Credit Suisse, a financial services firm headquartered in Switzerland, violated the terms of a 2014 plea agreement, but the Justice Department under Presidents Barack Obama and Donald Trump declined to enforce the agreement and punish the bank.
Former Credit Suisse bankers blew the whistle on the firm's use of sham companies, foundations, and trusts to evade tax authorities in the United States. As Bloomberg noted, in May 2014, when the bank pled guilty, it "did not tell the Justice Department about a $200 million account held by an American client" named Dan Horsky.
Whistleblowers revealed the account to U.S. investigators two months later, and they have demanded that the government impose an additional punishment beyond the $1.3 billion penalty that was paid around seven years ago.
Senator Ron Wyden, a Democrat from Oregon, wrote a letter to Attorney General Merrick Garland and Credit Suisse requesting more information, given the likelihood that the firm's executives made false or deceitful statements to a Homeland Security and Governmental Affairs Senate subcommittee in February 2014.
To better understand the "circumstances surrounding the disclosure of Mr. Horsky's hidden offshore assets to the U.S. government," Wyden asked [PDF] Credit Suisse when it first disclosed the accounts to the Justice Department, Internal Revenue Service (IRS), or any other U.S. agency.
Wyden also asked if the accounts were not reported to the U.S. government before July 2014, when a whistleblower claimed Credit Suisse was still managing tax-dodging accounts, why weren't they disclosed.
Furthermore, Wyden sought information on the number of accounts held by U.S. clients that Credit Suisse has determined to be in "non-compliance" with the plea agreement.
"In 2016, Mr. Horsky pled guilty to conspiring to defraud the United States and to submitting false documents to the IRS, and in 2017 he was sentenced to seven months in prison. Mr. Horsky's sentence was based, in part, on a filing by the DOJ that detailed how employees of Credit Suisse (identified in the filing as ‘International Bank’) helped Mr. Horsky go ‘deep into the shadows to conceal his ownership of his foreign financial accounts from U.S. authorities,’" according to Wyden.
At least one whistleblower reportedly informed the Justice Department of Horsky's undisclosed assets in July 2014 and alleged that the bank continued to conceal his assets and other U.S. accounts, even after they pled guilty to crimes.
Wyden's letter requested [PDF] a briefing with Justice Department officials by May 11 on the actions, or lack of action, taken by officials.
The New York Times described Horsky as a "retired business professor who lived in Rochester, N.Y., and amassed much of his fortune by investing in start-up companies in the 1990s."
"In September 2014, when Credit Suisse appeared in court to plead guilty, the judge asked both the bank and prosecutors whether they had any information that would affect the settlement agreement. Both sides said no," the Times recalled.
Credit Suisse's scheme to dodge taxes involved placing Horsky's funds under a relative's name, who lived overseas. The bank's Israel desk managed his wealth.
At any time, the Justice Department could have brought new whistleblower claims to the attention of the federal court that was involved in overseeing the plea agreement. Prosecutors never bothered to enforce the agreement, despite evidence of clear violations.