Kentucky Resident Pleads Guilty In Manhattan Federal Court To Hiding Hundreds Of Thousands Of Dollars In Secret Swiss Bank Accounts

Preet Bharara, the United States Attorney for the Southern District of New York, announced that PETER CANALE, a United States Citizen and resident of Jamestown, Kentucky, pled guilty today to willfully failing to file Reports of Foreign Bank and Financial Accounts (“FBARs”) with the Internal Revenue Service (“IRS”) regarding secret bank accounts that he maintained and controlled in Switzerland.  CANALE maintained his undeclared accounts at multiple different Swiss banks for approximately ten years, from 2000 through 2010.  During that time, CANALE’s undeclared assets reached a high value of over $780,000.  CANALE entered his guilty plea before U.S. District Judge Katherine B. Forrest.

According to the superseding Information filed in Manhattan federal court, other court documents, and statements made in connection with CANALE’s guilty plea:

Beginning in the early 1990s, a relative of CANALE (the “Relative”) maintained an undeclared offshore bank account at a predecessor firm of the Swiss bank UBS AG.  Upon the Relative’s death in July 2000, CANALE met in Manhattan with two Swiss bankers, Hans Thomann and Beda Singenberger, and discussed the continued maintenance of the assets that CANALE and his brother, Michael Canale, had inherited from the Relative.  They agreed that Thomann, working with Singenberger, would continue to maintain the assets in an undeclared bank account in Switzerland for the benefit of CANALE and Michael Canale.  Later, in July 2005, with the assistance of Singenberger, CANALE opened an undeclared account at Wegelin & Co. (“Wegelin”), a Swiss private bank.  CANALE’s undeclared account at Wegelin was opened in the name of a sham foundation organized under the laws of Liechtenstein, called the Janara Foundation.  CANALE, however, remained the beneficial owner of the assets in the Janara Foundation account.  As of December 31, 2009, the Janara Foundation account at Wegelin held assets valued at approximately $788,920.

In May 2010, Singenberger, acting under the authority given to him by CANALE, opened an undeclared bank account in the name of the Janara Foundation at another Swiss private bank (“Swiss Bank A”), and transferred the assets from the Janara Foundation account at Wegelin to the Janara Foundation account at Swiss Bank A.  As of October 31, 2010, the Janara Foundation bank account at Swiss Bank A, of which CANALE was the beneficial owner, held assets valued at approximately $718,143.

As charged in the superseding Information, for each of the calendar years from 2007 through 2010, CANALE was required, but failed, to file FBARs with the IRS disclosing his signatory or other authority over the Janara Foundation accounts held at Wegelin and Swiss Bank A, which had an aggregate value of more than $10,000 during each of these years.  For each of the calendar years from 2007 through 2010, CANALE also filed false Forms 1040 with the IRS, in which he failed to report as income the dividends, interest, and other income received by him from the Janara Foundation accounts at Wegelin and Swiss Bank A.

*                *                *

            CANALE, 62, faces a maximum sentence of five years in prison.  As part of his plea, CANALE has agreed to pay a civil penalty of $394,460, file amended tax returns, and pay back taxes of $106,820.  He is scheduled to be sentenced by Judge Forrest on December 3, 2015 at 1:00 p.m.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

            Mr. Bharara praised the outstanding efforts of the IRS-CI in the investigation.  Mr. Bharara also thanked the U.S. Department of Justice’s Tax Division for their assistance in the investigation.

            This case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Special Assistant United States Attorney Jorge Almonte (of the Tax Division) and Assistant United States Attorney Sarah E. Paul are in charge of the prosecution.