Ex-Credit Suisse Bankers Lose Bid to Boost $2.6 Billion Tax Fine
(Bloomberg) -- A U.S. judge dismissed a lawsuit by former Credit Suisse AG bankers who claim the firm should have paid more than $2.6 billion when its banking unit pleaded guilty in 2014 for helping thousands of Americans evade taxes.
The bankers claimed Credit Suisse misled the court by failing to disclose $200 million in accounts held by U.S. client Daniel Horsky, who later pleaded guilty to tax fraud. Had the court known of that deception, the bankers claim, the judge may have ordered the bank to pay a higher penalty.
But the Justice Department declined to join the lawsuit, saying it threatened talks with Credit Suisse about “the identification and remediation of remaining Swiss accounts held by U.S. citizens.” It said the seven-year-old plea agreement remains a “living document” that requires the bank’s cooperation in finding accounts hidden from the Internal Revenue Service.
U.S. District Judge Claude Hilton ruled Friday the lawsuit’s claims are “based on the speculative assumption that if Credit Suisse had disclosed additional illegal accounts, federal prosecutors likely would have pursued a higher negotiated criminal penalty than what is reflected in the plea agreement.”
Allowing the lawsuit to proceed “would threaten the Department of Justice’s ability to continue working with Credit Suisse in pursuit of uniquely governmental and federal interests.”
The case was filed in federal court in Alexandria, Virginia, under the False Claims Act, which lets people sue on behalf of the U.S. and share in any recovery. For the bankers to succeed, they would have to show an “established duty to pay money,” the judge wrote. But in the enforcement context, “there is no such duty” when the government has not assessed penalties.
A Credit Suisse spokesman declined to comment.
The bankers “have come forward with credible information that Credit Suisse continued to assist additional Americans with concealing assets from the United States after 2014,” according to a Nov. 18 filing by the bankers. “In some instances, the concealment is ongoing today.”
An attorney for the bankers, Jeffrey Neiman, said they plan to appeal Hilton’s ruling.
“Former bankers have come forward and exposed that Credit Suisse continued to conspire to defraud the United States after it promised it had stopped,” Neiman said. “The bank may be powerful but they should be held accountable and we will fight until they are held accountable.”
The case is U.S. ex rel. John Doe v Credit Suisse, 1:21-cv-00224, U.S. District Court for the Eastern District of Virginia (Alexandria).
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