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Israeli Bank to Pay $400 Million to Settle Tax Allegations
From the Wall Street Journal of Mon, 22 Dec 2014 18:00:51 EST
Bank Leumi agreed to terminate several senior employees as part of a settlement with New York’s Department of Financial Services.
Bank Leumi agreed to terminate several senior employees as part of a settlement with New York’s Department of Financial Services. Gil Cohen Magen/Reuters

Israel-based Bank Leumi agreed to pay $400 million to U.S. and New York authorities on Monday and admitted to conspiring to help U.S. taxpayers avoid taxes by stashing assets in offshore accounts with the bank.

The bank resolved the tax-evasion allegations in separate settlements with the U.S. Department of Justice and New York’s Department of Financial Services, agreeing to pay the agencies $270 million and $130 million, respectively. It also agreed to terminate several senior employees as part of the New York regulator’s settlement.

Bank Leumi is one of about a dozen banks, many of them in Switzerland, that U.S. authorities have investigated for aiding tax evasion. Monday’s deal came under the auspices of a program between the Swiss government and the U.S. Justice Department that allows banks to hand over data on Swiss bank accounts held by American clients despite Swiss secrecy laws.

Of the $270 million penalty, $157 million represents a penalty for U.S. taxpayer accounts held at the bank’s Swiss subsidiary, prosecutors said.

Under the terms of the Justice Department settlement, Bank Leumi agreed to disclose 1,500 of its U.S. taxpayer-held accounts. The bank, one of Israel’s largest, entered into a so-called deferred prosecution agreement in which it admitted to the charges without pleading guilty and avoided prosecution.

The conspiracy spanned more than a decade. Bank Leumi sent private bankers from Israel and elsewhere to the U.S. to meet with U.S. clients and help them use front corporate entities created in Belize and other countries to hide their undeclared accounts, prosecutors said.

The Department of Financial Services, headed by Benjamin M. Lawsky, said the bank offered U.S. clients “hold mail” services for roughly 2,450 U.S. accounts, under which statements and other account documents would be held abroad at the foreign bank and wouldn’t be sent to the customer’s address in the U.S.

Bank Leumi also offered “assumed name” and “numbered” accounts, where the name of the account holder wouldn’t appear on correspondence, and the bank would accept wire transfers under assumed names or numbers assigned to the account, Mr. Lawsky’s office said.

The New York regulator also installed an independent monitor at Bank Leumi, selected by the agency, to review the bank’s compliance programs. Such monitors are becoming a growing presence at banks under investigation by Mr. Lawsky’s office.

A bank spokesman didn’t immediately respond to a request for comment.

Some of Switzerland’s largest banks have settled tax-evasion cases in recent years. Credit Suisse Group AG pleaded guilty in May to helping Americans avoid taxes and agreed to pay a $2.6 billion penalty.

Write to Christopher M. Matthews at

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