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Scott Michel Discusses Plea Agreement of former UBS banker Christos Bagios

November 12, 2012, Tax Notes
Excerpt taken from the article.

A plea agreement signed by U.S. prosecutors and former UBS banker Christos Bagios could be viewed as a sign that Bagios, who also worked at Credit Suisse, is providing information in the government's investigation of Credit Suisse.

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In the November 6 plea agreement, the prosecutors recommended that Bagios be sentenced to time served in light of his "cooperation and substantial assistance regarding his former colleagues and customers at UBS AG," and because his conduct was not as egregious as that of other foreign bankers and asset managers who have been prosecuted or indicted for conspiring with U.S. taxpayers to defraud the IRS.

Scott D. Michel of Caplin & Drysdale told Tax Analysts that he finds it interesting that Bagios and the prosecutors agreed to a binding plea agreement (which allows either side to withdraw its consent if the court does not sentence the defendant according to the terms of the deal). But he said the government sent a clear signal in the agreement that if the court were to seek to impose a sentence other than that agreed upon, the prosecutors would file the appropriate papers and pursue a more lenient sanction.

Michel said the agreement refers to Bagios's cooperation against customers and employees of UBS but doesn't mention other banks. "Bagios worked at Credit Suisse, and it would be quite surprising were his cooperation not to extend to that institution as well," he said.

"Indeed, it is likely that he is cooperating against that bank and the government did not want to disclose that in this plea agreement," Michel said. "When individuals plead guilty and then cooperate, they normally cannot pick and choose their cooperation targets--the government will expect full and complete cooperation on all relevant subjects. So I strongly suspect that Bagios has been telling the U.S. about more subjects than just UBS, and if that's the case, that will increase pressure on Credit Suisse and perhaps other banks to try and resolve their differences with the Justice Department as quickly as possible."

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