Swiss bank considered fugitive after no-show

NEW YORK – The U.S. Justice Department called Switzerland’s largest private bank a fugitive from justice on Friday after it didn’t send any representatives to a court hearing in New York, where it has been charged with conspiring with American clients to hide $1.2 billion from the Internal Revenue Service.

Wegelin & Co. is accused of helping at least 100 U.S. clients conceal huge sums of money from the IRS in overseas accounts. Federal prosecutors said the bank recruited American customers who were concerned about possible prosecution for tax violations at home, including some who had already pulled money out of other Swiss banks because of growing pressure from U.S. law enforcement.

Three of the bank’s client advisers were indicted in January. The bank was added as a defendant in the case on Feb. 2.

U.S. officials, however, have yet to find a way to move the case forward.

The bank was summoned to appear before a federal judge in New York on Friday at 3 p.m., but neither a bank officer nor a lawyer showed.

As for the charges, the bank suggested that there was a conflict between U.S. and Swiss law.

“The circumstances create a clear dilemma for Wegelin & Co: If it were to adhere to current US legal practice aimed at Swiss banks, it would have to breach Swiss law,” the statement said.

The bank added that it would “make every effort to resolve this matter within the boundaries of respectful cooperation.”

It is unclear what prosecutors can do next. Wegelin doesn’t have an office in the U.S. Federal authorities have frozen $16 million that the bank had in a correspondent account in the U.S., but that amount is tiny compared to the sums involved.

U.S. District Judge Jed Rakoff, who is presiding over the case, asked prosecutors to make a proposal on how to move the prosecution forward and suggested involving the State Department, but the hearing ended without any immediate resolution.