George Landegger, the chairman of an international pulp mill company, Parsons & Whittemore, pled guilty to willfully failing to file reports of foreign bank and financial accounts (FBARs) with the IRS regarding secret Swiss bank accounts that he maintained and controlled at a Swiss private bank headquartered in Zurich, Switzerland.
Landegger maintained his undeclared accounts at the Swiss Bank from at least the early 2000s up until 2010.
During that time, Landegger’s undeclared assets reached a high value of over $8.4 million.
Landegger entered his guilty plea before U.S. Magistrate Judge Debra Freeman.
Landegger was represented by Jeremy Temkin of Morvillo Abramowitz in New York.
“As he admitted, George Landegger maintained secret Swiss bank accounts he repeatedly failed to declare to the IRS, and he took steps to conceal his ownership of the accounts,” said U.S.Attorney Preet Bharara. “The benefits of citizenship or residency in the United States come with certain obligations, including, as George Landegger well knew, the legal requirement to report foreign bank accounts. He will now pay for his illegal conduct.”
Landegger maintained undeclared bank accounts on his own behalf at the Swiss Bank.
In 2005, a representative of the Swiss Bank recommended to Landegger that for the protection of Landegger and the Swiss Bank, Landegger utilize the services of an attorney based in Zurich, Switzerland, to form a sham entity to hold Landegger’s undeclared accounts at the Swiss Bank.
A sham trust was formed to hold Landegger’s undeclared accounts at the Swiss Bank and conceal Landegger’s ownership of those accounts from the IRS.
The sham trust, which was organized under the laws of Lichtenstein, was named “Onicuppac,” which is the word “Cappucino” in reverse.
In April 2009, Landegger, the Swiss bank executive, and another individual had a meeting in Switzerland, the purpose of which was to discuss the future of Landegger’s undeclared accounts at the Swiss Bank, in light of the public news that another Swiss bank, UBS AG, had been investigated by United States law enforcement authorities for helping U.S. taxpayers maintain undeclared accounts.
During that meeting, Landegger and the Swiss Bank Representative exective discussed the possibility of Landegger disclosing his undeclared accounts to the IRS, including by entering the IRS’s offshore voluntary disclosure program (OVDP).
Landegger rejected the possibility of disclosing his undeclared accounts to the IRS, whether by entering the OVDP or by any other method.
Instead, Landegger and the Swiss bank executive determined to empty the accounts of their assets by slowly moving the undeclared assets out of Switzerland.
Between May 2009 and July 2010, Landegger, with the assistance of the Swiss bank executive and others at the Swiss Bank, emptied the assets from his undeclared accounts at the Swiss Bank by transferring a portion of those undeclared assets to a new, declared account in Canada, and by transferring the remainder of the undeclared assets to an account maintained by another individual in Hong Kong.
During the time Landegger maintained his undeclared accounts at the Swiss Bank, capital gains and losses were generated in the account from Landegger’s investments in foreign securities.
Between 2007 and 2010, the high value of Landegger’s undeclared assets was over $8.4 million.
For each of the calendar years from at least the early 2000s through 2010, Landegger failed to file FBARs with the IRS, as he was required to, disclosing his signatory or other authority over his undeclared accounts at the Swiss Bank.
Landegger, 77, of Ridgefield, Connecticut, faces a maximum sentence of five years in prison.
As part of his plea, Landegger agreed to pay a civil penalty of over $4.2 million and back taxes of over $71,000.
He is scheduled to be sentenced by U.S. District Judge Richard J. Sullivan on May 12, 2015, at 10:00 a.m.