On March 29, the Senate Finance Committee released a report on its investigation of Credit Suisse’s role in U.S. tax evasion schemes. The report, written by the Democratic staff of the Finance Committee, highlights the key role whistleblowers have played in uncovering Credit Suisse’s illegal tax activity and calls for the Internal Revenue Service (IRS) to dedicate more funding to its Whistleblower Office.
The 70-plus page report is the culmination of a two-year investigation into Credit Suisse’s handling of accounts owned or controlled by United States citizens. As the report explains, “the purpose of the investigation was to understand whether the bank violated the terms of its 2014 plea agreement with the Department of Justice involving the bank’s participation in a conspiracy to assist thousands of wealthy U.S. taxpayers in hiding offshore accounts from the Internal Revenue Service.”
In the 2014 plea deal, Credit Suisse pled guilty to a charge of conspiring to aid tax evasion. According to The New York Times, “Credit Suisse was fined a total of $2.6 billion, but avoided even higher fines because it vowed to the Justice Department and a Senate panel that it had not only stopped the practice, but that it would close ‘any and all accounts of recalcitrant account holders.’”
According to the Senate report, Credit Suisse violated the 2014 plea deal in a number of instances, “including failing to report what may be an ongoing criminal tax conspiracy involving nearly $100 million in secret offshore accounts belonging to a family of dual U.S.–Latin American citizens,” and “in assisting U.S. businessman Dan Horsky in concealing over $220 million in offshore accounts from the IRS.”
The report notes that “[i]n both instances, Credit Suisse failed to disclose the accounts to DOJ after entering into its plea agreement, and only did so after whistleblowers notified U.S. authorities of the existence of the accounts.”
The key role whistleblowers have played in exposing Credit Suisse’s misconduct is repeated throughout the report. Through the IRS Whistleblower Program, individuals who voluntarily report original information about tax violations can qualify for monetary awards. Since 2007, the IRS Whistleblower Program has granted over $1 billion to whistleblowers based on the collection of over $6 billion in back taxes, interest, penalties, and criminal fines and sanctions.
The report highlights whistleblowers in its list of Committee findings: “Without whistleblowers, over $300 million in secret offshore accounts held at Credit Suisse and other financial institutions would likely have remained secret. Had whistleblowers not come forward, it is possible that hundreds of millions of dollars in offshore accounts at Credit Suisse would remain hidden to this day. In both the Horsky case and the case of the Family, whistleblowers were essential to discovering major offshore tax evasion schemes.”
In addition to calling on the DOJ and IRS to investigate Credit Suisse’s compliance with the 2014 plea agreement, the Senate report calls on the IRS to dedicate more funding to its Whistleblower Office. In recent years, the IRS Whistleblower Program has been plagued by a number of issues, including long delays in award processing.
“Use of Inflation Reduction Act funding for expedited processing of whistleblower claims,” the report recommends. The IRS should dedicate funding from the Inflation Reduction Act to increase the Whistleblower Office’s ability to quickly analyze and act on the information provided by whistleblowers, especially in major cases involving offshore tax evasion schemes. This may require closer coordination with the functional components at the IRS.”
On March 2, a bipartisan group of senators introduced the IRS Whistleblower Program Improvement Act of 2023. The bill offers reforms to the IRS Whistleblower Program including the implementation of de novo review of award decisions and interest payments on delayed whistleblower awards.
CREDIT SUISSE’S ROLE IN U.S. TAX EVASION SCHEMES