EFTA01125419.pdf

JUDGE Yeti PREET BHARAR 51 © OC,F).7 0 A Attorney for the : United States Southern District of New York By: JASON H. COWLEY DANIEL W. LEVY • DAVID B. MASSEY a Assistant United States Attorneys One St. Andrew's Plaza New York, New York 10007 PM GgtH1Y UNITED STATES DISTRICT COURT NY CASHIERS • • SOUTHERN DISTRICT OF NEW YORK x UNITED STATES OF AMERICA, Plaintiff, 12 Civ. ALL FUNDS VERIFIED COMPLAINT ACCOUNT NO. HELD IN THE NAME OF WEGELIN & CO., : Defendants in rem. x Plaintiff United States of America, by its attorney, PREET BHARARA, United States Attorney for the Southern District of New York, for its Verified Complaint alleges, upon information and belief, as follows: I. NATURE OF THE ACTION 1. This an action by the United States of America seeking forfeiture of all funds, approximately $16.2 million, on deposit at UBS AG, Account No. held in the name of Wegelin & Co. (the "Defendant Funds"). The Defendant Funds are subject to forfeiture pursuant to 18 U.S.C. 981(a)(1)(A), as property involved in transactions in violation of 18 U.S.C. § 1956. EFTA01125419  2. The Internal Revenue Service, Criminal Investigation ("IRS-CI") has conducted an investigation regarding a conspiracy among Wegelin & Co. ("Wegelin"), more than 100 U.S. taxpayer-clients of Wegelin, and others known and unknown to defraud the United States of certain taxes due and owing, among other things, concealing from the Internal Revenue Service ("IRS") undeclared accounts owned by U.S. taxpayers at Wegelin and other Swiss banks. As set forth below, it was part of this scheme to provide U.S. taxpayer-clients of Wegelin and other Swiss banks who had undeclared accounts in Switzerland access to their undeclared funds in the United States in a manner that obscured the source of these funds, that is, the U.S. taxpayer- clients' undeclared accounts in Switzerland. To promote and further this scheme to defraud, Wegelin and other Swiss banks used Wegelin's correspondent bank account in the United States to launder undeclared funds from Switzerland to U.S. taxpayer- clients in a manner that facilitated the continued concealment of these undeclared accounts from the IRS. The high volume of other transactions and other funds moving in and out of Wegelin's correspondent account contemporaneously with the laundering of these undeclared assets helped to facilitate these money laundering transactions by making their true nature more difficult to detect and to lend these transactions an aura of legitimacy. -2- EFTA01125420 II. JURISDICTION AND VENUE 3. This Court has jurisdiction pursuant to 28 U.S.C. §§ 1345 and 1355. 4. Venue is proper pursuant to 28 U.S.C. 1355(b)(1)(A) because acts and omissions giving rise to the forfeiture took place in the Southern District of New York. III. PROBABLE CAUSE FOR FORFEITURE Background Wegelin Bank and Its Co-Conspirators 5. At all times relevant to this Complaint, Wegelin was a Swiss private bank with offices only in Switzerland. Its headquarters were located in the city of St. Gallen. Wegelin provided private banking, asset management, and other services to individuals and entities around the world, including U.S. taxpayers in the Southern District of New York. Wegelin provided these services through "client advisors" based in its various branches in Switzerland ("Client Advisors"). Wegelin was principally owned by a small group of managing partners ("Managing Partners") and was governed by an executive committee that included the Managing Partners (the "Executive Committee"). Wegelin did not maintain an office or branch in the United States, but it directly accessed the U.S. banking system through a correspondent bank account, Account No. 101-WA-358967-000, held -3- EFTA01125421 at UBS AG ("UBS") in Stamford, Connecticut (the "Stamford Correspondent Account"). 6. From at least in or about 2008 up through and including at least in or about 2010, Michael Berlinka ("Berlinka") worked as a Client Advisor at Wegelin's Zurich branch (the "Zurich Branch"). 7. From at least in or about 2006 up through and including in or about 2010, Urs Frei ("Frei") worked as a Client Advisor at Wegelin's Zurich Branch. 8. From at least in or about 2007 up through and including in or about 2010, Roger Keller ("Keller"), worked as a Client Advisor at Wegelin's Zurich Branch. When Keller was out of the office and could not communicate with, or provide services to his U.S. taxpayer-clients, Frei served as his backup, and vice versa. 9. On or about January 3, 2012, Keller, Frei, and Berlinka were indicted by a federal grand jury in the Southern District of New York for conspiring to defraud the United States of America and an agency thereof, the IRS, and to commit offenses against the United States, to wit, violations of Title 26, United States Code, Sections 7206(1) and 7201. See United States v. Berlinka, et al., 12 Cr. 2 (JSR) (attached hereto as Exhibit A and incorporated by reference herein). -4- EFTA01125422  10. From in or about 2005 up through and including in or about 2010, Client Advisor A, a co-conspirator, worked as a Client Advisor at the Zurich Branch. At various times, Client Advisor A also served as the "team leader" of Berlinka, Frei, and Keller, and other Client Advisors of the Zurich Branch. As a team leader, Client Advisor A coordinated certain activities of, but did not supervise, these and other Client Advisors. 11. From in or about 2007 up through and including in or about 2011, Managing Partner A, a co-conspirator, was one of the Managing Partners of Wegelin. From in or about 2005 up through and including in or about 2011, Managing Partner A was the head of Wegelin's Zurich Branch. During that period, Managing Partner A supervised Berlinka, Frei, and Keller, Client Advisor A, and other Client Advisors in the Zurich Branch with respect to, among other things, the opening and servicing of "undeclared accounts" for U.S. taxpayers. Undeclared accounts are bank and securities accounts for U.S. taxpayers in which the assets, and the income generated in them, were not reported by the U.S. taxpayers to the taxation authority of the United States, the IRS. 12. From in or about 2008 up through and including in or about 2012, Executive A, a co-conspirator, was a member of the Executive Committee of Wegelin. At all times relevant to this Complaint, Executive A worked primarily at the Zurich Branch. -5- EFTA01125423  13. At all times relevant to this Complaint, Beda Singenberger ("Singenberger"), a co-conspirator, owned, operated, and controlled an investment advisory business based in Zurich called Sinco Treuhand AG ("Sinco Trust"). Beginning at least in or about 2000, Singenberger, through Sinco Trust, served as an independent asset manager for various U.S. taxpayers who held undeclared accounts at Wegelin, UBS, and other Swiss banks. Singenberger helped U.S. taxpayers hide such accounts, and the income generated therein, by, among other things, creating sham corporations and foundations for U.S. taxpayers as vehicles through which the U.S. taxpayers could hold their undeclared accounts at UBS, Wegelin, and other Swiss private banks, and by serving as the asset manager for U.S. taxpayers who held undeclared accounts at these banks. From at least in or about 2002 to in or about 2006, Singenberger regularly traveled to the Southern District of New York and other places in the United States to meet with his U.S. taxpayer-clients with undeclared accounts at UBS, Wegelin, and other Swiss private banks. 14. From in or about the mid-1990s up through and including in or about late 2008, Gian Gisler ("Gisler"), a co-conspirator, worked as a client advisor at UBS in Switzerland. From in or about early 2009 up through and including in or about mid to late 2009, Gisler served as an independent asset manager at a Swiss asset management firm ("Swiss Asset Manager A") for -6- EFTA01125424 U.S. taxpayers who held undeclared accounts at Wegelin, UBS, and other Swiss banks. Gisler managed and/or assisted in opening at least seven undeclared accounts for U.S. taxpayers at Wegelin. At all times relevant to this Complaint, Swiss Asset Manager A did not maintain an office in the United States. 15. At all times relevant to this Complaint, Swiss Bank C and Swiss Bank D were other banks in Switzerland that held undeclared accounts for U.S. taxpayers. As set forth more fully below, Swiss Bank C and Swiss Bank D used Wegelin's correspondent account to provide its U.S. taxpayer-clients access to their undeclared funds. Obligations of United States Taxpayers With Respect to Foreign Financial Accounts 16. At all times relevant to this Indictment, citizens and residents of the United States who had income in any one calendar year in excess of a threshold amount ("U.S. taxpayers") were required to file a U.S. Individual Income Tax Return, Form 1040 ("Form 1040"), for that calendar year with the IRS. On Form 1040, U.S. taxpayers were obligated to report their worldwide income, including income earned in foreign bank accounts. In addition, when a U.S. taxpayer completed Schedule B of Form 1040, he or she was required to indicate whether "at any time during [the relevant calendar year]" the filer had "an interest in or a signature or other authority over a financial account in a foreign country, such as a bank account, securities account, or EFTA01125425 other financial account/1 and if so, the U.S. taxpayer was required to name the country. 17. In addition, U.S. taxpayers who had a financial interest in, or signature or other authority over a foreign bank account with an aggregate value of more than $10,000 at any time during a particular calendar year were required to file with the IRS a Report of Foreign Bank and Financial Accounts, Form TD F 90-22.1 ("FBAR") on or before June 30 of the following year. In general, the FEAR required that the U.S. taxpayer filing the form identify the financial institution with which the financial account was held, the type of account (either bank, securities, or other), the account number, and the maximum value of the account during the calendar year for which the FEAR was being filed. -8- EFTA01125426  The Nature and Risks of Correspondent Banking and Wecrelin's Correspondent Account at USS 18. As reported in a 2001 investigative report published by the Minority Staff of the Senate Permanent Subcommittee on Investigations entitled Correspondent Banking: A Gateway For Money Laundering: Correspondent banking is the proVision of banking services by one bank to another bank. It is a lucrative and important segment of the banking industry. It enables banks to conduct business and provide services for their customers in jurisdictions where the banks have no physical presence. For example, a bank that is licensed in a foreign country and has no office in the United States may want to provide certain services in the United States for its customers in order [to] attract or retain the business of important clients with U.S. business activities. Instead of bearing the costs of licensing, staffing and operating its own offices in the United States, the bank might open a correspondent account with an existing U.S. bank. By establishing such a relationship, the foreign bank, called a respondent, and through it, its customers, can receive many or all of the services offered by the U.S. bank, called the correspondent. Today, banks establish multiple correspondent relationships throughout the world so they may engage in international financial transactions for themselves and their clients in places where they do not have a physical presence. Many of the largest international banks located in the major financial centers of the world serve as correspondents for thousands of other banks. Due to U.S. prominence in international trade and the high demand for U.S. dollars due to their overall stability, most foreign banks that wish to provide international services to their customers have accounts in the United States capable of transacting business in U.S. dollars. Those that lack a physical presence in the U.S. will do so through correspondent accounts, creating a large market for those services. -9- EFTA01125427 Correspondent Banking: A Gateway For Money Laundering (Feb. 2001). 19. Because foreign financial institutions may not be subject to oversight by U.S. regulatory authorities, providing these foreign financial institutions access to the U.S. financial system through the correspondent banking system increases the risk of money laundering. In order to combat these risks, among other means, Federal Financial Institutions Examination Council ("FFIEC") publishes The Bank Secrecy Act/Anti-Money Laundering Handbook (the "Handbook"), a publication that helps identify money-laundering risks and establishs guidelines for U.S. financial institutions to mitigate those risks. In terms of correspondent accounts, the Handbook explains their inherent money-laundering risk and how criminal elements such as drug traffickers have used them to launder funds. The Handbook further explains: Because of the large amount of funds, multiple transactions, and the U.S. bank's potential lack of familiarity with the foreign correspondent financial institution's customer, criminals and terrorists can more easily conceal the source and use of illicit funds. Consequently, each U.S. bank, including all overseas branches, offices, and subsidiaries, should closely monitor transactions related to foreign correspondent accounts. Handbook, Correspondent Accounts (Foreign) — Overview. 20. The Handbook also explains the danger of "nested" foreign correspondent accounts. "Nested accounts occur when a -10- EFTA01125428 foreign financial institution gains access to the U.S. financial system by operating through a U.S. correspondent account belonging to another foreign financial institution." These nested accounts pose a further money-laundering risk because they provide additional foreign financial institutions access to the U.S. financial system and make it more difficult to identify the source and nature of the funds being sent to or from a correspondent account at a U.S. financial system. 21. Because of the heightened risk of money laundering through correspondent accounts, the U.S.A. Patriot Act and related regulations impose certain obligations on U.S. financial institutions housing correspondent accounts for foreign financial institutions to guard against money laundering. As explained in the Handbook: Due diligence policies, procedures, and controls must include each of the following: • Determining whether each such foreign correspondent account is subject to (Enhanced Due Diligence). • Assessing the money laundering risks presented by each such foreign correspondent account. • Applying risk-based procedures and controls to each such foreign correspondent account reasonably designed to detect and report known or suspected money laundering activity, including a periodic review of the correspondent account activity sufficient to determine consistency with information obtained about the type, purpose, and anticipated activity of the account. -11- EFTA01125429 Handbook, Foreign Correspondent Account Recordkeeping and Due Diligence — Overview. 22. Since at least the late 1990s, Wegelin has had a correspondent bank account with UBS in Stamford, Connecticut. Through this correspondent relationship, Wegelin could wire funds from Switzerland to the Stamford Correspondent Account in the United States and, in turn, wire funds from the Stamford Correspondent Account to other accounts in the United States or to accounts overseas. Wegelin also had the ability to issue checks drawn on the Stamford Correspondent Account. These checks functioned like any check drawn on an account at a U.S. financial institution and could be deposited, or cashed for U.S. dollars, at other financial institutions. 23. Wegelin also offered nested correspondent services to other Swiss banks, including Swiss Bank C and Swiss Bank D, two Swiss banks that also held undeclared accounts for U.S. taxpayers. These additional Swiss banks were able to have Wegelin issue checks drawn on the Stamford Correspondent Account on their behalf. Swiss Bank C used this nested relationship, despite the fact that Swiss Bank C maintained its own correspondent account with UBS in the United States, which allowed it to conduct wire transactions in the United States, but did not include check-writing abilities. -12- EFTA01125430  Overview of Wegelin and Its Co-Conspirators' Mail and Wire Fraud Scheme to Defraud the United States 24. From at least in or about 2005 up through and including in or about 2011, more than 100 U.S. taxpayer-clients of Wegelin and other Swiss banks, conspired with, at various times, Wegelin and many of Weglin's employees, including Berlinka, Frei, Keller, Managing Partner A, Executive A, Client Advisor A, other Client Advisors at Wegelin, Swiss Bank C and Swiss Bank D, and others known and unknown, to defraud the United States of certain taxes due and owed by concealing from the IRS undeclared accounts owned by U.S. taxpayers at Wegelin and other Swiss Banks including Swiss Bank C and Swiss Bank D. As of in or about 2010, the total value of such undeclared accounts at Wegelin alone was at least $1.2 billion. In particular, Client Advisors at Wegelin, including Berlinka, Frei, and Keller, and others opened dozens of new undeclared Wegelin accounts for U.S. taxpayers in or about 2008 and 2009 after UBS and another large international bank based in Switzerland ("Swiss Bank B") closed their businesses servicing undeclared accounts for U.S. taxpayers ("the U.S. cross-border banking businesses") in the wake of widespread news reports in Switzerland and the United States that the U.S. Department of Justice was investigating UBS for helping U.S. taxpayers evade taxes and hide assets in Swiss bank accounts. These Client Advisors did so after the Managing Partners, including Managing Partner A, affirmatively decided to -13- EFTA01125431 take advantage of the flight of U.S. taxpayer-clients from UBS by opening new undeclared accounts for these U.S. taxpayers at Wegelin. As a result of this influx of former UBS U.S. taxpayer-clients into Wegelin, Wegelin's undeclared U.S. taxpayer assets under management, and the fees earned by managing those assets, increased substantially. As part of their sales pitch to U.S. taxpayer-clients who were fleeing UBS, at various times, client advisors at Wegelin told U.S. taxpayer-clients that their undeclared accounts at Wegelin would not be disclosed to the United States authorities because Wegelin had a long tradition of bank secrecy and, unlike UBS, did not have offices outside Switzerland, thereby making Wegelin less vulnerable to United States law enforcement pressure. Managing Partner A and another executive of Wegelin participated in some of these meetings. At various times, Berlinka, Frei, and Keller collectively managed undeclared U.S. taxpayer assets worth hundreds of millions of dollars. As part of the scheme to defraud, Wegelin, Swiss Bank C, and Swiss Bank D provided U.S. taxpayer-clients with undeclared accounts access to funds in these undeclared accounts in a manner that obscured the source of these funds, that is, the U.S. taxpayer-clients' undeclared accounts in Switzerland. Also as part of this scheme, these U.S. taxpayer-clients, used the U.S. mails, private and commercial interstate carriers, and interstate wire communications to submit tax returns that were -14- EFTA01125432 materially false and fraudulent in that these returns failed to disclose these undeclared accounts or the income generated from these accounts. Means and Methods of the Conspiracy 25. Among the means and methods by which Wegelin and its co-conspirators carried out the conspiracy were the following: a. Client Advisors at Wegelin opened and serviced undeclared accounts for U.S. taxpayers for the purpose of helping the U.S. taxpayers hide assets and income from the IRS. b. Client Advisors at Wegelin opened and serviced undeclared accounts for U.S. taxpayer-clients in the name of sham corporations and foundations formed under the laws of Liechtenstein, Panama, Hong Kong, and other jurisdictions for the purpose of concealing the identities of the beneficial owners of those accounts -- that is, their U.S. taxpayer-clients -- from the IRS. c. Client Advisors at Wegelin knowingly received and retained at Wegelin documents that falsely declared that such sham entities were the beneficial owners of certain accounts, when the client advisors knew that U.S. taxpayer-clients beneficially owned such accounts. -15- EFTA01125433  d. Client Advisors at Wegelin permitted certain U.S. taxpayers to open and maintain undeclared accounts at Wegelin using code names and numbers (so-called "numbered accounts") so that the identities of the U.S. taxpayer-clients would appear on a minimal number of bank documents in the event that documents or databases were stolen from Wegelin or otherwise fell into the hands of third parties. e. Client Advisors at Wegelin ensured that account statements and other mail for their U.S. taxpayer-clients were not mailed to them in the United States. f. Client Advisors at Wegelin sent e-mails and Federal Express packages to potential U.S. taxpayer-clients in the United States to solicit new private banking and asset management business. g. At various times from in or about 2005 up through and including in or about 2007, Client Advisors at Wegelin communicated by e-mail and/or telephone with U.S. taxpayer-clients who had undeclared accounts at Wegelin. Client Advisors sometimes used their personal e-mail accounts to communicate with U.S. taxpayers to reduce the risk of detection by law enforcement authorities. h. Wegelin opened undeclared accounts for U.S. taxpayers referred to them by, and whose account opening -16- EFTA01125434 paperwork was completed by, an investment advisor in Manhattan and a lawyer in Los Angeles, California. i. Beginning in or about late 2008 or early 2009, after Wegelin began to open new undeclared accounts for U.S. taxpayers whose accounts were being closed by UBS, Managing Partner A instructed Wegelin Client Advisors of the Zurich Branch not to communicate with their U.S. taxpayer-clients by telephone or e-mail, and instead to cause their U.S. taxpayer-clients to travel from the United States to Switzerland to conduct business relating to their undeclared accounts. j. Berlinka advised U.S. taxpayer-clients not to voluntarily disclose undeclared accounts to the IRS and assured them that their Wegelin account information would not be disclosed to United States authorities. k. Wegelin, Swiss Bank C, and Swiss Bank D provided U.S. taxpayer-clients with undeclared accounts access to, and use of, the funds in these undeclared accounts in manner that helped U.S. taxpayer-clients keep these undeclared accounts concealed and continue to avoid paying taxes due and owed from the income generated in these accounts. 1. Various U.S. taxpayer-clients of Wegelin and other Swiss banks, including Swiss Bank C and Swiss Bank D, utilizing the mails and wires, filed Forms 1040 that falsely and fraudulently failed to report the existence of, and the income -17- EFTA01125435 generated from, their undeclared Wegelin accounts; evaded substantial income taxes due and owing to the IRS, thus defrauding the IRS of these funds; and failed to file FBARs identifying their undeclared accounts. Wegelin Solicited New Undeclared Accounts Through a Third-Party Website 26. From in or about 2005 up through and including in or about 2009, Wegelin solicited new business from U.S. taxpayers wishing to open undeclared accounts in Switzerland by recruiting clients through the third-party website "SwissPrivateBank.com." As of on or about July 2, 2007, this website advertised "Swiss Numbered Bank Account[s]" and "Swiss Anonymous Bank Account[s]", among other things. Specifically, the website stated: Swiss banking laws are very strict and it is illegal for a banker to reveal the personal details of an account number unless ordered to do so by a judge. This is long established in Swiss law. Any banker who reveals information about you without your consent risks a custodial sentance [sic] if convicted, with the only exceptions to this rule concerning serious violent crimes. Swiss banking secrecy is not lifted for tax evasion. The reason for this is because failure to report income or assets is not considered a crime under Swiss banking law. As such, neither the Swiss government, nor any other government, can obtain information about your bank account. They must first convince a Swiss judge that you have committed a serious crime punishable by the Swiss Penal Code. The website invited users to n[r]equest a Swiss banking consultation today" by clicking a link to a "Consultation -18- EFTA01125436 Request" form that asked for information about a user's country of residence, telephone number, and e-mail address. The third-party website operator provided this information to Wegelin Client Advisors, who then sent e-mails from Switzerland to the United States, among other places, promoting Wegelin's private banking and asset management services. In this manner, Wegelin Client Advisors collectively sent more than 100 such e-mails to the United States soliciting new business. In certain cases where U.S. taxpayers responded to such e-mails, Client Advisors sent by Federal Express hard copies of the bank's promotional materials to U.S. taxpayers in the United States. This process eventually resulted in Wegelin obtaining new undeclared accounts holding millions of dollars in total for U.S. taxpayers. Managing Partner A and other managing partners of Wegelin received quarterly updates on the progress of this advertising program. Managing Partner A approved all payments to the website operator. 27. As a result of this and other business development efforts, the total value of undeclared accounts held by U.S. taxpayers at Wegelin increased substantially over time. As of in or about 2005, Wegelin hid approximately $240 million in undeclared assets for U.S. taxpayer-clients. By in or about 2010, this amount rose to at least $1.2 billion. -19- EFTA01125437  Wegelin Opens New Undeclared Accounts For U.S. Taxpayers Fleeing UBS 28. In or about May and June 2008, the United States Government's criminal investigation of UBS's U.S. cross-border banking business became publicly known and received widespread media coverage in Switzerland and the United States. At or about that time, many U.S. taxpayers with undeclared accounts at UBS began to understand that the investigation might result in the disclosure of their identities and UBS account information to the IRS. 29. On or about July 17, 2008, UBS announced that it was closing its U.S. cross-border banking business. Thereafter, UBS client advisors began to notify their U.S. taxpayer-clients that UBS was closing their undeclared accounts. Some UBS client advisors told such clients that they could continue to maintain undeclared accounts at Wegelin and certain other Swiss private banks. At or about that time, it became widely known in Swiss private banking circles that Wegelin was opening new undeclared accounts for U.S. taxpayers. 30. In or about 2008, the Executive Committee of Wegelin, the defendant, including its Managing Partners, affirmatively decided to take advantage of the flight of U.S. taxpayers with undeclared accounts by opening new undeclared accounts for many of them at Wegelin. Thereafter, in or about 2008 and 2009, Wegelin opened new undeclared accounts for at -20- EFTA01125438 least 70 U.S. taxpayers. Most of these were opened at Wegelin's Zurich Branch. 31. In or about 2008, Managing Partner A announced this decision to certain personnel of the Zurich Branch. At or about the time of this announcement, another Wegelin executive ("Executive A") stated to personnel of the Zurich Branch that Wegelin was not exposed to the risk of prosecution that UBS faced because Wegelin was smaller than UBS, and that Wegelin could charge high fees to its new U.S. taxpayer-clients because these clients were afraid of prosecution in the United States. 32. At or about the time Managing Partner A announced this decision, Managing Partner A supervised the creation of a list of Client Advisors at the Zurich Branch who were available to meet with potential U.S. taxpayer-clients who walked into the Zurich Branch without an appointment seeking to open new undeclared accounts. Thereafter, in or about 2008 and 2009, Berlinka, Frei, Keller, and other Client Advisors met with many new potential U.S. taxpayer-clients who arrived at Wegelin. In these meetings, Wegelin Client Advisors interviewed the potential U.S. taxpayer-clients about their backgrounds, the sources of their funds, and the amount of money they wished to transfer from UBS to Wegelin, among other things. In many cases, Managing Partner A or Executive A joined these interviews. During these meetings, the U.S. taxpayers typically presented their U.S. -21- EFTA01125439 passports for inspection and/or copying; advised that they were U.S. citizens or legal permanent residents of the United States; confirmed that UBS was closing their accounts; and completed certain account opening documents. These documents typically included a standard Swiss banking form called "Form A," which clearly identified the U.S. taxpayer as the beneficial owner of the account. In some cases, as described in more detail below, the Client Advisors sought to reassure their new U.S. taxpayer-clients that Wegelin would not disclose their identities or account information to the IRS. 33. In preparation for these meetings, Managing Partner A and Executive A supervised videotaped training sessions with Client Advisors of Wegelin's Zurich Branch to instruct them on their delivery of certain selling points to be made to U.S. taxpayers fleeing UBS. These selling points included the fact that Wegelin had no branches outside Switzerland and was small, discreet, and, unlike UBS, not in the media. 34. In this manner, Wegelin opened new undeclared accounts for at least 70 U.S. taxpayers. When such accounts were opened, they were designated with a special code that indicated to personnel within Wegelin, among other things, that the accounts were undeclared. At some point in or about 2008 or 2009, the Zurich Branch required that the opening of all new U.S. -22- EFTA01125440 taxpayer accounts had to be approved by Managing Partner A or Executive A. 35. From in or about March 2009 up through and including in or about October 2009, approximately 14,000 U.S. taxpayers voluntarily disclosed to the IRS undeclared accounts held at banks around the world, including Wegelin. As part of this process, dozens of U.S. taxpayers requested from Wegelin copies of their account records so that they could fully disclose their accounts to the IRS. Wegelin complied with many of these requests. The records that Wegelin sent to the United States included transaction confirmations and other documents listing the names of many Wegelin Client Advisors, including Berlinka, Frei, and Keller. In response to the expected disclosure of the names of Client Advisors to the IRS through these records, in or about 2009, Managing Partner A announced to certain personnel within the Zurich Branch that the format of certain Wegelin account-related documents would be changed so that the name of the Client Advisor would no longer appear on these documents. On a rolling basis from in or about late 2009 up through and including in or about early 2010, this change was implemented such that the names of the Client Advisors no longer appeared on certain records relating to undeclared accounts held by U.S. taxpayers, and "Team International," or a similar designation, appeared instead. -23- EFTA01125441  36. In or about mid-2009, Wegelin stopped opening new undeclared accounts for U.S. taxpayers but did not, at that time, close its existing undeclared U.S. taxpayer accounts. In or about August 2011, Wegelin sent letters to U.S. taxpayer-clients stating that it had "decided to no longer serve US persons" effective December 31, 2011. 37. In or about the end of 2009 or the beginning of 2010, after Wegelin stopped opening new undeclared accounts for U.S. taxpayers, Berlinka and Executive A opened at least three new undeclared accounts for U.S. taxpayers. Each of these U.S. taxpayers had at least two passports -- one from the United States and one from a second country -- and each had recently fled from Swiss Bank A, another Swiss private bank. In each case, Berlinka and Executive A opened the new undeclared account under the passport of the second country, even though Berlinka and Executive A were well aware that the U.S. taxpayer had a U.S. passport. Overview of Wegelin and The Conspiracy to Launder Funds Through Wegelin's Correspondent Account to Promote the Mail and Wire Fraud Scheme to Defraud the United States 38. From at least in or about 2005 up through and including in or about 2011, in order to promote the scheme to defraud described above, Wegelin, Swiss Bank C, Swiss Bank D, and others, known and unknown, used the Stamford Correspondent Account to provide U.S. taxpayer-clients access in the United -24- EFTA01125442 States to their undeclared funds held in Switzerland. These international transfers were often executed in a manner that helped conceal or obscure the U.S. taxpayer-clients' relationship with the transferred funds and helped to prevent the detection of the undeclared accounts. Additionally, the large volume of additional funds in the Stamford Correspondent Account, which was knowingly commingled with the laundered funds, and the high volume of transactions in and out of the Stamford Correspondent Account, facilitated this money laundering by making the transactions involving undeclared funds more difficult to detect and lending them an aura of legitimacy. These international transfers of funds from undeclared accounts in Switzerland involving the Stamford Correspondent Account promoted the mail and wire fraud scheme described above in which Wegelin and others conspired with U.S. taxpayer-clients to defraud the United States of the taxes owed from the income generated in the undeclared accounts while at the same time providing the U.S. taxpayer- clients access to, and use of, the funds in their undeclared accounts in a manner that would help conceal the source of their funds, that is, their undeclared accounts in Switzerland. -25- EFTA01125443  Means and Methods of the International Money Laundering Conspiracy 39. Among the means and methods by which Wegelin and its co-conspirators carried out the money laundering conspiracy were the following: a. Upon request by U.S. taxpayer-clients with undeclared accounts at Wegelin, Swiss Bank C, or Swiss Bank D, Client Advisors at these banks or independent Swiss asset managers would send via private interstate commercial carrier, such as DHL or Federal Express, checks from Switzerland drawn on the Stamford Correspondent Account to U.S. taxpayer-clients in the United States. b. As an alternative to checks, funds from the U.S. taxpayer-clients were debited from their undeclared accounts in Switzerland and wired to them in the United States through the Stamford Correspondent Account. c. Rather than one large check or wire for the amount requested, batches of multiple checks or wires in smaller amounts were often sent in order to minimize the risk of scrutiny or detection of the transaction by U.S. financial institutions or government authorities and the discovery of the U.S. taxpayer- clients' undeclared accounts. d. Checks were sometimes made payable to corporate entities affiliated with the U.S. taxpayer-client or family members of the U.S. taxpayer, rather than the U.S. -26- EFTA01125444 taxpayer himself or herself, helping to obscure the relationship between the U.S. taxpayer-client and the undeclared funds. e. When U.S. taxpayers with undeclared accounts at Swiss banks other than Wegelin, including Swiss Bank C and Swiss Bank D, made requests for funds, they would receive their funds, as described above, through Wegelin's Stamford Correspondent Account. f. While the checks and wires sent to U.S. taxpayer-clients referenced Wegelin, no reference was made to the account names or numbers of the U.S. taxpayer-clients at Wegelin or other Swiss banks, such as Swiss Bank C and Swiss Bank D. g. At the request of U.S. taxpayer-clients to their Client Advisors or Swiss asset managers, funds were sent from the Stamford Correspondent Account to third parties who provided goods or services to U.S. taxpayers, thus allowing the U.S. taxpayer the benefit of these undeclared funds in a manner designed to make the source of the funds, that is, a U.S. taxpayer-client's undeclared Swiss account, difficult to detect. h. These international transfers of undeclared funds were channeled through the Stamford Correspondent Account, the existence of which provided Wegelin access to the U.S. financial system. The undeclared funds sent through the account were knowingly commingled with the other funds present in the Stamford Correspondent Account, helping to essentially cloak -27- EFTA01125445 these transactions, veil them in an aura of legitimacy, and render scrutiny of these transactions far less likely. i. For one U.S. taxpayer-client with both declared and undeclared accounts at Wegelin, Frei asked the U.S. taxpayer-client to allow Frei to wire this U.S. taxpayer-client funds from the client's declared account at Wegelin to the United States for the U.S. taxpayer-client to withdraw as cash. Frei then traveled to the United States, collected the funds and provided those funds to another U.S. taxpayer-client. Frei then credited the first U.S. taxpayer-client's undeclared Wegelin account with that sum. U.S. Taxpayers with Undeclared Accounts at Wegelin Who Received Laundered Undeclared Funds Through the Stamford Correspondent Account Client A 40. At all times relevant to this Complaint, Client A' lived with her husband in Boca Raton, Florida, and became a naturalized citizen in 2003. In or about 1987, Client A became the beneficial owner of an undeclared account at UBS and its predecessor bank; at various times her husband was a joint owner of the account. In or about July 2008, Client A's UBS client advisor, Gian Gisler, advised Client A and her husband that she All designations of entities and individuals by number or letter in this Complaint, i.e. "Client A," are consistent with the designations referred to in United States v. Berlinka, et al., 12 Cr. 2 (JSR). -28- EFTA01125446 must close her UBS account because she was American. Gisler instructed Client A and her husband not to call UBS from the United States, and told them that he was leaving UBS. Gisler invited Client A to move her account with Gisler to another bank, but she declined. Gisler then recommended Wegelin and noted that it was a reliable bank that had no offices in the United States. 41. In or about September 2008, Client A and her husband traveled to Zurich to close her UBS account. By that time, Gisler had left UBS and Client A had a new UBS client advisor. The new UBS client advisor instructed them not to call from the United States, promised that UBS would not give their information to U.S. authorities, and endorsed Wegelin as a bank at which to hold their account. 42. During the same trip to Zurich in September 2008, Client A and her husband walked to Wegelin and met with Berlinka. Berlinka opened a new undeclared account beneficially owned by Client A using the code name "N1641" on or about September 19, 2008. At that time, Wegelin received, and thereafter maintained in its files, a Form A signed by Client A stating that Client A was the beneficial owner of the account. In addition, Wegelin received and thereafter maintained in its files another form stating that Client A was "a U.S. citizen"; was "the beneficial owner of all income from US sources deposited in the [account] in accordance with US tax law; and "was not entitled to or does not -29- EFTA01125447 want to claim any reliefs [sic] from United States Withholding Tax." 43. Berlinka told Client A and her husband that they would be safe at Wegelin and that Berlinka had been instructed not to disclose their account information to United States authorities. In addition, Berlinka instructed Client A and her husband not to call or send faxes to Wegelin from the United States and explained that Wegelin would not send mail to them in the United States. 44. On multiple occasions in or about 2008 and 2009, Client A or her husband called Berlinka from the United States to notify him that they would be traveling to Aruba. Once in Aruba, Client A or her husband called and/or faxed Berlinka to request that he send checks to them in the United States. In response, Berlinka sent checks drawn on the Stamford Correspondent Account from Switzerland to Client A in Boca Raton, Florida by private letter carrier. All the checks, which were payable to Client A, later cleared through the Stamford Correspondent Account with equivalent funds being debited from Client A's account at Wegelin. In addition, the checks were issued in the amount of $8,500 to help avoid detection of the account by the IRS. The following chart sets forth the check numbers for some of these checks, the approximate date they were issued and mailed, the approximate date they were negotiated, their amount, and the EFTA01125448 approximate amount of other funds present in the Stamford Correspondent Account on the dates the checks were negotiated,' as the presence of these additional funds helped to conceal these transactions and lend them an aura of legitimacy: Check No. Approximate Approximate Approximate Balance in Date of Date of Amount Correspondent Issue Negotiation Account 3416 11/25/2008 1/7/2009 $8,500 $88_,525,720 3417 11/25/2008 12/24/2008 $8,500 $135,195,787 3418 11/25/2008 12/11/2008 $8,500 $46,947,570 3468 1/5/2009 1/30/2009 $8,500 $209,111,171 3469 1/5/2009 2/12/2009 $8,500 $143,756,924 3470 1/5/2009 3/5/2009 $8,500 $95,378,847 3510 2/26/2009 3/10/2009 $8,500 $124,995,398 3511 2/26/2009 4/21/2009 $8,500 $65,612,863 3512 2/26/2009 4/6/2009 $8,500 $82,572,902 3552 4/21/2009 5/8/2009 $8,500 $51,668,319 3553 4/21/2009 5/20/2009 $8,500 $94,628,267 3554 4/21/2009 6/16/2009 $8,500 $46,616,379 3659 8/25/2009 10/26/2009 $8,500 $32,206,021 3660 8/25/2009 3/4/2010 $8,500 $66,725,205 Total: $119,000 45. In addition to the above-described checks, Client A and her husband also received funds in the form of wires from their undeclared Wegel