A Swiss lawyer pleaded guilty in a U.S. probe of offshore tax evasion and has been telling prosecutors how he helped American clients use secret accounts to hide assets from the Internal Revenue Service.
Edgar Paltzer, 57, admitted Aug. 16 in federal court in New York that he conspired from 2000 to 2012 to commit tax fraud by helping U.S. clients hide millions of dollars from the IRS. He was indicted on April 16 with a Swiss banker, Stefan Buck.
Paltzer’s lawyer, Thomas Ostrander, a partner at Duane Morris LLP, said his client is cooperating with U.S. authorities in their broader investigation of how foreign banks and advisers helped American clients evade taxes. Paltzer’s cooperation offers U.S. investigators a rare inside look at how Swiss bankers and advisers used sham trusts and corporations and moved cash and jewelry across borders to hide their assets from the IRS.
“His cooperation is complete and without any limitation,” Ostrander said outside of court. “He very quickly made a decision to face these charges and come to the U.S.”
Since 2008, the U.S. government has charged at least 90 people in a crackdown on offshore tax evasion, including two dozen bankers, lawyers and advisers. Paltzer admitted that from 2000 to 2012 he acted as a financial intermediary and helped U.S. taxpayers avoid their duty to pay taxes on worldwide income.
At the Aug. 16 hearing, Assistant U.S. Attorney Jason Cowley said Paltzer had control of bank vaults in Zurich where U.S. taxpayers put assets. Prosecutors got a court order that prevents Paltzer or anyone else from accessing those vaults.
Cowley said Paltzer helped dozens of U.S. taxpayers maintain undeclared Swiss accounts with “millions and millions of dollars in undeclared assets.”
When some Swiss banks decided to close accounts amid the U.S. crackdown, he helped American taxpayers move accounts to other Swiss banks, the prosecutor said.
Paltzer, who holds dual U.S. and Swiss citizenship and is licensed to practice law in New York, is returning to Switzerland, Ostrander said.
Paltzer agreed to pay restitution and forfeit fees he earned from his crime, which carries a potential five-year prison term. As a cooperator, he would probably get less time. Prosecutors have agreed to submit a letter to the sentencing judge outlining his assistance to the U.S.
The case is U.S. v Paltzer, 13-cr-00282, U.S. District Court, Southern District of New York (Manhattan).
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Porsche Faces New Hedge Fund Cartel Claims in Legal Battle
The funds, which include Elliott International LP and Perry Partners LP, are suing Porsche for 1.81 billion euros ($2.4 billion) over claims it manipulated Volkswagen shares by denying interest in a deal before it made a bid. After other investors lost two similar claims at a German tribunal last year, the funds added antitrust claims against Porsche to their suit, forcing a move to a court that specializes in cartel suits.
“It’s a litigation tactic sometimes used to get rid of a particular court,” Albrecht Bach, an antitrust lawyer at Oppenlaender Rechtsanwaelte in Stuttgart who isn’t involved in the dispute, said in an interview. “It can be part of a lawyer’s tactic to add arguments that shift jurisdiction to another court at which you might expect better results.”
Even if the new court, in Hanover, rejects the antitrust claims, it will take its own look at the market manipulation allegations, giving the funds a new chance with the argument.
Porsche, hounded for years by investor suits, has so far been successful in defending against allegations it manipulated Volkswagen shares. The company ended most related U.S. litigation by winning their bid to have the cases moved to Germany. Last month, it won a ruling in an effort to block a new legal claim in the U.K.
The investor suits argue that Porsche lied when it denied through much of 2008 that it wanted to buy Volkswagen, only to shift direction on Oct. 26 that year when it disclosed that it controlled 74.1 percent of Volkswagen, partly through options, and was seeking a takeover. The shares surged while short sellers ran to close their positions.
Volkswagen now owns the Porsche auto-making business. The defendant in the case is a holding company whose only asset is Volkswagen shares.
The case is LG Hannover, 18 O 159/13.
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Ryanair Files Dublin Suit Against Channel 4 Over Safety Claims
Ryanair Holdings Plc (RYA) has initiated defamation proceedings against Channel 4/Blakeway Productions and others in the wake of a television documentary that questioned its stance on safety, the carrier’s lawyer said.
“We have been instructed to vigorously prosecute these libel proceedings,” Paul Tweed, senior partner at law firm Johnsons, said in an e-mailed statement Aug. 14. The action is being brought in the High Court in Dublin.
The legal move comes a day after Ryanair dismissed Captain John Goss, who appeared in the Channel 4 “Dispatches” program that last week broadcast the safety concerns. The report relied on a survey conducted by the Ryanair Pilots Group, which claims to represent more than half of the carrier’s air crew.
Tweed said the program’s claims were “totally unfounded.” Proceedings have also been issued against Associated Newspapers, which publishes the Daily Mail, and Mirror Group, whose titles include the Daily Mirror, as well as the Belfast Telegraph in Northern Ireland. More cases are pending, he said.
The Channel 4 program said Ryanair pilots are encouraged to carry as little fuel as possible, causing three jets to declare emergencies before touching down in Valencia, Spain, after diversions from Madrid last year. Fuel emergencies are triggered when pilots come close to having 30 minutes of fuel left.
Ryanair encourages crews to fly with additional kerosene if the captain wishes to do so and the majority of its pilots carry more than the required amount daily, Chief Executive Officer Michael O’Leary said in an Aug. 13 interview.
Europe’s biggest low-cost airline also has no policy of deleting cockpit voice recordings, O’Leary said in response to assertions in the TV program, adding that pilots need to save so-called black-box information themselves. The documentary said crew members are also wary of raising concerns with the company.
Law Firm News
Howrey Settles Claims with Baker & Hostetler and Citibank
The trustee for Howrey LLP reached settlements resolving the largest secured claim and nailing down the largest asset for the law firm that liquidated in June 2011.
Just after Howrey partners voted to disband, a group moved to Baker & Hostetler LLP and took several cases with them, including two large contingent-fee lawsuits. At the time of their departure, the lawyers made an agreement with Howrey to split up the contingent fees when they were paid.
In a settlement announced Aug. 16, Howrey trustee Allan B. Diamond explained how he negotiated to receive $41 million immediately from Baker & Hostetler, or $3.3 million more than the formula under the pre-bankruptcy fee-sharing agreement. The total the firm will receive from the two contingency cases is about $92 million.
Diamond also settled the $41.4 million secured claim by lender Citibank NA, which has a lien on all assets.
Howrey partners lost control of the liquidation when the bankruptcy court authorized appointment of a Chapter 11 trustee in September 2011. Once known for expertise in antitrust and intellectual property law, the firm filed under Chapter 11 in June 2011 following an involuntary filing in April 2011. At one time, the firm had more than 700 lawyers.
The case is In re Howrey LLP, 11-31376, U.S. Bankruptcy Court, Northern District of California (San Francisco).
Sheppard Mullin Partners Begin New Orleans Police Monitoring
Sheppard Mullin Richter & Hampton LLP began monitoring the New Orleans Police Department, as part of a consent decree approved by the U.S. District Court for the Eastern District of Louisiana, the firm said in a statement.
Sheppard Mullin’s team includes government contract and internal investigations partners Jonathan Aronie, who will be the primary monitor and David Douglass, who is a deputy monitor.
The consent decree followed Justice Department Civil Rights Division investigation into New Orleans’s police department that ended in March 2011, according to the firm.
The Sheppard Mullin lawyers will monitor police practices, review policies, reports, and data and meet with officers, officials, and members of the public as required by the consent decree.
Former Charlotte-Mecklenburg, North Carolina police chief Dennis Nowicki, also a member of the team, is a deputy monitor.
Former Texas Medicaid Lawyer Karen Nelson Joins DLA Piper
DLA Piper LLP announced that Karen Nelson has joined the firm’s national health-care enforcement and compliance practice as of counsel in the Austin office. Previously, Nelson served as deputy inspector general and chief counsel for the Texas Health and Human Services Commission’s Office of Inspector General.
Nelson will focus her practice on advising providers and suppliers on compliance with, and enforcement of, Medicaid and Medicare laws and regulations, the firm said in a statement.
“Karen is an informed and experienced strategist, having been a key member of what many consider to be the most robust and effective Medicaid regulatory and enforcement agency in the country,” Frank Sheeder, chairman of DLA Piper’s health-care enforcement and compliance practice said in a statement.
DLA Piper has 4,200 lawyers in more than 30 countries in the Americas, Asia Pacific, Europe and the Middle East.
Hirschler Fleischer Adds Investment and Private Funds Partner
Hirschler Fleischer announced that partner James W. Van Horn Jr. joined the investment management and private funds practice in the Richmond office. He was previously at Carrell Blanton Garrett & Van Horn Plc.
Van Horn’s background is in advising middle-market businesses and private investment funds. He has experience representing clients in business formations, acquisitions and dispositions, as well as private securities offerings, venture capital and debt financings, contract negotiations and general corporate matters.
“Institutional investors need help identifying areas of contractual, tax and fiduciary risk associated with potential investments. As part of our team, Jim Van Horn will address these risks and help clients find new ways to meet their emerging obligations,” S. Brian Farmer, managing partner of the firm’s business section, said in a statement.
Hirschler Fleischer has lawyers at two Virginia offices. Arnstein & Lehr Adds Litigation Partner John Gekas
The Chicago law firm of Arnstein & Lehr LLP added partner John Gekas to the firm’s litigation practice. Prior to joining the firm, Gekas founded his own litigation firm, Gekas Law LLP.
Gekas has experience representing publicly traded and emerging businesses in contract disputes, securities and investment fraud, class actions, and construction and real estate litigation, the firm said.
Arnstein & Lehr has offices in Illinois, Florida and Wisconsin.
Peabody Sees JPMorgan’s Legal Costs at $5 Billion This Year
Charles Peabody, an analyst at Portales Partners LLC, talks about the legal expenses JPMorgan Chase & Co. faces amid the “London Whale” trading loss along with attorney Douglas Burns. Burns, a former federal prosecutor, says charges against SAC Capital Advisors LP will not taint the rest of the hedge fund industry.
They speaks with Tom Keene and Sara Eisen on Bloomberg Television’s “Surveillance.”
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