Business Crimes Hotline

In its plea agreement, Credit Suisse acknowledged that, as part of a decades-long operation, the financial institution had ' knowingly and willfully ' aided and assisted U.S. clients numbering in the thousands to open undeclared accounts, maintain those accounts, and hide the income and offshore assets of those clients from the IRS. Credit Suisse also detailed the techniques used to keep the accounts hidden in its plea. The techniques included transaction structuring (to avoid currency transaction reporting thresholds), sham entities, offshore debit and credit cards, destruction of (and failure to maintain) account records, and the use of unregistered investment advisers. These illegal cross-border banking activities continued up through 2009.

In addition to this corporate enforcement action, the investigation also previously yielded guilty pleas against two former employees of a Credit Suisse subsidiary, Credit Suisse Fides, for their respective roles in the schemes. While both are awaiting sentencing in Virginia, each faces a five-year maximum term of imprisonment.

MARYLAND

Former Bechtel Executive Enters Guilty Plea to FCPA-Related Charges

On Dec. 4, 2014, Asem Elgawhary, the former Vice President of U.S. engineering and construction company Bechtel Corporation (Bechtel), entered a guilty plea in the United States District Court for the District of Maryland before Judge Deborah K. Chasanow. The plea follows Elgawhary's indictment in February, 2014. Elgawhary was charged in connection with a Foreign Corrupt Practices Act (FCPA) investigation into a $5.2 million kickback scheme in the power industry in Egypt, specifically bid rigging on power contracts with Egyptian state-owned entities. Elgawhary's plea ' for which he is scheduled for sentencing in March 2015 ' was to charges of conspiracy to commit money laundering, mail fraud, and obstruction and interference with the administration of the tax laws.

As part of his plea, Elgawhary admitted his role in accepting over $5.2 million in kickbacks from three power companies from 1996 through 2011, in exchange for an unfair bidding advantage for projects with the Egyptian state-owned and controlled electricity company (EEHC). Elgawhary was in a position to provide this advantage as, in addition to his VP role at Bechtel, Elgawhary also served as General Manager of a Bechtel joint venture with EEHC, an entity called Power Generation Engineering and Services Company (PGESCo). PGESCo was formed to help EEHC with its procurement processes.

According to his plea, to conceal his actions, Elgawhary had the $5.2 million in kickbacks routed through a number of Swiss and offshore bank accounts that he controlled, and executed false certifications to Bechtel and PGESCo, indicating that he had no awareness of any fraud or other issues warranting financial disclosure. In connection with the count of tax law obstruction and interference, Elgawhary admitted to: 1) his failure to report the kickbacks as income; 2) denying income from a foreign bank account; and 3) underreporting the number of foreign accounts he controlled ' by reporting just one account. Finally, Elgawhary was interviewed by counsel for the company in April 2011 and he admitted in his plea that he provided misrepresentations during that interview. ' Matthew Alexander , Mayer Brown

VIRGINIA

Credit Suisse AG Agrees to $2.6 Billion Resolution of Offshore Tax Conspiracy Charges

Following its earlier guilty plea on May 19, 2014 ' for conspiracy to aid and assist U.S. taxpayers in filing false income tax returns (and other documents) with the Internal Revenue Service (IRS) ' Swiss corporation Credit Suisse AG (Credit Suisse) was sentenced on Nov. 21 in the United States District Court for the Eastern District of Virginia by the Court's Chief Judge, Rebecca Beach Smith. The plea agreement is the principal component of a larger, multi-billion dollar settlement with several state and federal agencies that breaks down as follows: a $1.136 billion criminal fine (to be paid to the DOJ's Crime Victims Fund); a $715 million payment to the New York Department of Financial Services; $666.5 million in restitution to the IRS; approximately $196 million in civil penalties, disgorgement, and interest to the Securities and Exchange Commission (SEC); and a $100 million payment to the Federal Reserve. In addition to the financial components of the plea agreement, Credit Suisse also received cease and desist orders from the Federal Reserve and State of New York that require the company to conduct several remedial steps. Finally, as part of its Nov. 21 plea, Credit Suisse also made future commitments to: 1) share information with authorities relating to account information (including information on other financial institutions that transacted with the hidden offshore accounts); 2) close non-compliant accounts; and 3) develop and apply compliance policies for related U.S. laws, such as the Foreign Account Tax Compliance Act.

In its plea agreement, Credit Suisse acknowledged that, as part of a decades-long operation, the financial institution had ' knowingly and willfully ' aided and assisted U.S. clients numbering in the thousands to open undeclared accounts, maintain those accounts, and hide the income and offshore assets of those clients from the IRS. Credit Suisse also detailed the techniques used to keep the accounts hidden in its plea. The techniques included transaction structuring (to avoid currency transaction reporting thresholds), sham entities, offshore debit and credit cards, destruction of (and failure to maintain) account records, and the use of unregistered investment advisers. These illegal cross-border banking activities continued up through 2009.

In addition to this corporate enforcement action, the investigation also previously yielded guilty pleas against two former employees of a Credit Suisse subsidiary, Credit Suisse Fides, for their respective roles in the schemes. While both are awaiting sentencing in Virginia, each faces a five-year maximum term of imprisonment.

MARYLAND

Former Bechtel Executive Enters Guilty Plea to FCPA-Related Charges

On Dec. 4, 2014, Asem Elgawhary, the former Vice President of U.S. engineering and construction company Bechtel Corporation (Bechtel), entered a guilty plea in the United States District Court for the District of Maryland before Judge Deborah K. Chasanow. The plea follows Elgawhary's indictment in February, 2014. Elgawhary was charged in connection with a Foreign Corrupt Practices Act (FCPA) investigation into a $5.2 million kickback scheme in the power industry in Egypt, specifically bid rigging on power contracts with Egyptian state-owned entities. Elgawhary's plea ' for which he is scheduled for sentencing in March 2015 ' was to charges of conspiracy to commit money laundering, mail fraud, and obstruction and interference with the administration of the tax laws.

As part of his plea, Elgawhary admitted his role in accepting over $5.2 million in kickbacks from three power companies from 1996 through 2011, in exchange for an unfair bidding advantage for projects with the Egyptian state-owned and controlled electricity company (EEHC). Elgawhary was in a position to provide this advantage as, in addition to his VP role at Bechtel, Elgawhary also served as General Manager of a Bechtel joint venture with EEHC, an entity called Power Generation Engineering and Services Company (PGESCo). PGESCo was formed to help EEHC with its procurement processes.

According to his plea, to conceal his actions, Elgawhary had the $5.2 million in kickbacks routed through a number of Swiss and offshore bank accounts that he controlled, and executed false certifications to Bechtel and PGESCo, indicating that he had no awareness of any fraud or other issues warranting financial disclosure. In connection with the count of tax law obstruction and interference, Elgawhary admitted to: 1) his failure to report the kickbacks as income; 2) denying income from a foreign bank account; and 3) underreporting the number of foreign accounts he controlled ' by reporting just one account. Finally, Elgawhary was interviewed by counsel for the company in April 2011 and he admitted in his plea that he provided misrepresentations during that interview. ' Matthew Alexander , Mayer Brown