Lesson from the Credit Suisse Fine

       Romeo Cerutti is a Swiss and Italian citizen who once practiced in California. Seems that when poor Credit Suisse got news that federal prosecutors were hot on their trail for their role in assisting Americans to evade US taxation in Switzerland they decided to send their general counsel to meet with the land sharks at the Justice Department. I am sure that Mr. Cerutti is a well-trained attorney and extremely effective as general counsel but going to Washington to meet with the Justice Department is not for the uninitiated. The New York Times reported quoting him as asking prosecutors to:  “Please don't do this.” Okay, I will admit that when the cell phone law first past I was an easy victim. I was driving. The phone rang. It was a client. I answered it. The county policemen parked at the roadside took note and then took chase. Lights flashing, the whole shebang. I finished my call as the officer sashayed up to my window. Certain that I would only receive a warning I inquired about the chief of the county police with whom I had gone to high school. The officer replied that he did in fact know him and that he was doing well. I felt more comfortable. But I did notice that he began writing in his ticket book. It's then that I recalled using the Cerutti defense: “Ah come on, please don't do this”. The ticket at the time was $130 I paid it promptly and billed the client for the telephone call. Having represented a number of clients charged with tax fraud and tax evasion  before both the Internal Revenue Service and Justice Department I would have told Mr. Cerutti, the “please don't do this defense” does not work. Credit Suisse was forced to plead guilty to one count of conspiring to aid tax evasion. It also admitted that its bankers enabled clients to easily evade the American taxes over many years. Eric Holder, Jr., the United States attorney gloating somewhat, said that “When a bank engages in misconduct this brazen it should expect that the Justice Department will pursue criminal prosecution to the fullest extent possible, as happened here”. The bank has agreed to pay fines of $2.6 billion for their role. At the moment, the bank has not been required to turn over the names of the unfortunate American account holders. Practitioners would be wise to advise clients that it may in fact be time to come clean and participate in the limited amnesty program the IRS now provides. For background on that program See a fine article on the subject: T. David and S Novak “The Undisclosed Foreign Bank Account, The Practical Tax Lawyer, ALI-CLE, April 2014.