The Swiss banking company Credit Suisse announced in a statement Friday that it was under investigation by the Justice Department and cited reports of “a broader industry inquiry.”
The announcement confirmed that the bank has become the DOJ’s latest target in its continuing effort to prosecute Swiss private banks that allegedly helped U.S. citizens avoid millions in taxes.
“Subject to our Swiss legal obligations, we will continue to cooperate with the U.S. authorities in an effort to resolve these matters,” the bank said in a statement.
Credit Suisse has been under department investigation since December 2008, when it and its rival bank HSBC received subpoenas and other requests from the department and other agencies regarding cross-border services provided by its private banking arm to American clients.
That investigation stemmed from a criminal probe of Swiss banking giant UBS, which faced similar charges of aiding tax evasion.
But the announcement that it had become a target of an investigation signals that U.S. prosecutors believe they have “substantial evidence that they have committed a crime,” said Jeff Neiman, a white-collar defense lawyer and former federal prosecutor involved in the UBS case.
“There’s a big difference between being under investigation and being the target of an investigation, and with that status comes the real possibility that the bank could face criminal indictments,” Neiman said.
Neiman said he believes Credit Suisse will try to cooperate fully with the U.S. government in order to avoid an indictment, which would bar it from conducting business in the U.S. – a “big poker” point of leverage that could devastate the bank, he added.
But such a deal would probably follow in the footsteps of a similar legal showdown faced by UBS, which ended in 2009 when the banking giant agreed to pay $780 million in fines and surrendered data on thousands of clients in a settlement with the department. Investigators contended at that time that UBS executives helped American clients hide up to $20 billion in secret offshore banking accounts, evading about $300 million a year in taxes from 2000 to 2007.
That raises a problem under Swiss law, Neiman said, because the Swiss prohibit banks from revealing their clients’ information.
“As we saw with UBS, what the U.S. government considers ‘full cooperation’ is the disclosure of U.S. citizens who have had money concealed,” he said. “So we have this showdown brewing once again between Swiss law and American law.”
In February, four private bankers with ties to Credit Suisse were indicted for helping clients evade taxes by setting up offshore accounts under false names and shifting money from Credit Suisse to smaller Swiss banks.
The bankers – Marco Parenti Adami, Emanuel Agustoni, Michele Bergantio and Roger Schaerer – were linked to two other private banks in Switzerland and one in Israel. Three of them left Credit Suisse before the indictments and face accusations of conspiracy and fraud.
And this is not Credit Suisse’s first run in with the department. In December 2009, it paid $536 million to settle charges that it violated U.S. sanctions by helping Iranian banks obscure the identity of their clients during international dealings.
