Swiss Enabler Pleads Guilty

A former Swiss banking executive has pleaded guilty in a Florida court to charges of helping U.S. clients evade taxes. Hansruedi Schumacher, who cooperated with the U.S. government and testified in another prominent offshore prosecution, will face sentencing later this year.

Schumacher, 56, was the Regional Market Manager for UBS’s North America International branch from 1990-2002. In 2002, he left UBS to help Neue Zuercher Bank (NZB) start its private banking operations. In doing so, he solicited many of UBS’s American clients to transfer their funds from UBS to NZB. He told these clients that NZB was more secure because it did not have a presence in the United States and could not be pressured by U.S. authorities to disclose client information.

Along with his co-conspirators, Schumacher provided these American clients with debit or credit cards they could use to access the funds in their NZB accounts. However, the clients were advised not to use these cards in the U.S., where the activity could be detected by authorities. When clients wanted to bring money back to the United States, NZB would prepare sham loan documents, which would also allow them to claim false interest deductions. The clients were also provided with telephone cards that they could use to contact their offshore bankers in a way that was untraceable. At times, they would even hand-deliver cash to their American clients in the United States.

Schumacher was a cooperating witness in the much publicized trial of Raoul Weil, the former UBS executive considered by many to be the “biggest fish” in the Department of Justice’s crackdown on offshore tax evasion. Weil was a fugitive in Switzerland for almost five years before being arrested while traveling to Italy. He was extradited to the United States where he was ultimately acquitted late last year, in a stinging defeat for the Department of Justice.

Given his extensive cooperation with U.S. authorities, we expect that Schumacher will receive leniency at sentencing. Recently, two former Credit Suisse bankers were sentenced to probation, largely due to their cooperation in the prosecution of the bank itself. Last year, Credit Suisse pleaded guilty to conspiracy to aid and assist U.S. taxpayers in filing false returns.