Bank Frey Official, Swiss Lawyer Charged in Tax Probe

The head of private banking at Bank Frey & Co. in Switzerland and a Swiss lawyer were charged with conspiring to help U.S. clients use offshore accounts to hide millions of dollars from the Internal Revenue Service.

Stefan Buck, the banker, and Edgar Paltzer, the lawyer, opened and managed undeclared accounts on behalf of U.S. taxpayers at Swiss banks, according to an indictment released yesterday in federal court in New York. While the indictment and Manhattan U.S. Attorney Preet Bharara didn’t identify either man’s employer, the bank confirmed today that Buck is the head of private banking and an executive board member.

Bank Frey “is currently reviewing the legal situation that derives from the indictment brought against a member of its executive board and will comment further in this matter in due course,” the Zurich-based bank said in a statement.

Bank Frey also confirmed that it was referred to in the indictment as Bank No. 1. The bank hadn’t previously been implicated in a U.S. crackdown on offshore tax evasion that led prosecutors to charge at least 88 people since 2008, including more than two dozen bankers, lawyers and advisers.

UBS AG, the largest Swiss bank, avoided prosecution in 2009 by paying $780 million, admitting it fostered tax evasion and handing over data on thousands of clients. Wegelin & Co., the oldest Swiss private bank, pleaded guilty in Manhattan in January to conspiring to help hide more than $1.2 billion in assets from the IRS while opening undeclared accounts for at least 70 U.S. taxpayers who were former UBS clients.

Swiss Residents

Paltzer, 56, a dual U.S.-Swiss citizen, and Buck, 32, a Swiss citizen, both reside in Switzerland. Neither defendant has been arrested, Bharara said in a statement. Each faces a maximum sentence of five years in prison if convicted.

In an e-mail, Paltzer wrote: “I am unfortunately not allowed to comment. All I can say at this point in time is that I have always tried to do my best. I take the opportunity to thank all of those who support me in these difficult times.”

From March 2009 to February 2012, Buck’s bank experienced an increase of about 300 percent in clients who were U.S. taxpayers, Bharara said.

As of Sept. 30, the bank had about 2 billion Swiss francs ($2.17 billion) in assets under management, according to Bharara’s statement. About 882.5 million francs, or 44 percent of the total, was held on behalf of U.S. taxpayers living in the U.S., he said.

Since 2009, 38,000 Americans avoided prosecution through an IRS amnesty program that let them repatriate their accounts by paying back taxes and penalties.

The case is U.S. v Paltzer, 13-cr-00282, U.S. District Court, Southern District of New York (Manhattan).

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