Wegelin pleads guilty to charges of aiding US tax evaders

Switzerland’s oldest bank to pay $58 million fine and close

ZURICH, SWITZERLAND – Wegelin & Co. pleaded guilty Thursday 3 January to criminal conspiracy charges in the US, the first bank to do so among a group of Swiss banks under investigation by the US Department of Justice (official DOJ statement 3 January). Switzerland’s oldest bank, founded in 1741, admitted to charges of aiding wealthy US clients fraudulently avoid American taxes.

The Wall St Journal, in its report Thursday, noted that “As part of its plea, Wegelin, based in St. Gallen, Switzerland, agreed to forfeit $15.8 million and give up another $20 million representing the amount of taxes avoided as a result of its conduct. The bank also faces a fine of between $14.7 million and $29.4 million.”

The private bank, based in St Gallen, long defended its role, but one year ago, in late January 2012, the bank announced it would sell the bulk of its wealth management business to Raiffeisen to protect its employees and clients. The two companies issued a statement at the time saying that “Wegelin & Co. Private Bankers will remain in existence to finalize the closure of all remaining US client relationships and to continue the negotiations with the US justice authorities.”

The bank was indicted 3 February and three of its senior managers pleaded guilty to criminal charges. It is expected to close down once sentencing is done in early March.