Tuesday, April 26, 2022

Paper company owner with ties to Alabama admits hiding millions in Swiss bank account. (Al.com)

Anti-tenure billionaire GEORGE LANDEGGER, JR., the former Chair for 22 years of our Georgetown University School of Foreign Service board, is a convicted felon, convicted of hiding $10 million in Swiss banks and sentenced to only two months in prison. 

He inveighed against college and university faculty tenure in a speech to our 1993 Georgetown University School of Foreign Service reunion luncheon.  Brian and I attended a d we were appalled at this labor-baiter. 

GEORGE LANDEGGER, JR. is now a convicted felon, rendered infamous, but this corporate criminal's name still encumbers Georgetown's program on International Business Diplomacy.

Beware of taking or seeking advice on worker rights, or any other subject, from corpulent corporate criminals and mendacious monopolists. 

 From Al.com: 

Paper company owner with ties to Alabama admits hiding millions in Swiss bank account

George Landegger congratulates a student at an event in Georgetown University. He pleaded guilty on Friday, Jan. 16, 2015, to a federal fraud charge related to millions of dollars stashed in a secret Swiss bank account. (Georgetown University website)


A paper mill executive who once won a multimillion-dollar fraud lawsuit in Mobile's federal court has pleaded guilty to illegally socking money in a secret Swiss bank account using a trust account named for a coffee drink.

George Landegger, CEO of Parsons & Whittemore, pleaded guilty last week in New York to a federal charge of failing to file a required report to the IRS about the account. He admitted that he maintained the undeclared account worth $8.4 million at the Swiss Bank in Zurich from the early part of the last decade to 2010.

Landegger, 77, of Ridgefield, Connecticut, agreed as part of his plea bargain to pay a civil penalty of more than $4.2 million and back taxes of more than $71,000. A judge set his sentencing for May 12' he faces a maximum of five years in prison, although the actual punishment likely will be less.

"As he admitted, George Landegger maintained secret Swiss bank accounts he repeatedly failed to declare to the IRS, and he took steps to conceal his ownership of the accounts," Manhattan U.S. Attorney Preet Bharara said in a prepared statement. "The benefits of citizenship or residency in the United States come with certain obligations, including, as George Landegger well knew, the legal requirement to report foreign bank accounts. He will now pay for his illegal conduct."

Parsons & Whittemore employed hundreds of people at a pair of pulp mills in Monroe County but sold them in 2010 to Georgia-Pacific, a subsidiary of Koch Industries.

Court records in the criminal case indicate that in 2005, a representative of Swiss Bank recommended to Landegger that he use a Zurich-based lawyer to create a sham trust to hold the executive's undeclared accounts at the bank. That trust - named "Onicuppac," or cappucino spelled backwards - was organized under the laws of Lichtenstein and kept money in the bank, outside of the reach of the IRS.

Court records describe an April 2009 meeting between Landegger, an unnamed Swiss Bank official and a third person in which they discussed news accounts of the United States cracking down on untaxed earnings hidden in foreign bank accounts. At the time, U.S. officials were investigating UBS AG regarding allegations that the Swiss bank was helping U.S. taxpayers maintain undeclared accounts.

Landegger and the Swiss Bank official discussed the possibility of entering the IRS's offshore voluntary disclosure program but rejected the idea. Instead, he and the bank official decided to empty the accounts of their assets by slowly moving funds out of Switzerland. Court records show that between May 2009 and July 2010, Landegger, with the assistance of the banker and others, began transferring the assets from his account to a new, declared account in Canada. He then transferred the remaining funds to an account maintained by another person in Hong Kong.

During the time Landegger kept undeclared accounts at the Swiss Bank, capital gains and losses were generated in the account from his investments in foreign securities, according to the plea agreement.

IRS Acting Special Agent-in-Charge Thomas E. Bishop said:

"The Internal Revenue Service has made uncovering hidden offshore accounts and income a top priority and, working with the Department of Justice, we continue to demonstrate our success in doing so," IRS Acting Special Agent-in-Charge Thomas Bishop said in a prepared statement. "The prosecutions of individuals who decide to keep their foreign assets concealed and of those who advise and assist them serve as clear warnings to anyone who doubts the U.S. government's resolve."

Landegger is not the first Parsons & Whittemore executive to get into trouble with the IRS. Arthur L. Schwartz, who was the president and chief operating officer of the company, pleaded guilty in 2006 to two counts of making false statements to the IRS during the course of two separate audits of the company.

According to a profile in Businessweek, Landegger serves as chairman emeritus of Georgetown University's Foreign Service School. He was chairman of the school for 22 years. He served as a first lieutenant in the U.S. Army Artillery. He also is a former chairman of the Alabama Commission on Higher Education and was chairman of Reading Alabama, which provided interactive computer reading education to public school students in the state.

Landegger found himself on the accusing side of the courtroom in a lawsuit against a Montrose company that Parsons & Whittemore invested in on the promise of a technological breakthrough in converting wood chips and vegetable matter into biodiesel. A federal jury in Mobile sided with Parsons & Whittemore, ordering Baldwin County-based Cello Energy to pay $10.4 million.

The plaintiffs argued that the supposed breakthrough was nothing more than a sham.

Former Monroe paper mill owner sentenced to prison for hiding funds in Swiss account

George Landegger congratulates a student at an even in Georgetown University. A judge decided this month that he will spend two months in prison on a federal fraud charge related to millions of dollars stashed in a secret Swiss bank account. (Georgetown University website)

George Landegger made millions of dollars and built a paper mill empire that extended into rural Alabama. His career will end with prison and a fine, punishment that is insufficient in the view of prosecutors.

A federal judge in New York earlier this month sentenced Landegger, 78, to two months in prison, followed by a year of supervised release, with the first six months under home confinement. U.S. District Judge Richard J. Sullivan also fined him $30,000 and ordered him to pay $71,824 owed to the government.

Landegger pleaded guilty in January to defrauding the IRS by hiding millions of dollars in a Swiss Bank account. As part of his plea bargain, he agreed to pay more than $4.2 million civil penalties, a sum equal to roughly half of the $8.4 million he had at the Swiss Bank in Zurich from the early part of the last decade to 2010.

The U.S. Attorney's Office had argued for a prison term of at least a year, the minimum under advisory sentencing guidelines.

"The Government certainly agrees that the Court should take into account the defendant's general background and characteristics, most notably, the defendant's extraordinary history of contributions to society, when imposing a sentence," Assistant U.S. Attorney Sarah Paul wrote in a sentencing memorandum. "However, the defendant's arguments do not support a variance as substantial as the defendant requests."

Defense attorney Jeremy Temkin, however, argued in his own court filing that prosecutors were unfairly singling out Landegger by refusing his participation in an amnesty program granted to 45,000 other people who had undeclared funds in offshore accounts.

"In sentencing George, we urge the Court to consider those contributions; the government's treatment of the 45,000 offshore accountholders who have participated in the (Offshore Voluntary Disclosure Program); the sentences imposed on similarly-situated defendants; and the significant price George has paid, and will continue to pay, as a result of this prosecution," he wrote.

Defendant rejected amnesty offer

Paul pointed out, however, that Landegger rejected participation in the amnesty program during an April 2009 meeting and instead started emptying the account and moving the money out of Switzerland, and did not seek to participate in the amnesty program until 2013 - some three years after he transferred funds from the Swiss bank account.

"This case involves a man who, like most Americans, enjoyed benefits from the taxes honestly and accurately paid by others, but who decided that he would, in effect, thumb his nose at the tax system and the IRS by hiding money overseas and evading taxes," the prosecutor wrote.

Temkin also urged the judge to reject an alternate punishment suggested by prosecutors, a period of confinement in a community corrections center. He wrote that both of the community corrections centers near his home in Connecticut "are located in dangerous neighborhoods in densely populated urban areas."

Landegger's company, Parsons & Whittemore, was active in at least two different countries - sometimes making enemies with his business practices. The employed hundreds of people at a pair of pulp mills in Monroe County but sold them in 2010 to Georgia-Pacific, a subsidiary of Koch Industries.

Landegger drew fierce anger in Canada when Parsons & Whittemore's St. Anne-Nackawic Pulp Co. Ltd. declared bankruptcy in 2004, shuttering the town's mill and leaving contractors and other creditors with some $50.7 million in unpaid bills

"It could very much mean the ruination of me," Nackawic contractor Paul Myles told the Daily Gleaner at the time. "Unless I get paid, I am in receivership ... I am just hoping I can hang on."

Myles faulted Parsons & Whittemore for beginning expensive upgrades on the mill before filing for bankruptcy protection.

"I don't know if it's illegal, but it is certainly unethical," Myles said.

Harsh punishment sought

A former employee of the mill, Steven Hawkes, wrote in a letter to the judge that Landegger had hurt many people in the Province of New Brunswick.

"We believe there could be many more bank accounts hidden from the IRS where money from our pension and the bankruptcy of the St. Anne mill is hidden," he wrote. "His admission of pleading guilty to federal fraud charges related to millions of dollars stashed in secret bank accounts leads many former employees to feel their personal (loss) of millions of dollars ended up hidden in secret bank accounts as well."

Landegger's attorney urged the judge to ignore Hawkes' letter.

"George operated the mill in accordance with the same high ethical standards that he followed in running the rest of P&W's business," Temkin wrote. "After multiple down cycles in the pulp and paper industry, St. Anne Nackawic could no longer be run profitably and it sought protection under the Canadian bankruptcy laws."

Temkin called Hawkes a "serial litigant whose conspiracy theories" had been rejected.

"His attempt to intervene in the St. Anne Nackawic bankruptcy proceeding was rejected by the Canadian bankruptcy court, which found that the rights had 'been protected and properly advanced by the Trustee and Inspectors of the bankrupt state.'"

Likewise, Temkin wrote, his client should not be tied to the criminal conduct of the defendant's former tax attorney, Arthur Schwartz.

"In 2006, after a complete investigation, the Office of the United States Attorney for the District of Connecticut concluded that George was a victim of Schwartz's misconduct, and Schwartz was charged with two counts of making false statements," Temkin wrote.

Landegger found himself on the other side of a fraud case in Baldwin, albeit in a civil proceeding. He won a multimillion-dollar fraud lawsuit in Mobile's federal court against a Baldwin County company that Parsons & Whittemore invested in. The jury ordered Cello Energy to pay $10.4 million after determining that its purported ability to turn wood chips into cheap diesel fuel was a hoax.

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