Today we once again turn our attention to the fascinating world of international money laundering. As I mentioned in a previous post, it’s no secret that in recent years the US government has made a concerted effort to close the Swiss-cheese-like loopholes in both the federal tax and criminal codes that have allowed so many to essentially completely dodge their tax obligations.
However, yesterday a landmark piece of legislation called the Foreign Account Tax Compliance Act (FACTA) took effect that may essentially put an end to the time-honored tradition of stashing your ill-gotten gains/Nazi blood money/FIFA World Cup bribes/despotic-dictator-corruption-skim, etc. in a handy-dandy numbered Swiss account.
This is great news if you’re a law-abiding citizen of the world, or a sovereign government trying to collect taxes that it’s owed, but it may significantly complicate matters for the criminal underworld and big-time tax dodgers. After all, once you steal a billion dollars, you gotta launder a billion dollars. Ask any old-school mafioso or Russian oligarch: Cleaning the money is often more difficult than stealing the money.
Fear Not, Thou Amoral Criminal, New York Real Estate Brokers Have a Solution For This Conundrum:
As detailed by New York Magazine, and referenced by Alison Griswold in today’s Slate, money is flowing into high-end Manhattan real estate transactions faster than you can say “Jamie Dimon”:
Well, well, well. It would appear that the Feds have finally (after years of trying) been able to get a Swiss citizen to plead guilty in conspiring to commit tax evasion. More importantly, it sounds that they’ve gotten the guy to name names of wealthy American clients that have been systematically dodging billions of dollars in US taxes by stashing their assets in Swiss bank accounts. Via the New York Times:
“A Swiss lawyer accused of helping American clients conceal millions of dollars in offshore accounts pleaded guilty to conspiracy to commit tax fraud in federal court in New York. The lawyer, Edgar Paltzer, 57, a dual United States-Swiss citizen, admitted he opened bank accounts in Switzerland in the name of entities he formed for American citizens, knowing they intended to evade taxes. “I was aware that this conduct was wrong,” he said, pleading guilty to newly filed criminal charges as part of a plea agreement.As part of his plea, Mr. Paltzer agreed to forfeit any fees he earned and cooperate with the United States government. “His co operation is complete and without any limitation,” Thomas Ostrander, Mr. Paltzer’s lawyer, said after the hearing. Mr. Paltzer, a former partner of the Swiss law firm Niederer Kraft & Frey who is licensed to practice in New York, was first charged in April on one count of conspiracy. That indictment accused him of conspiring with American taxpayers from 2000 through at least 2012 to help them hide their Swiss accounts from the Internal Revenue Service.” (bold emphasis mine).
Federal law-enforcement and regulatory agencies have been saying for years that it is difficult to convict white collar criminals due to the complex nature of the cases, vague and often contradictory evidence, blah blah blah. Personally I think the feds, and the SEC in particular, have used this excuse as cover not to extract admissions of wrongdoing from their corporate buddies in the revolving door that exists between the public and private sectors in the financial world (Tim Geithner, Hank Paulson, Christopher Cox, I’m talking ABOUT YOU).
While I’m no attorney, the fact that they extracted a guilty plea out of Edgar Palzer seems to indicate to me that they had a wealth of incriminating evidence on him, and that they made it very clear to him and his lawyer that they would take the case to trial, and win. Hence the guilty plea and cooperation agreement. I’m sure Mr. Palzer’s clients are less than pleased to see this in the NYT.
Coupled with other whistleblowers who claim to have specific, credible information on Swiss collusion with wealthy tax evaders, and who are willing to name names (whether in a self-serving fashion or not), it’s starting to look an awful lot like a reckoning is coming for Switzerland and their vaunted/reviled banking secrecy.
As an auditor and fraud investigator, I certainly applaud the efforts of the international community to increase transparency and compliance with the tax laws of sovereign nations. Futhermore, as a US taxpayer for the last couple of decades, I will feel no small amount of Schadenfreude if some high-profile Americans are revealed to be weasely tax cheats. I certainly have nothing against the Swiss Per Se, in fact I’ve traveled there a few times for both business and pleasure, and I found their country to be pleasant and well-run, if a bit expensive. However, the weight of history seems to be tipping the balance of international opinion and progress away from the sort of banking secrecy laws that have prevailed in Switzerland throughout modern European history.
One has to wonder if the crumbling “Swiss model” of banking secrecy will effect other notorious banking and tax havens worldwide. I couldn’t say with any degree of conclusiveness. But one thing remains certain – those of us dedicated to transparency and disclosure will keep pushing for truth, justice, and fairness.
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