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January 16, 2015


Fugitive Swiss Banker to Appear in US Court

A former client advisor at Bank Frey & Co. AG has agreed to personally appear in a United States District Court in New York to face charges that he conspired with American clients to help them evade taxes, after a federal judge denied his request to first have conditions of bail set. Stefan Buck is one of more than twenty Swiss bankers who have been indicted but are currently considered fugitives.

Although Switzerland has an extradition treaty with the U.S., they have not been willing to extradite individuals accused of tax crimes. Buck and his co-conspirator, Edgar Paltzer, were indicted on April 16, 2013. Paltzer, a Swiss lawyer who is licensed to practice law in New York, pleaded guilty that same year. He is expected to be sentenced in April 2015.

The government alleges that Buck helped American clients open and maintain undeclared accounts. According to the indictment, Buck sent structured checks to clients in the U.S. to help them avoid detection by authorities. “Structuring” is the practice of executing financial transactions in a way to avoid having the transactions reported to the government. For example, an individual might deposit $100,000 into the bank using more than ten separate transactions, each under $10,000, to avoid the filing of a Currency Transaction Report.

On November 18, 2014, Buck filed a motion, seeking to have bail set prior to his appearance in the United States. He proposed a bail package that would set his bond at $500,000 and permit him to return to Switzerland while he awaits trial.

The government opposed Buck’s motion, labeling him a fugitive and saying that he should personally appear to have his application for bail considered, rather than “asking the court to set bail while he remains a fugitive so he can then decide whether to return to the United States and appear before this Court.” Buck denies that he is a fugitive, since he was already in Switzerland when he was indicted, rather than fleeing there afterward.

His co-conspirator, Paltzer, had agreed with the government on a proposed bail package prior to traveling to the United States in 2013 to enter a plea of guilty, though he neither sought nor obtained any court order prior to actually appearing. His bail was set at $2 million, which he used a $500,000 French painting to pay a portion of.

After a string of important victories in offshore cases, the Department of Justice suffered setbacks late last year, when two high profile “enablers” were acquitted of the same charges that Buck faces. Raoul Weil, a former executive at Swiss giant UBS AG, was extradited to the U.S. after leaving Switzerland to travel to Italy. Weil was the highest ranking offshore banker to be charged since the U.S. started its crackdown in 2008. Weil has been referred to in the Swiss media as a “national hero” for successfully taking on the U.S. government. It is expected that these acquittals will lead more Swiss fugitives to appear in the U.S. and take their chances in front of a jury, rather than remaining in Switzerland or accepting a plea agreement.

Offshore Accounts/International Tax Disputes