On June 22, 2016, the IRS and the US DOJ successfully brought to conclusion the Bergantino Case with a guilty plea by Mr. Michele Bergantino (a citizen of Italy and a resident of Switzerland) to charges related to aiding and assisting U.S. taxpayers in evading their income taxes. Mr. Bergantino, a former Credit Suisse AG banker, pleaded guilty before U.S. District Judge Gerald Bruce Lee to conspiring to defraud the United States by assisting U.S. taxpayers to conceal foreign accounts and evade U.S. tax during his employment as a banker working for Credit Suisse AG on its North American desk.
The Bergantino Case Factual Background
According to the DOJ, Mr. Bergantino admitted that from 2002 to 2009, while working as a relationship manager for Credit Suisse in Switzerland, he participated in a wide-ranging conspiracy to aid and assist U.S. taxpayers in evading their income taxes by concealing assets and income in secret Swiss bank accounts. Mr. Bergantino oversaw a portfolio of accounts, largely owned by U.S. taxpayers residing on the West Coast, which grew to approximately $700 million of assets under management.
During his time as a relationship manager, Mr. Bergantino assisted many U.S. clients in utilizing their Credit Suisse accounts to evade their U.S. income taxes and to facilitate concealment of the U.S. clients’ undeclared financial accounts from the IRS. Among the steps taken by Mr. Bergantino to assist clients in hiding their Swiss accounts were the following: assuring them that Swiss bank secrecy laws would prevent Credit Suisse from disclosing their undeclared accounts to U.S. law enforcement; discussing business with clients only when they traveled to Zurich to meet him; structuring withdrawals from their undeclared accounts by sending multiple checks, each in amounts below $10,000, to clients in the United States; facilitating the withdrawal of large sums of cash by U.S. customers from their Credit Suisse accounts at Credit Suisse offices in the Bahamas, in Switzerland, particularly the Credit Suisse branch at the Zurich airport and at a financial institution in the United Kingdom; holding clients’ mail from delivery to the United States; issuing withdrawal checks from Credit Suisse’s correspondent bank in the United States; and taking actions to remove evidence of a U.S. client’s control over an account because the U.S. client intended to file a false and fraudulent income tax return. Moreover, Mr. Bergantino understood that a number of his U.S. clients concealed their ownership and control of foreign financial accounts by holding those accounts in the names of nominee tax haven entities, or structures, which were frequently created in the form of foreign partnerships, trusts, corporations or foundations.
Mr. Bergantino also admitted traveling to the United States approximately one to two times a year to meet with clients, taking careful steps to conceal the purpose of his visits from U.S. law enforcement. He used private couriers to send clients’ account statements to the U.S. hotels where he stayed, so that he would not be caught traveling with clients’ statements in his possession. In addition, Mr. Bergantino obtained “travel” account statements for each client he intended to visit which were devoid of Credit Suisse’s logo and account or customer identification information and used business cards that Credit Suisse provided that contained only his name and office number and did not carry the Credit Suisse name or logo. On entering the United States, Mr. Bergantino provided misleading information regarding the nature and purpose of his visit to U.S. Customs and Border Protection authorities.
In addition to assisting customers in evading their U.S. taxes, Mr. Bergantino also provided illegal advice to U.S. customers regarding investments in U.S. securities. Neither Mr. Bergantino nor Credit Suisse were registered with the U.S. Securities and Exchange Commission and both U.S. law and Credit Suisse policy prohibited Mr. Bergantino and other Credit Suisse employees from providing investment advice in the United States. Nevertheless, Credit Suisse management pressured its employees, including Mr. Bergantino, to make sales in the United States.
Mr. Bergantino faces a statutory maximum sentence of five years in prison. He also faces monetary penalties and restitution. Mr. Bergantino admitted that the tax loss associated with his criminal conduct was more than $1.5 million but less than or equal to $3.5 million.
The Bergantino Case Guilty Plea Comes After Three Wins and One Loss for the IRS
The Bergantino Case allows the IRS to solidify its victory claims against Credit Suisse. Two of Mr. Bergantino’s co-defendants, Mr. Andreas Bachmann and Mr. Josef Dörig, already pleaded guilty to the superseding indictment in 2014 and were sentenced on March 27, 2015. Credit Suisse pleaded guilty in May 2014 for conspiring to aid and assist taxpayers in filing false returns and was sentenced in November 2014 to pay $2.6 billion in fines and restitution. However, Mr. Raoul Weil was acquitted, even though he was the highest-ranking Credit Suisse banker prosecuted by the IRS.
What the Bergantino Case Means to U.S. Taxpayers with Undeclared Offshore Accounts
The Bergantino Case is one more example of the long reach of the IRS and the precarious situation of U.S. taxpayers with undeclared offshore accounts. First, the IRS demonstrated one more time that geographical distance does not matter when it comes to the IRS ability to prosecute those are in violation of U.S. tax laws. “Mr. Bergantino is now the third fugitive to come to the United States and plead guilty to charges in this case,” said Acting Assistant Attorney General Ciraolo. “To those who have actively assisted U.S. taxpayers in using offshore accounts to evade taxes, the message is clear: staying outside the United States will provide little comfort. We will investigate and charge you, and will work relentlessly to hold you to account for your actions.”
Second, with each guilty plea, the IRS obtains more and more evidence against U.S. taxpayers with undeclared offshore accounts, including the patterns for how these accounts were set up and maintained. This allows the IRS to broaden its prosecution of noncomplying taxpayers in a faster and cheaper way.
Contact Sherayzen Law Office for Help with Undeclared Offshore Accounts
If you are a U.S. taxpayer with undeclared offshore accounts and other offshore assets, you should contact Sherayzen Law Office as soon as possible. Our team of tax professionals are highly experienced in the voluntary disclosure of undeclared offshore accounts and we can help you.
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