Nader writes: In May of 2014, financial firm Credit Suisse AG pled guilty to serious criminal charges. The giant bank aided and assisted approximately 22,000 wealthy U.S. taxpayers (whose names Credit Suisse AG escaped having to send to the Justice Department for law enforcement) for over a decade in filing false income tax returns and other documents with the Internal Revenue Service (IRS).
The full extent of these crimes, according to a Department of Justice news release, are as follows: “assisting clients in using sham entities to hide undeclared accounts;” “soliciting IRS forms that falsely stated, under penalties of perjury, that the sham entities were the beneficial owners of the assets in the accounts;” “failing to maintain in the United States records related to the accounts;” “destroying account records sent to the United States for client review;” “using Credit Suisse managers and employees as unregistered investment advisors on undeclared accounts;” “facilitating withdrawals of funds from the undeclared accounts by either providing hand-delivered cash in the United States or using Credit Suisse’s correspondent bank accounts in the United States;” “structuring transfers of funds to evade currency transaction reporting requirements;” and “providing offshore credit and debit cards to repatriate funds in the undeclared accounts.”
These elaborate illegal acts over many years are quite revealing. They show a deliberate willingness by Credit Suisse AG officials to knowingly engage in profitable activities that defrauded the United States Treasury and burdened honest taxpayers.
The Employee Retirement Income Security Act of 1974, or ERISA, was enacted to protect the retirement savings of retirement plan participants. The law, in theory, automatically disqualifies institutions like Credit Suisse AG who have committed serious crimes or pled guilty to serious crimes from serving as a “qualified professional asset manager” (QPAM) of ERISA assets or pension plans.
Unfortunately, the Department of Labor has not adequately enforced this law or its regulations in this area.
The Department of Labor (DOL) already has granted Credit Suisse a temporary waiver to continue conducting their pension management business. On January 15th, the DOL held a public hearing—where I testified— to discuss whether Credit Suisse and its affiliates can continue this troubling trend of avoiding the consequences of their actions indefinitely. Credit Suisse AG is hoping to completely sidestep the mechanisms of justice for their admittedly serious crimes and carry on business as usual—a result that in itself is, unfortunately, business as usual.
This routine ability to evade proper punishment is the root of the issue of so much corporate and Wall Street crime—a slap on the wrist leads to a perpetual cycle of wrongdoing with no end in sight. Their corporate lawyers turn laws into “no-law” laws. Corporate crime pays.
The Department of Labor, which exists to defend workers, now has a unique opportunity to stand proudly at its post and to send a clear message—a firm signal—to other Qualified Professional Asset Managers that if they commit unthinkable criminal violations, they lose the ability to handle pension funds. On the other hand, allowing these institutions to continue to receive permanent waivers would be a clear signal that the DOL will tolerate cutting corners and criminal wrongdoing by powerful financial institutions at the expense of workers, complying taxpayers, democracy, and the rule of law.
