Bank Leumi to pay $400 million to settle tax evasion probes


(JTA) — Bank Leumi Le Israel BM will pay a total of $400 million to settle two investigations into tax evasion scams involving U.S. clients.

The bank, Israel’s second largest, also fired several senior employees who perpetuated tax and loan scams, the New York State Department of Financial Services said in a statement Monday.

“Bank Leumi employees engaged in a series of egregious schemes — including creating complex, sham loan arrangements — to help its U.S. clients shirk their responsibility to pay taxes,” the statement read. “What’s worse, when certain Swiss banks began to put the brakes on this type of misconduct, Bank Leumi instead hit the accelerator even harder — viewing it as a ‘golden opportunity’ to pick up new business.”

Bank Leumi negotiated with the U.S. Department of Justice and the State of New York for months before agreeing to pay $270 million and $130 million, respectively, Reuters reported.

From at least 2000 through 2011, the statement said, “Bank Leumi-Israel and its subsidiaries, including Bank Leumi USA, a New York State-chartered bank, knowingly and willfully aided and assisted U.S. clients, including New York clients, in opening and maintaining undeclared accounts in a foreign country, concealing their offshore assets and income from the Internal Revenue Service and other federal and state authorities, and filing false tax returns.”

Banks in Switzerland have been the primary targets of U.S. efforts to crack down on tax evasion, but U.S. authorities began investigating Israeli banks in 2011.

Israel’s largest bank, Hapoalim, and its fourth-largest lender, Mizrahi-Tefahot, also are under investigation, Reuters reported.

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