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FROM THE - JOURNALS of Monte Friesner ~ Financial Crime Consultant for WANTED SA ~

Thursday January 27, 2011 >

WANTED SA learned this morning that a New Jersey man was indicted on Wednesday for conspiring to hide accounts in India and the British Virgin Islands from the U.S. Internal Revenue Service with HSBC Bank in the United Kingdom.
Five bankers from HSBC Holdings Plc were involved in the scheme with the defendant Vaibhav Dahake, having helped him hide Indian accounts, people familiar with the probe said.
Dahake, an India native who became a naturalized U.S. citizen in 2006 and now lives in Somerset, New Jersey, was charged with one count of conspiring to defraud the IRS for having maintained the accounts from 2001 to 2010.
According to the indictment, the illegal activity included a conspiracy with five bankers at a bank based in England, and which is "one of the largest international banks in the world."
The indictment said this bank operated a U.S. unit called NRI Services that marketed offshore banking services to U.S. citizens of Indian descent, and which encouraged U.S. citizens to open undeclared bank accounts in India.
HSBC has a U.S. unit named NRI Services that handles offshore services related to India.
The people who said HSBC is the bank referred to in the indictment declined to be named because the identity is not public. Bloomberg News earlier identified HSBC as the bank.
"Bankers should encourage their clients to comply with the law, not advise them how to break it," U.S. Attorney Paul Fishman in New Jersey said in a statement.
Lawrence Horn, a lawyer for Dahake, said it was regrettable that his client was indicted. 
The five bankers included two in New York, one in Fremont, California and two in Thane, India, the indictment said.
HSBC spokeswoman Juanita Gutierrez declined to comment on the bank's involvement, but said "HSBC does not condone tax evasion." She said HSBC India closed its two NRI representative offices in New York and Fremont in June 2010.
U.S. officials have been cracking down in recent years against the maintenance of offshore accounts to hide income from tax authorities.
Switzerland's UBS AG admitted in 2009 to actively helping U.S. clients evade taxes held abroad, and paid $780 million to settle that case.
Last year it resolved a separate civil case and pledged to hand over thousands of account names. HSBC (Switzerland) got into trouble in 2010 when Revenue Canada discovered that HSBC was secreting millions of dollars for Canadian Tax Payers.
The IRS has been searching though 18,000 accounts of people who used an amnesty program last year that encouraged taxpayers to declare funds held abroad, in exchange for lower penalties.
Since the UBS case was settled, the U.S. government has said it will pursue other banks if it finds similar wrongdoing. It sent letters to HSBC clients last year, telling them they were targets of a criminal probe.
Dahake faces up to five years in prison and a $250,000 fine if convicted.
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