A Swiss tax lawyer on Friday pleaded guilty to conspiring to help US taxpayers avoid millions of dollars in payments to the Government and is helping officials in their further investigation.
Edgar Paltzer, described as a “former” partner at The Swiss Law Firm, was arrested earlier this month at New York’s John F Kennedy Airport. He pleaded guilty in federal court before US Magistrate Judge Ronald Ellis, the US Department of Justice said.
Charges were filed in April against Paltzer and a co-defendant Stefan Buck, who is still at large.
Paltzer’s lawyer, Thomas Ostrander, said his client was cooperating with US authorities in their broader investigation, according to Bloomberg news agency.
“His cooperation is complete and without any limitation,” Ostrander was quoted as saying outside the court. “He very quickly made a decision to face these charges and come to the US.” The arrest is the latest chapter in the long-standing spat between Washington and Switzerland over the use of Swiss banks for tax evasion. In June, the Swiss parliament’s lower chamber blocked a government bill that would have helped solve the matter.
The law would have softened banking secrecy rules so Swiss banks could provide information about aiding tax-evading US clients. In recent years, the US has forced Switzerland and some Swiss firms such as UBS to hand over names of clients who have violated US tax laws.
Paltzer, a US-trained lawyer connected to The Swiss Law firm since 1998, admitted in court to helping US taxpayers hide millions of dollars in offshore accounts. That enabled them to evade US taxes on income earned in the accounts, said Preet Bharara, US attorney for the southern district of New York.
“I intentionally formed foundations and corporations which permitted these US taxpayers to hide from the IRS (Internal Revenue Service) these accounts and the income earned in these accounts,” he was quoted as saying in court.
“I assisted these taxpayers in violating their legal duties. I was aware that this conduct was wrong.” One of the tricks was the creation of a sham foundation to receive funds when certain Swiss banks, nervous about increasing US pressure, required a US taxpayer to close an account, justice officials said.
According to the indictment, Paltzer helped one client in Connecticut bring back millions of dollars through jewellery that he had personally obtained. It included a $1.98-million ruby ring and $1.7 million worth of loose diamonds.
In another case, Paltzer helped a California woman hide $3.1 million in an undeclared account at UBS in the name of a sham foundation in Liechtenstein. He then helped her move the money to another Swiss bank on behalf of an “off-the-shelf” corporation in the British Virgin Islands.
Swiss banks had backed the proposed law that was killed by parliament in June. In exchange for passage of the law, the US had offered settlement to 14 banks under which they would have shared information about foreign accounts and paid fines — but would have avoided criminal prosecution.
An indictment in the US would result in a cut-off from the dollar currency trade and from doing business in the US.
Switzerland’s oldest bank Wegelin & Co said in March that it would soon close after a New York court convicted it of having aided US tax evaders by hiding more than $1.2 billion.
Since 2010, UBS financial services company has handed over data on some 4,450 clients to the US and paid $780 million in fines to avoid prosecution in the US over tax dodging issues.