HSBC Client Said to Plead Guilty to Hiding Bank Accounts

A New Jersey businessman accused of conspiring with five bankers at HSBC Holdings Plc (HSBA) to hide his Indian bank (INBK) accounts from U.S. tax authorities is scheduled to plead guilty next week, according to court records and a person familiar with the matter.
Vaibhav Dahake, of Somerset, New Jersey, will have a “plea agreement hearing” on April 11 in federal court in Trenton, New Jersey, court records show. He was indicted Jan. 26 on charges of conspiring with bankers of “one of the largest international banks in the world,” which has headquarters in England.
London-based HSBC, Europe’s largest bank by market value, is the bank, according to the person, who requested anonymity because the U.S. Justice Department hasn’t identified the conspirators.
Dahake was the first taxpayer charged in a crackdown focusing on whether HSBC helped clients with Indian accounts hide assets from the U.S. Internal Revenue Service. He’s accused of conspiring with two bankers in New York, one in Fremont, California, and two in Thane, India. He faces as long as five years in prison.
Dahake’s attorney Lawrence Horn declined to comment. Juanita Gutierrez, an HSBC spokeswoman, had no immediate comment. Rebekah Carmichael, a spokeswoman for U.S. Attorney Paul Fishman, declined to comment.

NRI Services

The bank operated a U.S. division called NRI Services, which marketed offshore-banking services to U.S. citizens of Indian descent. Through NRI, the bank “encouraged U.S. citizens to open undeclared bank accounts in India,” according to the indictment.
Dahake, a native of India who became a U.S. citizen in 2006, filed false tax returns that hid ownership of and income from undeclared accounts in India, as well as the British Virgin Islands, according to the indictment.
His British Virgin Islands accounts didn’t pay interest, and the bank solicited him to open accounts in India that paid “high interest rates,” according to the indictment.
In 2001, he met with a banker in New York who touted the advantages of an Indian account, “including that no U.S. forms were required, he did not have to provide a Social Security number, the account was not taxable in India” and no Form 1099 reporting the interest income would be filed with the IRS, according to the indictment.
The case is U.S. v. Dahake, 11-cr-42, U.S. District Court, District of New Jersey (Trenton)