CS in U.S. Tax Crosshairs – Again?

Credit Suisse is in trouble again for helping wealthy Americans cheat on their taxes, according to a report. U.S. officials are reviving a dormant investigation – because of a renowned U.S. business professor and tax cheat with Swiss banking ties.

Three years ago, the Zurich-based bank paid $2.6 billion and pleaded guilty to criminal charges of helping Americans cheat the taxman. For Credit Suisse, the settlement put to rest an investigation by U.S. officials that lasted for years. But that investigation is now being reopened, according to a report by «Bloomberg».

U.S. prosecutors, the Securities and Exchange Commission, and the Internal Revenue Service (IRS) want to know why the Swiss bank didn't tell them of $200 million in untaxed assets held offshore by a well-known former business professor who taught in Switzerland, Dan Horsky, according to sources.

Horsky worked with U.S. investigators for about one year, according to media reports, before pleading guilty and accepting a $100 million fine. At the time a citizen of the U.S., U.K. and Israel, Horsky is presumably linked to a probe of Credit Suisse's Israel desk, where five have been suspended amid an investigation by the bank itself and by U.S. authorities. 

Conspiracy To Avoid Telling?

Why does an errant taxpayer mean another criminal or civil case against Credit Suisse, when the issue was settled for the bank three years ago? Much of it has to do with Credit Suisse's own behavior: investigators became aware of Horsky's accounts later, and was not made aware by the bank – a potentially dangerous legal boomerang.

“If they didn’t provide information about this account when they had it in their files, there was either gross negligence or more likely some kind of conspiracy at the bank to avoid disclosing this account,” Houston-based attorney Larry Campagna told «Bloomberg».

Prosecutors, the SEC and the IRS are evaluating whether the failure to root our Horsky was a lapse in internal controls, or a criminal act by bankers with approval of management. Brady Dougan, who was CEO when Credit Suisse settled the landmark probe in 2013, had always hotly denied that management knew of the wrong-doing, which he claimed was the work of several errant bankers.

Horsky is notable for his long-standing ties to Switzerland: he taught Swiss bankers in an MBA program in Switzerland in conjunction with the University of Bern.