Wegelin & Co, the Swiss private bank which has broken up by selling non-US operations, has been declared a fugitive" by a US court. It denies it has not co-operated with US authorities.

Wegelin & Co,
which last month broke up by selling non-US operations, has been
declared a fugitive after failing to appear in a US court to answer a
criminal charge that it conspired to help US citizens avoid tax, news
reports said.

US District Judge Jed Rakoff told a federal court in Manhattan that
US prosecutors should enlist the help of diplomatic authorities,
including perhaps the State Department, to advance the case surrounding
what was once Switzerland’s oldest bank. It was founded in 1741 and run
as a private partnership, with several partners operating under
unlimited liability.

"Wegelin & Co. did not
appear at the hearing because the legal prerequisites to initiating criminal
proceedings under US
law have not been met. Under US law, a criminal case cannot be
commenced against a defendant until that defendant has been properly served
with the criminal summons. Because Wegelin has not been properly served,
the bank is not required to appear, and proceedings against it may not
begin. Wegelin has explained its position in detail in a letter provided
to the prosecutors," the bank told Family Wealth Report in an emailed statement today.

"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. Notwithstanding Wegelin's
decision today, the bank will, as it has done until now, make every effort to
resolve this matter within the boundaries of respectful cooperation with the U.S.
and obedience to Swiss law," it said.

Wegelin is accused of helping clients hide more than $1.2 billion in offshore bank accounts.

The US is carrying out a criminal probe into 11 Swiss and Swiss-style
banks, including Wegelin; they are suspected of selling offshore tax
evasion services to tens of thousands of wealthy US citizens. Inquiries,
growing out of scrutiny of UBS, are focused on Credit Suisse and Basler
Kantonalbank among others.

The non-US parts of Wegelin have been sold into Notenstein Private
Bank, a structure created by Swiss-based Raiffeisen, in a move described
by the partners of Wegelin as “extremely painful”. The sale is the most
dramatic example yet of how the US authorities’ reach is forcing
foreign firms to make significant moves to avoid falling foul of US law.

"Occasionally in these situations, progress is made through
diplomatic channels," Rakoff told Assistant US Attorney Daniel Levy at
the hearing. "Unlike an individual, arresting a company is somewhat
difficult, other than in science fiction," a report by Reuters said.

Rakoff spoke after Levy said "we have no proposal" for how to get Wegelin to formally answer the charge, reports said.

The bank was charged on 2 February after bringing conspiracy charges
against three bankers in its Zurich branch: Michael Berlinka, Urs Frei
and Roger Keller. More than 100 US taxpayers conspired with the
defendants and other conspirators between 2002 and 2011 to hide money
from the Internal Revenue Service, prosecutors said.