US prosecutors have moved to seize $12.2 million they say was transferred to New York from a secret Swiss account set up by a lawyer who helped US citizens hide assets from the tax authorities.

US prosecutors have moved to seize $12.2 million they say was transferred to New York from a secret Swiss account set up by a lawyer who helped US citizens hide assets from the tax authorities, Bloomberg reported.

In a forfeiture action filed yesterday in a Manhattan federal court, the government demanded the money of “Client 1” and the client’s father, who prosecutors said used a “mail and wire scheme to defraud the Internal Revenue Service of taxes due”. The accounts were held at “Bank A” in Zurich and “Bank B” in Switzerland, according to the civil complaint. The name of the client or bank is not named.

According to the news service, the government said the accounts were set up by Swiss attorney Edgar Paltzer, who pleaded guilty in New York on 16 August, admitting he committed tax fraud for more than a decade. Paltzer is cooperating with prosecutors.

In 2003, “Paltzer began to assist the Father and Client 1 in ensuring that their accounts at Swiss Bank B remained hidden from U.S. authorities”, according to the complaint by US Attorney Preet Bharara, the report said.

Last August, to highlight the scale of the issue, the US and Swiss governments signed a sweeping accord through which Swiss banks have the option of disclosing if they have, or suspect they have, violated US tax laws, in return for differing penalties. So far, about a third of Switzerland’s estimated number of over 300 banks have signed up to the accord. In 2009, Switzerland’s largest bank, UBS, agreed to pay criminal and civil fines to settle allegations it helped US tax evaders; the Swiss government also allowed certain data to be transferred to the US authorities in a move seen then as a historic breach of Swiss bank secrecy laws. A number of Swiss banks, such as Julius Baer, no longer provide offshore accounts to US citizens. In the case of the oldest Swiss private bank, Wegelin & Co, its US operations have closed down after legal action against it by the US and the remaining Swiss part of that bank has been reconstituted under a new name.

In the Bloomberg report, it said Paltzer created sham entities in the British Virgin Islands, Liechtenstein and Panama to hide the true owners of the accounts and visited the client and father in Staten Island, New York, in 2006, according to the complaint. The client and Paltzer also had dinner in Manhattan.

In late 2008, as the US intensified its crackdown, Bank B told the client and father that their undeclared accounts had to be closed, according to the complaint. Paltzer moved $12 million to Bank A. In February 2014, the money “was wired from Swiss Bank A to an IRS seized account” in Manhattan, the report added.