Former Swiss banker pleads not guilty to new U.S. tax charges

Reuters News
Posted: Oct 17, 2012 12:48 PM
Former Swiss banker pleads not guilty to new U.S. tax charges

By Kevin Gray and Lynnley Browning

FORT LAUDERDALE, Florida (Reuters) - A former Swiss private banker pleaded not guilty in a U.S. federal court on Wednesday to new charges that he helped wealthy U.S. clients evade taxes when he worked at UBS AG.

Christos Bagios, a Greek citizen and Swiss resident, was a senior banker at Swiss bank Credit Suisse AG, a rival of UBS, at the time of his arrest by U.S. authorities in January 2011.

Bagios, who had earlier worked at UBS, is a central figure in a broad probe by the U.S. Department of Justice into offshore tax evasion services sold by Swiss and Swiss-style banks.

Bagios was formally accused late on Tuesday of conspiracy to defraud the United States by helping to sell tax evasion services to wealthy Americans while at UBS. The accusation was made in criminal information documents that effectively override a criminal complaint filed against him in February 2011.

The original complaint came a month after his arrest and detention on charges of conspiracy and fraud in connection with allegedly helping 150 Americans hide up to $500 million from the Internal Revenue Service while he worked at UBS from 1999 to 2005.

The new charges shorten the time frame specified in the original charges concerning Bagios's work at UBS.

Credit Suisse, Switzerland's second-largest bank, disclosed in July 2011 that it was being investigated by the Justice Department. The investigation swelled after UBS, Switzerland's largest bank, paid $780 million and entered into a deferred-prosecution agreement, now ended, with U.S. authorities in 2009.

Bagios had been detained under the original charge without being formally charged for 22 months, a highly unusual legal action against a foreign banker by U.S. authorities.

Criminal procedure rules give U.S. authorities 30 days after bringing a criminal complaint to either indict a defendant or dismiss charges, unless the defendant waives his right to hearings. Bagios has repeatedly waived that right, spurring speculation among tax lawyers over whether he might be cooperating with the U.S. government.

Court documents show a change of plea hearing scheduled for October 26, raising the prospect that Bagios may change his plea to guilty. Bagios entered his not-guilty plea before Judge Barry Seltzer of Federal District Court in Fort Lauderdale.

The new charge carries a maximum penalty of five years' imprisonment. The original charges did not specify a penalty.

At the time of his arrest in New York and subsequent transfer to Florida, Bagios was head of Credit Suisse's Relationship Management West Coast group, a private banking unit that is part of Credit Suisse Private Advisors in Zurich, according to the bank's website.

The criminal information charge provided fresh assertions that Bagios worked with a group of co-conspirators. They include Hansruedi Schumacher, a former top UBS private banker who later worked at Neue Zurcher Bank and was indicted in the United States in 2009; Renzo Gadola, a former top UBS private banker who pleaded guilty to charges of fraud and conspiracy in December 2010; and Martin Lack, a former top UBS private banker who was indicted in August 2011 and is a fugitive from justice.

The latest charge also lists unnamed, unindicted co-conspirators, including two Swiss bankers and nine U.S. clients.

(Reporting by Kevin Gray in Fort Lauderdale, Tom Brown in Miami and Lynnley Browning in Connecticut; Editing by Kevin Drawbaugh and Andrew Hay)