Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

Credit Suisse under investigation. Again. For money laundering. Again.

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A different type of money laundering. Image courtesy of Adobe Stock.

A different type of money laundering. Image courtesy of Adobe Stock.

Looks like Credit Suisse is in trouble again. The feds and NYDFS have opened another money laundering investigation.

Check out the report on 2/23 at Wall Street Journal – Credit Suisse Probe Opens Old Wounds for the following info.

A retired professor invested $500K in a startup back in 2000. When the company went public in 2008, his shares were worth $80M.

Cool!  Good for him!

He didn’t want to share a lot of that with Uncle Sam, so he got some help from the Israel branch of Credit Suisse to cut his tax bill.

By 2013 he had $200M parked in his accounts in Switzerland.

Well, somehow the revenuers caught up with him.

He cooperated extensively, including wearing a wire to some meetings.

Current status for him is he was sentenced to seven months in a federal penitentiary.  The Bureau of Prisons is expecting him (inmate 90504-083), but he is not in custody. (Check for yourself here.) That means he will be moving into federal  housing soon. Unstated implication is that means he is now a felon.

Current status for Credit Suisse is another probe with possible additional prosecution and additional fines. Several bankers have been fired.

The rules have changed

Oh, that also reminds me yet again that the rules have changed for white-collar criminals. It used to be that if you went “state’s evidence” and delivered the goods to the feds, you got to walk.

I’ve noticed that the rules changed starting with the widespread financial fiascos at the turn of the century. Today if you want to testify against the big fish, you will need to plead guilty to a felony charge and take at least some time in the slammer.

(Don’t feel too sorry for the prof and his seven months in the pen. He got off light.  Federal sentencing guidelines include a measure of the dollar impact – I guessing that evading somewhere around $100M of income tax would have added a looooooot of time to his sentence if he had dared to go to trial.)

One on hand

In July 2014 the US Justice Department tumbled to the Israel branch of Credit Suisse helping out this prof. From context, the bankers had been helping him launder money since before 2008.

So on one hand this would seem to be the same problem for which Credit Suisse already wrote a $2.5 billion dollar check back in 2014 at the same time they pled guilty to one felony count of tax evasion.

So seems like this investigation would be covered by the previous settlement. Yet there is something more behind the scenes. What might that be? I don’t know.

On the other hand … laundering since 1910?

I don’t have much sympathy for the bank for the new round of investigation.  Keep in mind Credit Suisse has been laundering money for over a century.

The statement of facts on the 2014 settlement indicates the bank did full service money laundering, including setting up the shells to funnel the money and creating paperwork for the US authorities. They set up arrangements so launderers could repatriate the money back into the US. After all, what good is all that money sitting in a Swiss vault if you can’t ever use it?

I previously discussed this fiasco on 5/20/14: Credit Suisse admits to one felony for aiding tax evasion.

The bank set up a subsidiary in 1910 whose assigned job was to create the fake corporations needed to flow the money into the Swiss accounts.

Consider that a moment. A dedicated subsidiary. With the assigned task of creating shell corporations. Staffed with people for whom fabricating shells was their full-time job.

Full service laundering since 1910.

My comments in the previous article:

Since 1910?

I just glanced briefly at the statement of facts. One entertaining tidbit in paragraph 21 and 22 is that since 1910 Credit Suisse has operating a subsidiary that formed shell companies so its customers could hide ownership of accounts. 1910. Tax evasion. 1910. Intention to evade. Not an accident, oversight, blunder, or rogue assistant vice president in some remote office.

1910. Since before the Great Depression. Before Prohibition. They’ve been helping to hide ownership of money since before there was a U.S. Income Tax. Maybe Gatsby’s or Capone’s money is in Zurich right now waiting to be picked up.

Written by Jim Ulvog

February 24, 2017, 6:00 am at 6:00 am

Posted in Other stuff

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