Two Swiss wealth managers are swept up in the dragnet of what U.S. prosecutors call the largest-ever case of tax evasion.
The indictment of Robert Brockman with tax fraud in an alleged $2 billion tax fraud three weeks ago is reverberating in Switzerland: Geneva's prosecutor ordered $100 million held at Bank Syz frozen as well as another undisclosed sum at Mirabaud, «Gotham City» (behind paywall, in French) reported on Thursday.
Dubbed by U.S. prosecutors as the largest attempt at tax evasion ever, Brockman is accused of setting up offshore accounts to hide as well as launder money, filing false tax returns, backdating records, and using encrypted messaging with a co-conspirator to escape detection. Mirabaud is mentioned in the indictment; Syz is not.
Turning On An Associate
Brockman, a Texan software mogul whose net worth was estimated at $1 billion until the indictment alleged he hid double that, is a long-standing associate of Robert Smith, a Black private equity billionaire. Smith, who gained prominence last year by promising to pay off college loans for 400 Morehouse graduates, had his own tax evasion troubles – he was reportedly a client of Banque Bonhote.
Ultimately, Smith escaped prosecution by turning on Brockman, and by paying a nearly $140 million settlement. The case is by far the largest of its type to hit Swiss wealth managers – and the indictment of Brockman portrays an entirely more sophisticated tax cheat than the thousands of Americans swept up in the initial wave of the investigation more than ten years ago.
Wily And Imaginative
The software billionaire is accused of code-naming nominees («King,» «Bonefish,» and «Snapper») on an offshore structure and used a charitable trust to hide assets. He also appears both highly imaginative and keenly aware of a rising tide at the Internal Revenue Service and among politicians on pursuing offshore accounts.
For example, Brockman attempted to tweak one offshore vehicle after reading a congressional report on cracking down on tax havens. He also wanted an associate to attend a money laundering conference, preferably in disguise, according to the indictment.
Revisiting U.S. Tax
The investigation revisits an issue which Switzerland set aside in 2016. Scores of Swiss banks came clean to U.S. officials in a government-brokered scheme for them to avoid prosecution. Wealth managers spent years scrubbing their accounts clean of tax evaders after a nearly decade-long pursuit by U.S. officials.
There is no indication either Syz or Mirabaud are under investigation in the U.S.; neither participated in the 2013 program, according to a Department of Justice listing of the program. A spokesman for Mirabaud didn't comment; a spokeswoman for Syz said banking secrecy prevents it from addressing specific cases.
