An Israeli bank admitted Monday in Los Angeles to conspiring to aid U.S. taxpayers in preparing and submitting false tax returns to the Internal Revenue Service by hiding income and assets in offshore bank accounts in Israel and elsewhere around the world.
Bank Leumi Group will pay the United States a total of $270 million, according to its agreement with the U.S. Department of Justice. The agreement defers prosecution on a criminal information charging the bank with conspiracy to aid and assist in the preparation and presentation of false tax returns and other documents to the IRS.
The case marks the first time an Israeli bank has admitted to such criminal conduct, which spanned a 10-year-plus period and included an array of services and products designed to keep U.S. taxpayer accounts concealed at Bank Leumi Group’s locations in Israel, Switzerland, Luxembourg and the United States, according to the U.S. Attorney’s Office.
The Bank Leumi Group’s parent company is Bank Leumi le-Israel, B.M., one of Israel’s largest banks, with subsidiaries in seven countries and more than 13,000 employees.
Other subsidiary banks entering into the deferred prosecution agreement include The Bank Leumi le-Israel Trust Co. Ltd., the oldest and largest of all bank trust companies in Israel; Leumi Private Bank S.A., a Switzerland-based subsidiary; Bank Leumi S.A., a Luxembourg-based subsidiary; and Bank Leumi USA, an FDIC-insured, full-service commercial bank with offices in Los Angeles and elsewhere.
Of the $270 million payment, $157 million represents a penalty for U.S. taxpayer accounts held at Leumi Private Bank in Switzerland, according to the Justice Department.
The penalty is consistent with the Justice Department’s Swiss Bank Program, which permits certain Swiss banks to avoid prosecution by making a full and complete disclosure of their U.S. taxpayer-held accounts and paying substantial penalties.
The agreement further provides that Bank Leumi Luxembourg and Leumi Private Bank will cease to provide banking and investment services for all accounts held or beneficially owned by U.S. taxpayers.
“The Bank Leumi Group recognized that the writing is on the wall for offshore banking, and cooperating with the government’s investigation was the only way to proceed,” said Deputy Attorney General James M. Cole.
“This deferred prosecution agreement demonstrates both that the Justice Department will hold financial institutions accountable for their crimes, and that we will be fair in recognizing extraordinary cooperation,” he said.
— City News Service