LANDEGGER utilize the services of an attorney based in Zurich, Switzerland, to form a sham entity to hold LANDEGGER’s undeclared accounts at the Swiss Bank. Thereafter, a sham trust was formed to hold LANDEGGER’s undeclared accounts at the Swiss Bank and further conceal LANDEGGER’s ownership of those accounts from the IRS. The sham trust, which was organized under the laws of Lichtenstein, was named “Onicuppac,” which is the word “Cappucino” in reverse.
In April 2009, LANDEGGER, Swiss Bank Representative-1, and another individual had a meeting in Switzerland, the purpose of which was to discuss the future of LANDEGGER’s undeclared accounts at the Swiss Bank, in light of the public news that another Swiss bank, UBS AG, had been investigated by United States law enforcement authorities for helping U.S. taxpayers maintain undeclared accounts. During that meeting, LANDEGGER and Swiss Bank Representative-1 discussed the possibility of LANDEGGER disclosing his undeclared accounts to the IRS, including by entering the IRS’s offshore voluntary disclosure program (the “OVDP”). LANDEGGER affirmatively rejected the possibility of disclosing his undeclared accounts to the IRS, whether by entering the OVDP or by any other method. Instead, LANDEGGER and Swiss Bank Representative-1 determined to empty the accounts of their assets by slowly moving the undeclared assets out of Switzerland. Thereafter, between May 2009 and July 2010, LANDEGGER, with the assistance of Swiss Bank Representative-1 and others at the Swiss Bank, emptied the assets from his undeclared accounts at the Swiss Bank by transferring a portion of those undeclared assets to a new, declared account in Canada, and by transferring the remainder of the undeclared assets to an account maintained by another individual in Hong Kong.
During the time LANDEGGER maintained his undeclared accounts at the Swiss Bank, capital gains and losses were generated in the account from LANDEGGER’s investments in foreign securities. Between 2007 and 2010, the high value of LANDEGGER’s undeclared assets was over $8.4 million. For each of the calendar years from at least the early 2000s through 2010, LANDEGGER failed to file FBARs with the IRS, as he was required to, disclosing his signatory or other authority over his undeclared accounts at the Swiss Bank.
LANDEGGER, 77, of Ridgefield, Connecticut, faces a maximum sentence of five years in prison. As part of his plea, LANDEGGER has agreed to pay a civil penalty of over $4.2 million and back taxes of over $71,000. He is scheduled to be sentenced by U.S. District Judge Richard J. Sullivan on May 12, 2015, at 10:00 a.m. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
Mr. Bharara praised the outstanding efforts of IRS-CI in the investigation. Mr. Bharara also thanked U.S. Department of Justice’s Tax Division for their assistance in the investigation.
This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Sarah E. Paul and Jason H. Cowley are in charge of the prosecution.