Credit Suisse Pleads Guilty in Tax Evasion Case – Agrees to Pay $2.6 Billion

Expert Guest Entry by Robert Menzies, Originally published on 

Earlier this week Credit Suisse AG pleaded guilty to conspiracy to aid and assist U.S. taxpayers in filing false income tax returns and other documents with the IRS.

The plea agreement provides that Credit Suisse will pay a total of $2.6 billion – $1.8 billion to the DOJ for transfer to the U.S. Treasury, $100 million to the Federal Reserve and $715 million to the New York State Department of Financial Services. In addition, Credit Suisse acknowledged that for decades it operated an illegal cross-border banking business and assisted more than 22,000 Americans evade taxes. According to a statement of facts filed with the plea agreement, Credit Suisse adopted a number a ways to assist its U.S. clients in hiding income from the IRS, including:

  • assisting clients in using sham entities to hide undeclared accounts;

  • soliciting IRS forms that falsely stated, under penalties of perjury, that the sham entities were the beneficial owners of the assets in the accounts;
  • failing to maintain in the United States records related to the accounts;
  • destroying account records sent to the United States for client review;
  • using Credit Suisse managers and employees as unregistered investment advisors on undeclared accounts;
  • facilitating withdrawals of funds from the undeclared accounts by either providing hand-delivered cash in the United States or using Credit Suisse’s correspondent bank accounts in the United States;
  • structuring transfers of funds to evade currency transaction reporting requirements; and
  • providing offshore credit and debit cards to repatriate funds in the undeclared accounts.

Attorney General Eric H. Holder, who announced the resolution of the investigation stated, “This case shows that no financial institution, no matter its size or global reach, is above the law. Credit Suisse conspired to help U.S. citizens hide assets in offshore accounts in order to evade paying taxes. When a bank engages in misconduct this brazen, it should expect that the Justice Department will pursue criminal prosecution to the fullest extent possible, as has happened here.”

IRS Commissioner John Koskinen added, “Pursuing international tax evasion is a priority area for IRS Criminal Investigation, and we will continue to follow the money here in the United States and around the world….Today’s guilty plea is another important milestone in ongoing law enforcement efforts to investigate the use of offshore accounts to evade taxes. People should no longer feel comfortable hiding their assets and income from the IRS.”

Eight Credit Suisse executives have also been indicted for their actions related to the company’s efforts to assist its customers in evading U.S. taxes. Thus far, two have pleaded guilty and are scheduled for sentencing in August. Both face maximum penalties of five years in prison.