Israeli Bank Charged With Offshore Tax Evasion Conspiracy

1. Defendant BANK LEUMI LE-ISRAEL, B.M. ("BANK LEUMI-ISRAEL") was a public company, registered with the Registrar of Companies in Israel and traded on the Tel-Aviv stock exchange. Defendant BANK LEUMI-ISRAEL was the parent company of the Leumi Group, which included defendant THE BANK LEUMI LE-ISRAEL TRUST COMPANY LTD. ("BANK LEUMI TRUST"); defendant BANK LEUMI (LUXEMBOURG) S.A. ("BANK LEUMI-LUXEMBOURG"); defendant LEUMI PRIVATE BANK S.A. ("LPB" and formerly "BANK LEUMI-SWITZERLAND"); and defendant BANK LEUMI USA.

2. An "undeclared account" was a financial account owned by an individual subject to U.S. tax and maintained in a foreign country that had not been reported by the individual account owner to the U.S. government on an income tax return and a Report of Foreign Bank and Financial Accounts, Form TD F 90-22.1 ("FBAR").

3. These introductory allegations are incorporated as if re-alleged in full in Count One of this Information.

4. From at least in or about 2000 and continuing until at least in or about early 2011, defendants BANK LEUMI-ISRAEL, BANK LEUMI TRUST, BANK LEUMI-LUXEMBOURG, BANK LEUMI-SWITZERLAND, BANK LEUMI USA (collectively, the "Defendants") did unlawfully, voluntarily, intentionally, and knowingly conspire, combine, confederate, and agree together and with others both known and unknown to the United States Attorney to commit the following offense against the United States: to willfully aid, assist in, procure, counsel, and advise the preparation and presentation of false income tax returns and other documents to the Internal Revenue Service of the Treasury Department (the "IRS"), in violation of Title 26, United States Code, Section 7206(2).

B. THE MANNER AND MEANS OF THE CONSPIRACY

5. The object of the conspiracy was carried out, and was to be carried out, in substance, as follows:

a. Defendants BANK LEUMI-ISRAEL, BANK LEUMI TRUST, BANK LEUMI-LUXEMBOURG, and BANK LEUMI-SWITZERLAND aided, assisted, and advised their U.S. clients to either sell all of the U.S. securities in their accounts or advised their clients to set up a nominee offshore entity which was controlled by the client, all in order to avoid U.S. tax reporting requirements;

b. Defendants BANK LEUMI-ISRAEL and BANK LEUMI-SWITZERLAND aided and assisted U.S. taxpayer-clients, who were exiting an illegal U.S. cross-border business they were conducting with Swiss Bank A, to open accounts at defendants BANK LEUMI-ISRAEL and BANK LEUMI-SWITZERLAND, knowing that the U.S. taxpayer-clients were seeking to maintain accounts that were undeclared to U.S. authorities;

c. Defendants BANK LEUMI-ISRAEL, BANK LEUMI-LUXEMBOURG, and BANK LEUMI-SWITZERLAND used account features such as "Hold Mail," "Assumed Name," "Numbered Accounts," and defendant BANK LEUMI TRUST established accounts for U.S. clients that listed defendant BANK LEUMI TRUST as the nominee account holder, all to reduce the likelihood that their clients' U.S. accounts would be disclosed to or discovered by U.S. authorities; and

d. Defendants BANK LEUMI-ISRAEL, BANK LEUMI-LUXEMBOURG, BANK LEUMI-SWITZERLAND and BANK LEUMI USA agreed to a plan whereby loans issued by defendant BANK LEUMI USA to U.S. clients would be backed by the U.S. clients' undeclared offshore assets held in accounts at defendants BANK LEUMI-ISRAEL, BANK LEUMI-LUXEMBOURG, and BANK LEUMI-SWITZERLAND, in order to allow the U.S. clients to enjoy the economic benefits of the funds in their undeclared accounts without directly repatriating the funds or creating a paper trail that could potentially disclose the existence of the undeclared accounts to U.S. authorities.

C. OVERT ACTS

6. In furtherance of the conspiracy, and to accomplish its object, Defendants, together with others known and unknown to the United States Attorney, committed and willfully caused others to commit the following overt acts, among others, in the Central District of California and elsewhere:

CLIENT 1

a. In or about November 2007, in Tel Aviv, Israel, Client 1, a U.S. citizen residing in Malibu, California, opened an undeclared account at defendant BANK LEUMI-ISRAEL in Tel Aviv, Israel.

b. In or about July 2008, Client 1, with assistance from Banker 1, an employee of defendant BANK LEUMI-ISRAEL in Tel Aviv, Israel, and Banker 2, an employee of defendant BANK LEUMI USA in Los Angeles, California, opened an account at defendant BANK LEUMI USA in Los Angeles, California.

c. In or about November 2008, Client 1, with assistance from Banker 1 and Banker 2, caused defendant BANK LEUMI USA in Los Angeles, California, to extend a $7 million credit facility to Client 1, collateralized by Client 1's undeclared account at defendant BANK LEUMI-ISRAEL.

d. On or about October 21, 2009, from the Central District of California, Client 1 filed with the IRS a false and fraudulent U.S. Individual Income Tax Return, Form 1040, for tax year 2008 that failed to report the undeclared account at defendant BANK LEUMI-ISRAEL.

CLIENT 2

e. In or about 1997, Client 2, a U.S. citizen residing in Beverly Hills, California, opened an undeclared account at defendant BANK LEUMI-LUXEMBOURG.

f. In or about 2009, Client 2 traveled to Luxembourg, and met with Banker 3, an executive employed by defendant BANK LEUMI-LUXEMBOURG, and Banker 4, an employee of defendant BANK LEUMI-LUXEMBOURG. At that meeting, Banker 3 and Banker 4 provided Client 2 with a German cellular phone, pre-programmed with the Bankers' phone numbers in Luxembourg.

g. In or about 2009, Banker 3 and Banker 4 instructed Client 2 to never call them from Client 2's personal phone, but to only call them using the German cellular phone they provided to Client 2.

h. Between in or about 2009 and in or about 2011, from the Central District of California, and elsewhere, Client 2 called Banker 3 and Banker 4 using the German cellular phone they had provided in order to discuss Client 2's undeclared account at defendant BANK LEUMI-LUXEMBOURG.

i. On or about February 17, 2011, from the Central District of California, Client 2 filed with the IRS a false and fraudulent U.S. Individual Income Tax Return, Form 1040, for tax year 2009 that failed to report the undeclared account and related income associated with the undeclared account at defendant BANK LEUMI-LUXEMBOURG.

CLIENT 3

j. On or about January 5, 2004, Client 3, a U.S. citizen residing in Tarzana, California, sent Banker 5, an employee of defendant BANK LEUMI-ISRAEL in Tel Aviv, Israel, a fax asking that his name be added as a beneficial owner of two undeclared accounts with in excess of $12 million on deposit at defendant BANK LEUMI-ISRAEL in Tel Aviv, Israel.

k. On or about April 16, 2009, from the Central District of California, Client 3 filed with the IRS a false and fraudulent U.S. Individual Income Tax Return, Form 1040, for tax year 2008 that failed to report the undeclared account and related income associated with the undeclared account at defendant BANK LEUMI-ISRAEL.

l. On or about October 2010, Banker 6, an employee of defendant BANK LEUMI USA in Beverly Hills, California, caused defendant BANK LEUMI USA in Beverly Hills, California, to renew a $6.5 million credit facility extended to Client 3, collateralized by Client 3's undeclared account at defendant BANK LEUMI-ISRAEL.

CLIENT 4

m. In or about September 2008, Client 4, a U.S. citizen residing in Hollywood, Florida, flew to Switzerland to close his account at Swiss. Bank A, and during that trip met with Banker 7, an employee of defendant BANK LEUMI-SWITZERLAND, in order to transfer his funds at Swiss Bank A to defendant BANK LEUMI-SWITZERLAND.

n. In or about September 2008, Banker 7 facilitated the opening of a numbered account at defendant BANK LEUMI-SWITZERLAND by directly communicating with one or more bankers at Swiss Bank A.

o. In or about September 2008, Banker 7 suggested to Client 4 that Client 4 should have his mail from defendant BANK LEUMI-SWITZERLAND held at the bank to help prevent Client 4's account at defendant BANK LEUMI-SWITZERLAND from being disclosed to the United States Government.

p. In or about September 2008, Banker 7 instructed Client 4 not to take any bank account opening documents from defendant BANK LEUMI-SWITZERLAND when Client 4 traveled back to the United States.