Swiss asset manager settles US tax evasion charges

The Geneva asset management firm Prime Partners has agreed to pay $5 million (CHF4.8 million) to the United States to settle charges for tax evasion and assisting US taxpayers in opening and maintaining undeclared foreign bank accounts from 2001 to 2010.

A US Department of Justice (DOJ) statement external linkon August 15 said the firm had entered a non-prosecution agreement and agreed to pay $5 million to the US for helping US taxpayer-clients create and maintain undeclared foreign bank accounts.

Under the agreement Prime Partners handed over 175 client files for non-compliant US taxpayer-clients. The DOJ said the firm would not be criminally prosecuted and had offered ‘extraordinary cooperation’.

Prime Partners forfeited $4.32 million, representing fees that it earned by handling US taxpayer-clients’ accounts, and paid $680,000 in restitution to the Internal Revenue Service (IRS), representing unpaid taxes arising from the tax evasion by Prime Partners’ US taxpayer-clients.

Acting Manhattan US Attorney Joon H. Kim said: “Prime Partners admits to helping its clients conceal their ownership of foreign bank accounts to avoid their US tax obligations. They created sham entities and even counselled their clients to use pay phones and prepaid debit cards to avoid detection of their tax fraud scheme.”

The DOJ said the Geneva firm had admitted its wrongful conduct, notably that it knew certain US taxpayers were maintaining undeclared foreign bank accounts with the assistance of Prime Partners in order to evade their US tax obligations, in violation of US law.

It also acknowledged that it helped certain US taxpayer-clients conceal from the IRS their beneficial ownership of undeclared assets maintained in foreign bank accounts by creating sham entities with no business purpose, advised the US taxpayer-clients not to retain their account statements and to destroy any faxes they received from Prime Partners.

The US justice authorities say that, in early 2009, Prime Partners voluntarily implemented a series of remedial measures to stop assisting US taxpayers in evading federal income taxes. Following the settlement, it must continue to cooperate with the US for at least three years.

Numerous Swiss banks and financial institutions have been caught up in a long-running tax dodging dispute between Switzerland and the US.

In 2009, UBS became the first Swiss bank to be punished by the US for helping clients evade taxes. It was hit with a big fine, as were later Credit Suisse, Julius Bär and other banks. The collapse of Wegelin prompted Swiss legislators to bring down the curtain of banking secrecy and negotiate a non-prosecution agreement with the US for a number of financial institutions caught up in the tax evasion spat.

The DOJ closed its “Swiss Bank Programe” in January 2016, having netted $1.36 billion in fines from 80 Swiss or Swiss-based banks.
A handful of other banks, including Pictet and the Basel and Zurich cantonal banks, could still be subject to criminal convictions and heavy fines.