A wealthy investor in Virginia pleaded guilty on Tuesday to criminal tax evasion through an international bank, said by a person briefed on the case to be HSBC, one of the world's largest private banks.
The case is significant because it shows the authorities are expanding their scrutiny of banks suspected of enabling tax evasion by wealthy Americans beyond UBS, the giant Swiss financial company. It also provides an example of a bank apparently taking steps to hide its operations in the wake of the UBS case, even as many banks said they were shutting down their undeclared offshore services for American clients.
The investor, Andrew B. Silva, of Sterling, Va., pleaded guilty to failing to disclose to the American tax authorities more than $250,000 that he had kept at a bank through a sham Liechtenstein trust, according to court papers filed in United States District Court for the Eastern District of Virginia. While the court papers do not identify the bank, a person briefed on the case said that it was HSBC, which is based in London but has a large Swiss operation. Christopher Rizek, a lawyer for Mr. Silva, declined to comment.
Juanita Gutierrez, a spokeswoman for HSBC, declined to comment. Last December, a person briefed on the matter said that the Justice Department had expanded its investigation into foreign banks that sell offshore private banking services to include HSBC and Credit Suisse. HSBC's private bank, one of the world's largest, managed assets of $352 billion as of the end of 2008, according to the company.
Mr. Silva, a head and neck surgeon, inherited $250,000 from his mother in 1997 and deposited it into a Swiss bank. His mother told him to write a "coded letter" to a Swiss lawyer in Zurich who was managing the account, which was held in the name of a Liechtenstein trust, according to court papers.
In 1999, Mr. Silva met the lawyer, who told him the account was "hush hush" because it was intended to evade taxes and that "it would be best if he did not talk to others about it," according to the court papers. The lawyer declined to give Mr. Silva documents pertaining to the account, saying that he should keep them for safety. Court papers did not identify the lawyer.
In August 2009, the bank told him it was closing his account, which had grown to $268,000, because it was closing offshore undeclared accounts of wealthy Americans. The Swiss lawyer told Mr. Silva that the bank would not transfer the funds by wire because it "would create a trail for U.S. authorities," according to the court papers. The Swiss lawyer told Mr. Silva that he should send the money home from four separate post offices in Zurich by regular and priority mail, staggering the delivery over weeks so that the "envelopes did not look suspicious."
The Swiss lawyer took Mr. Silva to meet his banker on Oct. 12, 2009, after the bank said it was closing offshore undeclared accounts of wealthy Americans. The Swiss banker handed Mr. Silva "$115,000 in U.S. currency consisting of an individually wrapped brick of $100,000 in sequentially numbered, new $100 bills." The second bundle contained $15,000. The banker told Mr. Silva that it "could not provide him with more cash at the time."
Over October 2009, Mr. Silva mailed the money to his home in Sterling in amounts of less than $10,000 - below the limit at which money being brought into the United States must be declared. Mr. Silva mailed more money in November 2009 after meeting again with his Swiss banker and lawyer in Zurich. The bank told him not to carry any statements because it could lead to discovery of his accounts. In all he mailed dozens of envelopes and hand-carried others into Dulles International Airport outside Washington.
UBS was not allowed to distribute cash or make wire transfers when it closed down its undeclared offshore banking services for wealthy Americans as part of its deferred prosecution agreement with the Justice Department in February 2009. In that deal, UBS averted indictment by admitting to criminal wrongdoing with its private banking services and agreeing to pay $780 million.
Seven American clients of UBS, the Swiss bank giant, have pleaded guilty over the last year to tax evasion through the bank's offshore services. Mr. Silva is scheduled to be sentenced on May 7.