By Christopher M. Matthews
Israel-based Bank Leumi agreed to pay $400 million to U.S. and
New York authorities on Monday and admitted to conspiring to help
U.S. taxpayers avoid taxes by stashing assets in offshore accounts
with the bank.
The bank resolved the tax-evasion allegations in separate
settlements with the U.S. Department of Justice and New York's
Department of Financial Services, agreeing to pay the agencies $270
million and $130 million, respectively. It also agreed to terminate
several senior employees as part of the New York regulator's
settlement.
Bank Leumi is one of about a dozen banks, many of them in
Switzerland, that U.S. authorities have investigated for aiding tax
evasion. Monday's deal came under the auspices of a program between
the Swiss government and the U.S. Justice Department that allows
banks to hand over data on Swiss bank accounts held by American
clients despite Swiss secrecy laws.
Of the $270 million penalty, $157 million represents a penalty
for U.S. taxpayer accounts held at the bank's Swiss subsidiary,
prosecutors said.
Under the terms of the Justice Department settlement, Bank Leumi
agreed to disclose 1,500 of its U.S. taxpayer-held accounts. The
bank, one of Israel's largest, entered into a so-called deferred
prosecution agreement in which it admitted to the charges without
pleading guilty and avoided prosecution.
The conspiracy spanned more than a decade. Bank Leumi sent
private bankers from Israel and elsewhere to the U.S. to meet with
U.S. clients and help them use front corporate entities created in
Belize and other countries to hide their undeclared accounts,
prosecutors said.
The Department of Financial Services, headed by Benjamin M.
Lawsky, said the bank offered U.S. clients "hold mail" services for
roughly 2,450 U.S. accounts, under which statements and other
account documents would be held abroad at the foreign bank and
wouldn't be sent to the customer's address in the U.S.
Bank Leumi also offered "assumed name" and "numbered" accounts,
where the name of the account holder wouldn't appear on
correspondence, and the bank would accept wire transfers under
assumed names or numbers assigned to the account, Mr. Lawsky's
office said.
The New York regulator also installed an independent monitor at
Bank Leumi, selected by the agency, to review the bank's compliance
programs. Such monitors are becoming a growing presence at banks
under investigation by Mr. Lawsky's office.
A bank spokesman didn't immediately respond to a request for
comment.
Some of Switzerland's largest banks have settled tax-evasion
cases in recent years. Credit Suisse Group AG pleaded guilty in May
to helping Americans avoid taxes and agreed to pay a $2.6 billion
penalty.
Write to Christopher M. Matthews at
christopher.matthews@wsj.com
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