How Some Americans Play It

Ingenious Americans exploit numbered Swiss accounts in innumerable ways. Here are three that particularly disturb U.S. Attorney Robert Morgenthau:

. STOCK TRADING: Many U.S. investors use secret accounts to play the stock market, cabling or mailing instructions to their Swiss banks to buy and sell securities through brokerage houses in New York. Another trick is to phone a New York broker designated by a Swiss bank and use a code name to place an order. The broker executes the order for the account of the Swiss bank and winds up with no record of the real buyer's identity. Since foreign banks are not taxed at all on trading profits--and at a maximum rate of only 30% on stock dividends--U.S. citizens, especially those in higher tax brackets, can often lighten their tax bills by channeling their stock deals through the banks.

. IMPORT-EXPORT: Some U.S. importers minimize the taxes they pay on profits. Every time they buy foreign goods, they use special arrangements to pay excessively high prices. They thus deflate their recorded profits and tax obligations. Meanwhile, the foreign sellers kick back part of the bloated purchase price into the Americans' Swiss bank accounts.

. REAL ESTATE: To avoid paying income taxes, some American real estate owners hold large sums of cash in numbered Swiss accounts. How can they ever use the money? They have the Swiss bank arrange to "buy" some of their properties with money from their own anonymous accounts. In that way, the money is repatriated to the U.S. One real estate man, for example, "sold" a piece of property for nearly $1,000,000 but did not have to pay taxes on the deal since the property had cost no more than that when he purchased it. There was a further advantage: as a foreign institution, the new owner of record had to pay no more than 30% taxes on rental income.

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