Goodwin Procter client Wegelin closes down after US tax evasion case

Switzerland’s oldest private bank Wegelin & Co is to close after admitting in a New York court yesterday that it had helped its clients evade taxes.

The 271-year-old Swiss bank, appearing in the US District Court in the Southern District of New York before Judge Jed Rakoff, pleaded guilty to tax law violations and to helping its clients hide more than $1.2bn (£743m) from the Internal Revenue Service in secret accounts over nearly a decade.

The bank has agreed to pay $57.8m (£36m) in fines, restitution and forfeiture proceeds to US authorities. It has also confirmed it will close down its banking operations.

Rich Strassberg, the chair of Goodwin Procter’s white collar crime and government investigations practice, represented Wegelin along with fellow litigation partner John Moustakas.

The Justice Department was represented by lawyers David Massey, Daniel Levy and Jason Cowley.

In a statement, assistant US Attorney General Kathryn Keneally said it was a top Justice Department priority, “to find those who continue to shirk their tax obligations,” as well as those who help them and profit from it.

“The best deal now for these folks is to come in and ‘get right’ with the IRS, before either the IRS or the Justice Department finds them,” she added.

Preet Bharara, the US attorney for Manhattan, described the case as a “watershed moment”.

Wegelin was originally indicted on 2 February last year, the first time an overseas bank had been charged by the US for facilitating tax fraud by US taxpayers.

At that time, the US government seized more than $16m from Wegelin’s correspondent bank account in the US, in accordance with a civil forfeiture complaint and seizure warrant.

As of December 2010, Wegelin had approximately $25bn in assets under management.

In a statement from its headquarters in Swiss town St Gallen, Wegelin said: “Once the matter is finally concluded, Wegelin will cease to operate as a bank.”

Goodwin Procter did not comment.