Credit Suisse Faces Geneva Probe Tied to Former Bankers

(Bloomberg) -- Geneva prosecutors are investigating whether a Credit Suisse Group AG unit failed to stop money laundering in a widening fraud case tied to a defunct asset manager, according to people familiar with the probe.

Prosecutors added the bank to the criminal investigation late last week after two former employees were named as suspects over the summer, said the people, who didn’t want to be identified discussing an open case. Four people at Credit Suisse and four at the asset manager, TG Investments, including its two founding partners are suspects, the people said.

“Credit Suisse firmly rejects any criminal liability and will vigorously defend itself against the allegations with all available means,” the bank said in an emailed statement. Credit Suisse acted as a custodian bank for TG Investments, which had its own mandate to manage the assets.

The probe has been dragging on for years and focused initially on the two TG partners, who had left Credit Suisse in 2008 to manage money for Turkish clients. In 2016, the pair was charged with fraud and criminal mismanagement for forging signatures and faking orders to try to cover losses of at least 150 million Swiss francs ($149 million). The case has attracted 20 individual plaintiffs, including Turkish businessman Aydin Dogan -- a former business partner of U.S. President Donald Trump.

The probe is the second in the Swiss city to raise questions about the bank’s vigilance in managing money for rich clients from key emerging markets.

Lescaudron Similarities

A former Credit Suisse wealth manager, Patrice Lescaudron, was convicted in February of defrauding his wealthy Georgian and Russian clients in a scandal that continues in the Swiss courts and abroad. The six clients who lost money in that case argue that the bank either knew about Lescaudron’s deception and did nothing, or if not, should be held responsible for criminal negligence.

Gregoire Rey, who represents one of the TG partners, was not immediately available to comment on the bank’s inclusion in the probe. Ilir Cenko, a spokesman for the other partner, didn’t immediately return a call seeking comment.

Rey has said his client didn’t profit from the alleged fraud and was only trying to cover losses that mounted to nearly 300 million Swiss francs.

It’s not clear why prosecutors decided to expand the probe to the bank itself, the person said. Of some 50,000 trades executed by the clients between 2009 and 2015, prosecutors are focused on about 40, one of the people with knowledge of the case said.

One of the four Credit Suisse employees, who has subsequently been fired, was charged with complicity in fraud and money laundering for having authorized trade instructions from Geneva-based TG Investments in April 2014. The other three employees have also been charged with complicity.

Under Swiss law, a bank may have violated Switzerland’s money-laundering law if a judge determines that it didn’t do enough to stop the transfers and that guilt cannot be attributed to a single individual.

A spokesman for the prosecutor’s office didn’t immediately return a call seeking comment.

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