Swiss bank nears $547M settlement of U.S. tax probe

Swiss bank Julius Baer Wednesday said it expects to pay $547.25 million to settle a U.S. investigation of evidence it helped wealthy American clients evade U.S. taxes.

The announcement in Zurich said Julius Baer, Switzerland's fourth-largest private bank, has reached an "agreement in principle" with the office of U.S. Attorney Preet Bharara in New York's southern federal district. Bharara is expected to file resolution documents in Manhattan federal court, the bank said.

Bharara's office declined to comment. However, the bank said the anticipated settlement is subject to a U.S. Department of Justice review that is expected to be resolved in the first quarter of 2016.

Julius Baer, which in June had set aside $350 million for the settlement, added an additional $197.25 million to cover the expected settlement cost, the bank said.

The provision will be charged to Julius Baer's 2015 full-year financial results. The bank said it expects to remain adequately capitalized after the settlement and anticipates reporting a net profit for the fiscal year.

Julius Baer characterized the settlement as "a comprehensive resolution regarding it's legacy U.S. cross-border business." Other Swiss banks are expected to reach similar resolutions of the long-running federal investigation of allegations that they regularly helped American clients use undeclared overseas accounts and hidden ownership structures to hide billions of dollars in income and assets from the IRS.

"Julius Baer remains committed to cooperating proactively with the DOJ's investigation," the bank said in its statement announcing the tentative resolution. The bank also said it "carried out its cooperation in full compliance with applicable Swiss laws and regulations."

Bharara's office in Oct. 2011 announced a federal conspiracy indictment of Daniela Casadei and Fabio Frazzetto, defendants who worked for a financial institution identified in the filing only as "Swiss Bank No. 1." Julius Baer subsequently acknowledged that a current and former employee had been charged, The New York Times reported.

More than 180 U.S. taxpayer clients conspired  with Casadei and Frazzetto to hide at least $600 million in assets from the IRS, the indictment alleged. The court filing also charged that the bank suspects:

• Helped American clients open and maintain undeclared accounts in code names, the names of non-U.S. relatives or sham corporate entities.
• Ensured that mail related to the accounts wasn't sent to the U.S.
• Advised the American clients to travel to Switzerland to conduct business involving the accounts.
• Traveled to the U.S. to meet with the clients.

Dozens of Swiss banks have reached non-prosecution agreements in which they've collectively paid hundreds of millions of dollars to the Department of Justice and turned over information about U.S. clients to resolve investigations of suspected offshore tax evasion.

Separately, approximately 12 banks Switzerland-land based banks have been under criminal investigation by Department of Justice prosecutors over similar allegations.

UBS in 2009 reached a record $780 million non-prosecution agreement with federal prosecutors in which the Swiss banking giant admitted its bankers traveled secretly to the U.S. to help wealthy clients conceal income in undeclared overseas accounts. UBS turned over information on roughly 4,000 financial accounts, data that the Department of Justice used to charge dozens of the clients.