The United States Justice Department said it has busted Swiss Life Holding AG and three subsidiaries helping its citizens hide assets and income in offshore accounts, thereby evading taxation.
Swiss Life, Switzerland’s largest Insurance company and its sister companies have agreed to the indictment.
They have agreed to deferred prosecution and paying a fine of about $77 Million.
The three subsidiaries caught in the web are Swiss Life (Liechtenstein) AG, Swiss Life (Singapore) Pte. Ltd., and Swiss Life (Luxembourg) S.A..
Audrey Strauss, United States Attorney for the Southern District of New York, Stuart M. Goldberg, Acting Deputy Assistant Attorney General of the Justice Department’s Tax Division, and James C. Lee, Chief of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced today the filing of a criminal Information charging the Swiss companies,
They are all accused of conspiring with U.S. taxpayers and others to conceal from the Internal Revenue Service (the “IRS”) more than $1.452 billion in offshore insurance policies, including more than 1,600 insurance wrapper policies, and related policy investment accounts in banks around the world and the income generated in these accounts.
Ms. Strauss, Mr. Goldberg, and Mr. Lee also announced a deferred prosecution agreement with the Swiss Life Entities under which they agreed to accept responsibility for their criminal conduct by stipulating to the accuracy of the Statement of Facts attached to the Agreement.
The Agreement requires the Swiss Life Entities to refrain from all future criminal conduct, enhance remedial measures, and continue to cooperate fully with further investigations into hidden insurance policies and related policy investment accounts.
“Further, as part of today’s resolution, the Swiss Life Entities agreed to pay approximately $77.3 million to the U.S. Treasury, which includes restitution, forfeiture of all gross fees, and a penalty component.
“If the Swiss Life Entities abide by all of the terms of the Agreement, the Government will defer prosecution on the Information for three years and then seek to dismiss the charge.
Manhattan U.S. Attorney Audrey Strauss said: “As they admit, Swiss Life and its subsidiaries sought out and offered their services to U.S. taxpayers to help them become U.S. tax evaders.
“The Swiss Life Entities offered private placement life insurance policies and related policy investment accounts to U.S. customers, and provided services that concealed the policies and other assets from the IRS. Indeed, the Swiss Life Entities saw U.S. authorities’ stepped-up offshore tax enforcement as an opportunity to pitch themselves to tax-evading U.S. customers as an alternative to Swiss banks.
“Under the terms of today’s agreement, Swiss Life will turn over more than $77 million and commit to cooperating with the United States in identifying U.S. tax evaders.”
Acting Deputy Assistant Attorney General Stuart M. Goldberg said: “Swiss Life today is held criminally responsible for creating and marketing specially designed insurance products to U.S. tax evaders seeking a new way to hide their offshore assets, in light of heightened Justice Department and IRS tax enforcement efforts. Financial enablers here and abroad – and the taxpayers seeking their services – should know that we will continue to identify and unmask such schemes.”
IRS-CI Chief James C. Lee said: “The successful resolution of this investigation is an important victory for the American taxpayer for two primary reasons.
“First, the recovery of more than $77 million owed to the U.S. government sends an unequivocal message that offshore evasion is still a high priority of IRS Criminal Investigation.
“Secondly, this agreement further requires Swiss Life Entities to continue to cooperate with the government and does not shield them from future civil or criminal sanctions, which should put every entity engaged in offshore evasion on notice.”
The Swiss insurers from the summer of 2008, swooped on the U.S. market, aware that UBS and other Swiss banks were terminating or reevaluating their business relationships with U.S. clients in response to increasing offshore tax enforcement efforts by U.S. authorities.
“Certain management and sales personnel within the Swiss Life PPLI Business Unit viewed these developments as a business opportunity to expand the PPLI Business by onboarding U.S. clients who were fleeing UBS and other Swiss banks.
Such clients with undeclared assets were typically referred within Swiss Life as “non-comprehensive advice seeking,” which was frequently abbreviated to “NCAS.” Because Swiss Life would be identified as the owner of the policy investment accounts, rather than the U.S. policyholder and/or ultimate beneficial owner of the assets, the insurance wrapper policies could be and were used by unscrupulous U.S. taxpayers to hide undeclared assets and income and to evade taxes.
In turn, Swiss Life grew its PPLI business and earned fees on those policies. Members of management of the PPLI Business Unit knew about and authorized the onboarding of U.S. clients without regard to whether they were declared or undeclared.
Swiss Life also engaged in other misconduct with respect to U.S.-related policies.