The US Department of Justice announced in a statement that the firm had entered a non-prosecution agreement, as part of which it revealed 175 client files of non-compliant US taxpayer clients.
The firm acknowledged that it knew it was violating US law by engaging in wrongful conduct, including:
- creating entities with no business purpose;
- advising US taxpayer clients to destroy any faxes they received from the group; and
- facilitating cash transfers in the United States between US taxpayer clients with undeclared foreign bank accounts, which they helped to maintain between 2001 and 2010.
“Prime Partners admits to helping its clients conceal their ownership of foreign bank accounts to avoid their US tax obligations,” acting Manhattan US attorney Joon H. Kim said.
“They created sham entities and even counselled their clients to use payphones and prepaid debit cards to avoid detection of their tax fraud scheme.”
Forfeiture and restitution
However, as early as 2009, Prime Partners voluntarily implemented a series of remedial measures to stop assisting US taxpayers in evading federal income taxes, the US justice authorities said.
The non-prosecution agreement thus came as a result of the “extraordinary cooperation” shown by the firm, meaning that it will not be criminally prosecuted.
It requires Prime Partners to forfeit $4.32m to the US Government, representing fees that it earned by handling US taxpayer-clients’ accounts.
The asset manager is also liable for an additional $680,000 in restitution to the Internal Revenue Service (IRS), representing the loss of tax revenues as a result of the firm’s actions.
Following the settlement, Prime Partners must also continue to cooperate with US authorities for at least three years.
“The resolution of this matter through a non-prosecution agreement, along with forfeiture and restitution, reflects the extraordinary cooperation provided by Prime Partners to our investigation and should serve as proof that cooperation has tangible benefits,” said acting deputy assistant attorney general Stuart M Goldberg.
“We will continue to pursue financial services firms around the world that help their clients evade US taxes.”
Numerous Swiss banks and financial institutions have been caught up in a long-running tax dodging dispute between Switzerland and the US.
Last month, a former Credit Suisse banker pleaded guilty to participating in a scheme concocted to help Americans dodge millions of dollars in taxes by concealing assets and income in offshore accounts.
