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How Credit Suisse Got Off Easy

How Credit Suisse Got Off Easy

Last fall, James Cole, the No. 2 man at the Justice Department, sent an intriguing email about the criminal investigation of Credit Suisse’s offshore tax-evasion schemes for wealthy American clients. He asked Kathy Keneally, the agency’s top official directing the protracted investigation of Switzerland’s second biggest bank, “Can you give me an update on where we are with them?”

In that September 4 email, whose contents were obtained by Newsweek, Cole added this eyebrow-raising detail: “I got a call from Broderick Johnson who says the CEO wants to get this resolved.”

Broderick Johnson would be a lawyer and former lobbyist close to President Barack Obama. Last January, Obama named him assistant to the president and cabinet secretary—his job is to liaise with various government agencies, including the Justice Department. Cole’s email was of interest in part because Johnson’s former K Street lobbying firm, Collins Johnson Group, was representing Credit Suisse. But it was also notable because of the timing: The Justice Department had just finalized a deal for most of Switzerland’s banking industry, more than 300 banks, to pay fines for enabling tax evasion for American clients. That agreement, the capstone of the Justice Department’s seven-year crusade against offshore tax evasion through Swiss private banks, didn’t include more than a dozen Swiss banks under criminal investigation, most notably, Credit Suisse.

Johnson’s intervention appears to have worked: After some 18 months of stalemate, the bank started serious negotiations with the Justice Department. On May 19, Credit Suisse pleaded guilty to a single count of conspiring to aid tax evasion over decades, up to 2009, and agreed to pay the largest criminal tax fine in U.S. history—$2.6 billion—for having deceived the Justice Department, the Internal Revenue Service, the Federal Reserve and the Securities and Exchange Commission (SEC).

Johnson’s intervention appears to have worked: After some 18 months of stalemate, the bank started serious negotiations with the Justice Department. On May 19, Credit Suisse pleaded guilty to a single count of conspiring to aid tax evasion over decades, up to 2009, and agreed to pay the largest criminal tax fine in U.S. history—$2.6 billion—for having deceived the Justice Department, the Internal Revenue Service, the Federal Reserve and the Securities and Exchange Commission (SEC).

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