ALEXANDRIA, Va. – Two former Swiss bankers avoided jail time Friday for their roles in a tax fraud scheme that helped U.S. customers hide billions of dollars in assets.
Prosecutors in U.S. District Court in Alexandria recommended probation for the two men, Andreas Bachmann and Josef Dorig. The two were among eight former employees of Zurich-based Credit Suisse and its subsidiaries who were indicted in 2011. The other six remain at large.
Bachmann and Dorig voluntarily came to the U.S. to face charges and have co-operated with prosecutors’ investigation. Last year, Credit Suisse pleaded guilty to aiding U.S. tax evaders and agreed to pay about $2.6 billion to the U.S. government and regulators.
The recommendation for probation came despite the fact that federal sentencing guidelines called for prison terms of more than four years.
Judge Gerald Bruce Lee could have imposed a prison sentence despite prosecutors’ recommendation, but chose not to.
“I see no reason to put you in jail,” Lee told Bachmann, cutting him off mid-apology.
Bachmann told the judge that the years since his 2011 indictment have been the worst in his life and that he wants “nothing more than to take responsibility for my actions.”
Dorig also apologized for his conduct.
Still, after the sentencing hearing, Dorig’s lawyer questioned the fairness of a system in which his client, a Swiss national, is punished for actions perfectly legal inside of Switzerland, where the financial industry built its reputation on maintaining secrecy for its clients.
“The system is clearly broken, stacked, and unfair to foreign bankers and trust company officials. The government charged Mr. Dorig — without warning and without being given a chance to explain himself — years after Mr. Dorig had been directing U.S. clients to disclose” their assets and take advantage of amnesty offers, Robert Henoch said. “He was put through a four-year ordeal while U.S. nationals committing the object crime of tax evasion were allowed to escape with a fine, without even a slap on the wrist.”
Henoch said that “people in Switzerland understand that the American system of prosecuting foreign nationals while letting American taxpayers (off the hook) is grossly unfair.”
Henoch said his client faced a very serious threat of jail time when he agreed to come to the U.S. last year and face prosecution. He agreed to do so because while the Swiss government would not have extradited him, he would have been at risk of arrest any time he left the country, and Dorig has family members overseas that he wanted to be able to visit.
Bachmann’s lawyers, in their court papers, suggest it is unlikely that other defendants in the case will be brought to trial. “Those who supervised and sanctioned Mr. Bachmann’s activities at Credit Suisse either have not been indicted or have remained in Switzerland — under no realistic threat of extradition,” the lawyers wrote.
Dorig, 72, worked for various Credit Suisse subsidiaries until he formed his own company, Dorig Partner AG, that worked closely with Credit Suisse and handled numerous American accounts referred to it by Credit Suisse. In 2008, Dorig began advising clients to take advantage of amnesty offers by the IRS, even though doing so exposed his role and left him subject to U.S. prosecution. As a result, 67 clients paid more than $71 million in back taxes, Dorig’s lawyers said.
According to court documents, Dorig regularly travelled to the U.S. to meet with existing clients and recruit new ones. Bachmann, 57, travelled to the U.S. twice a year, sometimes personally carrying bags of cash for clients looking to make withdrawals.
Prosecutors made their sentencing arguments Friday at sidebar, meaning that the public couldn’t hear what was said. In court papers, prosecutors cite the fact that 45,000 U.S. taxpayers with foreign bank accounts have paid $6.5 billion in back taxes and penalties in the last six years under IRS amnesty programs that have let those taxpayers avoid criminal prosecution.
Both men were fined — $100,000 for Bachmann and $125,000 for Dorig — in addition to a five-year term of unsupervised probation.