Credit Suisse Pleads Guilty to Decades-Long Tax Evasion Conspiracy

“European banking giant Credit Suisse has pleaded guilty to helping American clients avoid paying taxes by concealing assets in illegal, undeclared bank accounts — becoming the largest bank to plead guilty to a criminal charge in 20 years,” as reported by Democracy Now, which described the plea deal as follows:

Credit Suisse will pay about $2.6 billion in penalties and hire an independent monitor. But the bank will not be required to turn over the names of the Americans who used the bank to evade taxes. In addition, no senior Credit Suisse executives will face jail time, and the bank will be allowed to continue operating in the United States. According to The New York Times, the Securities and Exchange Commission voted last week to grant Credit Suisse a temporary exemption from a federal law that requires a bank to hand over its investment-adviser license in the event of a guilty plea.

The Executive Director of the National Whistleblower Center, Stephen M. Kohn (one of the attorneys who represented UBS tax whistleblower Bradley Birkenfeld), took this opportunity to compare this settlement with the Justice Department’s previous prosecution of, and settlement with, UBS via the following statement:

On May 19, 2014 the Swiss bank Credit Suisse AG pleaded guilty to helping wealthy Americans avoid taxes and paid a $2.6 billion fine.  While this was a significant step forward in policing illegal offshore accounts, the prosecution raises a number of troubling issues.

Swiss banking giant UBS was prosecuted in 2009.  Despite the fact that UBS’s illegal offshore holdings were twice as large as Credit Suisse’s, UBS paid a fine of only $780 million, two thirds less than the Credit Suisse penalty.  Why did UBS pay such a small penalty in relation to the magnitude of the crimes it committed?

The reason is simple.  In the UBS case the Justice Department turned on its own whistleblower and sent Mr. Birkenfeld to prison.  Instead of working with Mr. Birkenfeld to identify all of the bankers and clients involved in the crimes, the Justice Department agreed to a quick and dirty settlement with UBS.  The Justice Department’s decision to attack the whistleblower, instead of using him as a resource for its investigation, cost the taxpayers billions of dollars.  Based on the Credit Suisse-DOJ agreement, UBS should have paid back to the taxpayers twice as much as Credit Suisse.

We call for a full investigation into how the Justice Department conducted the UBS investigation and why the Justice Department engaged in a malicious prosecution of the whistleblower.

Mr. Birkenfeld, who worked at Credit Suisse before being employed at UBS, provided the name of the head of the U.S. desk of that bank, to the Justice Department in 2007.  He is owed a debt of gratitude by the U.S. government for risking his career and freedom to serve the interests of the American people in ensuring that those responsible for illegal offshore banking practices are held fully accountable.