Jail for German who blackmailed Liechtenstein bank

Business Materials 23 January 2009 21:34 (UTC +04:00)

A German, 49, who blackmailed a Liechtenstein bank, threatening to expose a list of tax-shy German customers, was sentenced in Germany Friday to 63 months in jail for extortion, dpa reported.

His two assistants were given suspended jail terms of 22 and 18 months by the court in the port city of Rostock.

Thailand-based Michael F, who has a criminal record, demanded 13 million euros (17 million dollars) from Liechtensteinische Landesbank (LLB). He managed to obtain 9 million euros from 2005 to 2007. Most of the hush money has vanished.

The case highlighted tax evasion by rich Germans who open secret "offshore" bank accounts in the Alpine principality of Liechtenstein and "forget" to report the earnings to German tax officials.

In a different case, German intelligence last year paid for a disk of leaked data from a different Liechtenstein bank, LGT. This week, a former German corporate high-flyer, Klaus Zumwinkel, went on trial. The former Deutsch Post chief admitted hiding money at the LGT.

In Rostock, judges said the trio had obtained statements for 2,300 LLB bank accounts which are thought to have belonged to rich Germans.

Prosecutors said F, the leader, had a long criminal record and should be kept in precautionary custody after serving his minimum sentence, but the court declined this. His surname was withheld by German media because of defamation laws.

The case created what seems to be a paradox: "selling" stolen data back to its original Liechtenstein owners was judged a crime, but selling the same data to German authorities was praised as virtuous.

The Rostock court confirmed that it granted partial remission of punishment to F because during the trial he gave the data to German tax authorities at no charge. The trial of the trio began in May.

F was arrested at Hamburg Airport in 2007 as he was about to fly back to his wife and luxury home in Thailand.

Police found 450,000 euros in his luggage, including 18 banknotes with serial numbers that had been recorded by LLB when it paid the hush money.

Lawyers for the three defendants said they would appeal. They demanded an acquittal, claiming LLB was not entitled to protection by German law.

Investors take attache cases full of cash to lodge in Liechtenstein banks, which offer accounts without any paper trail and which are kept secret from German authorities.

There has been friction between the two states over the practice. Liechtenstein says it will only release data about a German's account if Germany first proves that it has been used for crime.