- The Washington Times - Monday, May 19, 2014

Switzerland’s second-largest bank pleaded guilty Monday to helping U.S. citizens cheat on their taxes and had agreed to pay $2.6 billion in penalties, an amount the Justice Department called the largest fine ever in a criminal tax case.

Credit Suisse is the first bank in a decade to plead guilty in a U.S. court of law, and the case marks an increasingly aggressive stance by the Department of Justice to go after big banks for criminal actions.

Attorney General Eric H. Holder Jr. has faced criticism from lawmakers who said the Justice Department failed to hold banks accountable for their handling of mortgage-backed securities in the run-up to the 2008 financial crisis, and decided not to pursue criminal verdicts for fear of the economic ramifications that may occur because of such a plea.

“This case shows that no financial institution, no matter its size or global reach, is above the law,” Mr. Holder said during a press conference Monday. He said “a company’s profitability or market share can never and will never be used as a shield from prosecution or penalty. And this action should put that misguided notion definitively to rest.”

Zurich-based Credit Suisse helped clients use phony entities to hide undeclared accounts, didn’t properly maintain U.S. account information, and in some cases destroyed records sent to U.S. clients, according to court papers filed in Alexandria federal court. The bank also helped clients evade currency reporting requirements by the way it structured transactions, the Justice Department said.

“We deeply regret the past misconduct,” Credit Suisse Chief Executive Officer Brady Dougan said in a statement.

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For centuries, Switzerland has been known for the world’s strictest bank-secrecy laws, which turned the country into a haven for asset hiding and made “Swiss bank account” its own term with implications of shady finance.

But a treaty the small Alpine nation signed with the U.S. last year after a long-running diplomatic dispute tore some holes in that secrecy curtain, allowing Swiss banks to disclose information to the U.S. government about their American clients that could be used in tax-evasion and other cases. Previously, Swiss law had forbade the banks from cooperating, putting financial institutions in a bind between the two countries’ laws.

In exchange, the U.S. agreed to allow banks to settle cases and avoid potential criminal prosecutions.

According to various reports, federal prosecutors have been narrowing in on Credit Suisse for some time. The Justice Department is also close to reaching either a settlement or guilty plea with France’s BNP Paribus for alleged violations of U.S. sanctions lodged against countries such as Iran and Sudan, according to the Wall Street Journal, citing people familiar with the investigation.

Last week, Mr. Holder gave a warning to all banking institutions saying in his weekly video address that: “There is no such thing as too big to jail.”

“Some have used that phrase to describe the theory that certain financial institutions, even if they engage in criminal misconduct, should be considered immune from prosecution due to their sheer size and their influence on the economy,” Mr. Holder said.

“That view is mistaken,” Mr. Holder said. “And it is a view that has been rejected by the Department of Justice. To be clear: No individual or company, no matter how large or how profitable, is above the law. When the Department of Justice conducts investigations, we will always follow the law and the facts wherever they lead.”

Mr. Holder’s critics have said that the Department of Justice, instead of criminally going after banks, has resolved cases with settlements and by paying fines — promising not to break the law in the future. The Department of Justice has entered into at least 20 such agreements with financial institutions during Mr. Holder’s five-year tenure, according to data published by law firm Gibson, Dunn & Crutcher.

More than a year ago, Mr. Holder told Congress that criminal charges against large, multinational banks could damage national or global economies.

“That the size of some of these institutions becomes so large that it does become difficult for us to prosecute them,” he said in March 2013.

Last year the government’s $13 billion settlement with J.P. Morgan Chase didn’t include a guilty plea. The last company to plead guilty was Crédit Lyonnais, which in 2004 admitted making false statements to the Federal Reserve.

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