Swiss firm Niederer Kraft & Frey (NKF) has lost two partners after the duo were caught up in allegations of tax evasion between the US and Switzerland.
Former NKF partner Edgar Paltzer was named in a criminal indictment filed in mid-April in the Southern District Court in New York, alleging that he and Stefan Buck – the head of private banking at Bank Frey in Zurich – had conspired to help US citizens avoid paying tax in the US.
NKF and Bank Frey were described on the indictment as “the Swiss law firm” and “Swiss Bank No. 1” but both have confirmed their identity.
Paltzer resigned from NKF in December 2012, a statement on the firm’s website confirmed.
Fellow NKF partner Markus Frey, who was not named in the indictment but is chair of Bank Frey, resigned from the firm on 20 April this year. According to the firm Frey “tendered his resignation because he concluded that it was in the best interests of NKF”.
A Bank Frey statement added: “With this step, he wishes to emphasise the clear separation of his activities as a partner of the law firm from those as chairman of the board of directors of Bank Frey & Co.”
The bank said Frey would provide legal consultancy advice on an independent basis and would remain chair of the board.
The allegations follow the prosecution of Swiss banks UBS and Wegelin by US authorities for tax evasion. According to the US indictment against Buck and Paltzer, Wegelin provided back-office services to Bank Frey, including allowing Bank Frey to have cheques to its clients isued from Wegelin’s correspondent account in the US. This, the US authorities claim, permitted the bank to assist US clients to repatriate undeclared funds to the US.
The indictment also claims that Paltzer and Buck and “their co-conspirators” helped US taxpayers to open undeclared Swiss bank accounts after the clients had been forced to close similar accounts with other banks.
A spokesperson for NKF declined to comment on the allegations, save to say that if true the firm “would not tolerate them”. He added that the firm had taken the necessary action and was managing the situation.
Bank Frey issued a statement saying that Buck had been suspended from his duties to allow him to defend himself against the accusations. “This step is by no means to be misconstrued as a sign that Bank Frey considers Stefan Buck to be guilty of the accusations made against him. Bank Frey supports Stefan Buck in the legal proceedings and emphasises that he is presumed innocent unless and until proven guilty,” the statement said.
Paltzer said he was unable to comment, but said: “I take the opportunity to thank all those who support me in these very difficult times.”
Frey declined to comment.