They said it wouldn't happen, but the Department of Justice is getting what it's been looking for: A criminal charge against a financial firm.
Credit Suisse will plead guilty to criminal wrongdoing today in a case where the Swiss bank helped Americans dodge taxes. The bank is expected to plead guilty to one count of conspiring to aid tax evasion, and it will pay $2.6 billion in penalties.
The case is significant for the DoJ which has been criticized for its lack of criminal prosecutions against firms since the financial crisis. Attorney General Eric Holder was put in the spotlight last March when he said his staff is hesitant to prosecute large financial firms for fear of the economic repercussions.
The guilty plea from Credit Suisse on tax evasion may alleviate some of the pressure on the DoJ, but it still doesn't address the lack of prosecutions of firms involved in the financial crisis.
What's more, Credit Suisse's CEO is expected to keep his job, according to some reports. That may raise eyebrows as other CEOs have lost their jobs over lesser offenses. Think Bob Diamond at
According to report from the U.S. Senate Permanent Subcommittee on Investigation, at its peak, Credit Suisse had over 22,000 U.S. customers with Swiss accounts with assets of roughly $10 billion.
Credit Suisse's dealings with tax evasion date back decades. In 1988, a client based in Elizabeth, New Jersey inherited an undeclared accounts at Credit Suisse in Switzerland, according to documents from the DoJ. In 2002, the bank transferred the account into a new account and a banker later met with the client at hotel in New York City to discuss investment strategies. Then in April 2006, the same client failed to declare the Credit Suisse account, the DoJ said.
The scheme went on, according to prosecutors, when in 2009 a banker suggested the client transfer the account to another Swiss bank rather than return the funds to the U.S.
UBS dealt with similar tax evasion challenges in 2009. It entered a deferred prosecution agreement that allowed the charges against it to be dismissed. and paid over $780 million in the case.
In the end, UBS entered a deferred prosecution agreement that allowed the charges against it to be dismissed. UBS also paid over $780 million in the case.
The DoJ will hold a press conference at 6pm with more detail on the Credit Suisse case.
