Manhattan U.S. Attorney Announces Charges Against Kentucky Resident For Maintaining Secret Swiss Bank Accounts

Preet Bharara, the United States Attorney for the Southern District of New York, and Shantelle P. Kitchen, the Acting Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigations Division (“IRS-CI”), announced today the unsealing of an Indictment against PETER CANALE, a U.S. Citizen and resident of Kentucky, for conspiring to defraud the IRS and evade taxes by establishing and maintaining secret, undeclared bank accounts in Switzerland. CANALE was arrested this morning at his residence in Jamestown, Kentucky, and is expected to be presented later today in the United States District Court for the Eastern District of Kentucky. CANALE is scheduled to be arraigned before U.S District Judge Katherine B. Forrest in Manhattan federal court on December 3, 2014, at 3:00 p.m.

According to the allegations in the Indictment unsealed today in Manhattan federal court:

CANALE conspired with others – including his brother Michael Canale, Beda Singenberger, a Swiss citizen who ran a financial advisory firm, and Hans Thomann, a Swiss citizen who served as a client adviser at UBS and certain Swiss asset management firms – to establish and maintain undeclared bank accounts in Switzerland, and to hide those accounts from the IRS. CANALE used a sham entity to conceal from the IRS his ownership of the undeclared accounts, and deliberately failed to report the accounts and the income generated in the accounts to the IRS.

In approximately 2000, a relative of CANALE’s who held an undeclared bank account in Switzerland died and left a substantial portion of the assets in the undeclared account to CANALE and Michael Canale. CANALE and his brother met with Thomann and Singenberger and determined they would continue to maintain the assets in the undeclared account for the benefit of CANALE and his brother.

Thereafter, in approximately 2005, CANALE, with Singenberger’s assistance, opened an undeclared account at the Swiss bank Wegelin. The account was opened in the name of a sham foundation formed under the laws of Lichtenstein to conceal CANALE’s ownership. As of December 31, 2009, the account held assets valued at approximately $789,000.

For each of the calendar years from 2007 through 2010, CANALE willfully failed to report on his tax returns his interest in the undeclared accounts and the income generated in those accounts. For each of these years, CANALE also failed to file with the IRS a Report of Foreign Bank and Financial Accounts, or FBAR, as the law required him to do.

CANALE, 61, of Jamestown, Kentucky, is charged with one count of conspiracy to defraud the United States, evade taxes, and file a false and fraudulent income tax return, which carries a maximum sentence of five years in prison. The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Bharara praised the outstanding investigative work of IRS-CI. Mr. Bharara also thanked the U.S. Department of Justice’s Tax Division for their assistance.

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorneys Jason Cowley and Sarah Paul and Special Assistant United States Attorney Jorge Almonte of the DOJ’s Tax Division are in charge of the prosecution.

The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

US v Peter Canale Indictment