Bank Leumi Israel’s largest bank will pay $400 million to settle allegations that it helped American clients evade taxes on overseas income in a criminal conspiracy that operated for more than a decade. The Department of Justice said the Bank Leumi helped hide American customers’ accounts at the bank’s locations in Israel, Switzerland, Luxembourg, and the U.S. The improper activities included:
- Secretly sending private bankers from Israel and elsewhere into the U.S. and meeting with U.S. clients in hotels, parks and coffee shops to discuss efforts to hide income and assets.
- Aiding American clients in creating nominee corporate entities in Belize and other jurisdictions to hide undeclared accounts and disguise the true ownership.
- Providing “hold mail services” so that correspondence and other account information would not go directly to the U.S. owners and link them to the funds.
- Opening and maintaining undeclared accounts for American clients who moved their funds out of Swiss banks following the U.S. probes of those institutions.
Excerpts of bank documents showed that Bank Leumi officials viewed the U.S. investigation of Swiss banks as a “golden opportunity to contact customers” and urged bankers “to suggest [to prospective clients] that they transfer their accounts to here.
The bank also agreed to provide the names of more than 1,500 of its U.S. account holders, federal investigators said.
Additionally, Bank Leumi agreed to pay $130 million to the New York regulator and take steps to fire managers and other employees involved in the improper conduct. A former branch manager and former senior relationship manager have already resigned, according to the regulator.
Jeffrey Newman represents whistleblowers.