27th Cambridge International Symposium on Economic Crime
The Responsibility of Management for the prevention & control of related risks
The Cost Benefits – is it worth it? (5th Sep. 2009, XX: session, SIPA contribution)
Official Swiss amicus curiae ¦ Motion of amicus curiae ¦ Response of amicus curiae

*                    *                    *




Amicus curiae Swiss Investors Protection Association, by and through its Secretary, hereby moves the Court for permission to file brief outline of elements, plus 10 exhibits, in support of the Common Good, the Rule of Law, the prerogatives of the constitutional lawmakers, and the pre-eminence of U.S. Senate-approved international treaties and conventions, all of which are seen to be material regardless of how the Petition to Enforce "John Doe" Summons ("Memorandum") is being disposed of. The brief, which contains 6 pages of text, is attached to this motion, as are the exhibits (www.solami.com/amicus.htm).


It is not intended to dwell here on applicable and relevant legal theories, reasonings and arguments which have been the stock in trade of more learned and capable colleagues on either side of the case. Rather, the focus of this brief is on some so far apparently overlooked crucial questions, such as the legitimacy, legality and limits of the IRS’ and the Treasury’s actions and inactions underlying their charges against the respondent. For it bears to remember that the U.S. Constitution, too recognizes and provides for the hierarchy of law, with Senate-approved international treaties to be binding all over the United States and to constitute an integral and even pre-eminent part of "the supreme law of the land" (Exhibit 6: www.solami.com/amicus.htm#LawofNations). It bears to remind the powers that be that it is incumbent on the U.S. Congress to "lay and collect Taxes, Duties, Imposts and Excises" (U.S. Constitution Article 1 Section 8). And that in the absence of evidence of congressional review and approval of the confiscatory 28% (initially 31%)"backup withholding tax" written into the U.S. Internal Revenue Service’s (IRS) world-widely imposed Qualified Intermediary Regulations (QIA: www.solami.com/rp-00-12.pdf), this ill-considered administrative Ukase has from its outset been and is still invalid. Moreover, for the sake of the common good, it appears indicated to remind urbi et orbi, that the duty to vigorously defend a mandator’s interests must not be pursued without adequate deference to other countries’ sovereign rights, to the supremacy of Senate-approved international treaties, and to other citizens’ and parties’ legitimate interests. E.g. speaking in one breath of the Senate-approved Swiss-American Double Taxation Agreement and the IRS’ ill-advised Ukas, i.e. its QIA, and treating them on the same footing, is seen to reflect a micro-economic vision which gives inadequate consideration to the adverse effects of one’s own actions and inactions on both the crucial respect for the Rule of Law and on the Common Good.


1. In its order of April 13, 2009 [DE 33], this Court held that district courts have the inherent authority to allow participation by an amicus curiae where an amicus brief "would be desirable and relevant to the disposition of the case."

2. The Swiss Investors Protection Association ASDI/SIPA was founded in 1981 by Swiss lawmakers, lawyers and other concerned professionals as an association in the sense of article 60 of the Swiss Civil Code (www.solami.com/gold.htm#ASDI/SIPA). It is seen to be in a unique position to shed additional light on the matters at issue and thus to significantly assist the Court in the disposition of this case. Indeed, since its beginning, ASDI/SIPA, and the undersigned ad personam, have rendered good offices for addressing & discreetly but successfully resolving various Swiss-U.S. legal disputes. This included blocking the RJR/Nabisco LBO while it jeopardized Swiss bondholders (www.solami.com/barbarians.htm). We have also been involved in Y2K-work in cooperation with U.S. Senate staffers & European officials (www.solami.com/Y2K.htm).

3. And when U.S., European and Swiss bankers sought advice on the IRS’ proposed QI Regulations, we lent our insights and expertise for the analyses of the options to prevent the coming into force of what was seen as a product of bureaucratic lawmaking which would fly in the face of U.S. laws & long-standing prohibition of double-taxation. Our major concerns are reflected in the exhibits 1-7, and there notably in the below-quoted draft Complaint for Declaratory and Injunctive Relief (www.solami.com/Klein2.doc | www.solami.com/QI.htm).

4.         In the case of the "fugitive" Marc Rich, the Swiss Government also saw itself compelled to forcefully intervene with both an amicus curiae and other sovereign means (www.solami.com/marcrich.htm). As indicated in our obituary for an outstanding Swiss diplomat and specialist for parallel diplomacy (www.solami.com/edouardbrunner.htm#Iran), the danger was then and has remained real of some U.S. power holders causing serious damage to U.S. interests in Iran. Notably by aggressively pursuing, without consultation, their narrow official duties of bringing said notorious trader-with-the-enemy to court - regardless of his role in helping the Swiss Government represent U.S. interests in Iran.

5. In the case at hand, similarly hidden or at least not publicly divulged interests seem to be at work. The blackening of parts of documents introduced by the IRS is not seen to be a marginal but a revealing issue availing itself to a more thorough discovery which might have been – and still might be - enlightening and helpful to the Court (Reeves Declaration, his exhibit 3, doc.2, p.71, exhibit 18, doc.2-2, p.56, and exhibit 22, doc.2-3, p.7, 14). The questions thus raised might include: who did the blackening, what was blacked out, and what’s the rationale behind this dead give-away.

6. Another subject of concern is the apparent lack, so far, of
- information on the legal basis of the QI agreements,
- information on the amounts transferred to the IRS since 2001 until now by the UBS - respectively by all other some 7000 QI banks - on account of the world-widely imposed confiscatory 28% (initially 31%) backup withholding tax on capital, not on interest (sic!), in exchange for the right of U.S. persons not to divulge to the IRS outsourced assets,
- cooperation by the IRS to respond to related questions we have been asking them in connection with our contribution to last year’s Cambridge International Symposium on Economic Crime (www.solami.com/glasnost.htm), and
- efforts by counsels - whether they represent UBS or third parties who have introduced other amicus curiae - to avail themselves of discovery opportunities.

7. All this is on top of the fact that almost all essential UBS documents on which the IRS charges are based are tainted, for they were obtained with illegal means and outside of existing, practical and agreed channels. As such, these documents are seen to be not usable in a court committed to uphold the Rule of Law.

8.          Accordingly, we have noted with appreciation the court procedures followed with a wide optic under the presiding Judge, notably his request to the U.S. Government to specify the limits of where, in the event, it is prepared to go in pursuing this case. We are very appreciative of this Court’s profound concerns thus expressed on this case’s national & international ramifications (see also exhibit 7: "Following the Flag", Barrons editorial of 12/4/2000; exhibit 8: a Swiss lawmaker’s still unanswered questions of 12/13/2000; and exhibit 9: a Swiss magistrate’s involontary suspension of Penal Code article 271).

9.          Accordingly, we have been encouraged to point also to what we consider to be highly relevant elements which, strictly speaking, are however less of a juridical nature.We are talking of the reportedly some 20 billion dollar belonging to U.S. persons and UBS clients which have exercised their explicit rights under the QI system not to divulge their outsourced assets in return for QI protection money in the form of said unauthorized confiscatory 28% backup withholding tax. Apparently in agreement with their colleagues at the drafting table of the IRS, the UBS had worked out already in July 2000, how to "legally" funnel out of U.S. securities into – presumably QI-exempt - "UBS investment funds and certain derivative products"(sic!; Reeves Declaration, his exhibit 8, doc, 2-2, p.17). In the event, this would go a long way to start to explain the QI-induced world-wide re-channeling of huge "fugitive" funds which have made possible the unconscionable apprentice-sorcerer operations, market aberrations and havoc which, since 2001, have grown into the tsunamis hitting both the U.S. and the global economy. By the same token, it would seem to offer a handle for bringing some corrective sense back into the market, if the reportedly some 7000 QI-banks where again to be unshackled of this hugely damaging and, moreover, illegal lex americana universalis Ukase.

10.         Under these circumstances, it may please the Court to draw its own conclusion from the fact that, in December 2000, we and some more visionary of our eventually QI-affected banker friends in the United States and Switzerland, under duress, saw ourselves compelled not to seek at that time judicial review and relief from the appropriate U.S. Court. With the above-outlined experience gained since, it thus bears reminding this Court of the corresponding parts of the final draft complaint of 15 December 2000 (www.solami.com/Klein2.doc):

29. The Administrative Procedure Act ("APA") authorizes this Court to provide judicial review and relief to any "person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action . . . ." 5 U.S.C. § 702. The APA further directs this Court to "hold unlawful and set aside agency action, findings, and conclusions found to be
(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;
(B) . . . ;
(C) in excess of statutory jurisdiction, authority, or limitation, or short of statutory right; [or]
(D) without observance of procedure required by law. . . ." 5 U.S.C. § 706(2).
30. In violation of the foregoing APA provisions, the Intermediary Regulations attempt to impose legal obligations and costs upon banking institutions outside the IRS’s legal jurisdiction and authority.

31. In further violation of the foregoing APA provisions, the Intermediary Regulations seek through economic pressure to coerce foreign business entities subject to the laws of foreign countries to enter into contracts of adhesion, using forms devised by the IRS, in which plaintiffs are required to agree to violate the laws of those countries, as well as their legal and fiduciary duties to their customers… Requiring or coercing entities to violate the laws to which they are subject, to waive their customers’ rights under such laws, and to subject themselves to liability, including criminal liability, under such laws, is unconscionable as a matter of contract and contrary to public policy. Therefore, it is arbitrary, capricious, and an abuse of the Agency’s discretion.

32. In further violation of the foregoing APA provisions, on information and belief the Intermediary Regulations were promulgated without due regard to, or consideration of, controlling legal authority, including the requirements of Friendship and Commerce Treaties which, under Article VI, section 1 of the United States Constitution, constitute the supreme law of the land. … In addition, by depriving U.S. citizens of the benefits of local banking privacy laws, the Intermediary Regulations deprive U.S. citizens banking in foreign countries of the legal protections to which their foreign counterparts remain entitled, thereby violating treaty obligations. Regulations promulgated without due regard to controlling legal authorities, including applicable treaties, are arbitrary, capricious, an abuse of the Agency’s discretion, and otherwise not in accordance with law.

33. In further violation of the foregoing APA provisions, the Intermediary Regulations have the effect of discriminating against small and medium-sized intermediaries, and in favor of their large multinational competitors. … The promulgation of such a burdensome, destructive, and discriminatory regulation without due consideration to the relative costs of such a regulation is arbitrary, capricious, and an abuse of discretion.
34. …

35. In further violation of the foregoing APA provisions, the Intermediary Regulations require the QI, a non-U.S. entity, to agree without reservation to be bound by U.S. discovery and disclosure rules, notwithstanding strict rules and constraints written into the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters, [CITE], to which both the United States and Switzerland have agreed to be bound. The regulation thereby violates U.S. treaty obligations and therefore is not in accordance with the law.

36. In further violation of the foregoing APA provisions, on information and belief, in promulgating the Intermediary Regulations, the IRS failed to give adequate consideration to the societal and economic costs associated with the requirements of the regulations. This failure was arbitrary, capricious, and an abuse of the Agency’s discretion.

37. For all the foregoing reasons, and others, the Intermediary Regulations are arbitrary, capricious, an abuse of discretion, and not in accordance with law; in excess of statutory jurisdiction, authority, or limitation; short of statutory right; and promulgated without observance of procedure required by law. Therefore, the Intermediary Regulations should be held unlawful and set aside. 5 U.S.C. § 706(2).

38. An actual, justiciable controversy exists between plaintiffs and defendants concerning the defendants’ failure to perform their obligations pursuant to 5 U.S.C. §§ 706(2). … The issuance of declaratory relief and entry of an order enjoining defendants from implementing and enforcing the Intermediary Regulations will terminate the existing controversy between the parties.


WHEREFORE ________________, _________________ and ________________ respectfully request the Court to enter an order granting the following relief:

A. A declaration by the Court holding the Intermediary Regulations unlawful because they are arbitrary, capricious, an abuse of discretion, and not in accordance with the law; and
B. An order setting aside the Intermediary Regulations and enjoining defendants from further implementing or enforcing them; and
C. Plaintiffs’ attorney fees and costs incurred in prosecuting this action, and such other and further relief as the Court may deem just and proper.

11.        As indicated, this legitimate action before a U.S. Court was aborted under duress. For the IRS – at least indirectly through its future QI partners and beneficiaries, UBS AG and McKinsey & Company – had then threatened the plaintiffs-to-be with unspecified sanctions and retorsion measures if they were to go ahead with their legal challenge of the QI Regulations in 2000.

12. For the Common Good and the Rule of Law - and regardless of eventual deficiencies of this brief - this Court may thus consider itself authorized, solicited and obliged to take the actions indicated under the circumstances, e.g. to revert the matter to the U.S. Supreme Court, or to issue on its own the corresponding orders to declare as invalid from the beginning the QI agreement underlying the actions brought by the U.S. Government against UBS AG.

Respectfully submitted

Anton Keller, Secretary
Swiss Investors Protection Association
cp 2580, 1211 Geneva 2, Switzerland
t+f: +4122-7400362 +4179-6047707

4 August 2009

Exhibits 1-10 (www.solami.com/amicus.htm)
[url:  www.solami.com/USvsUBS.htm ¦ see also: .../QIdetails.htm ¦ .../swissbanks.htm ¦ .../brink.htm]

Service List

To fax # 001305-5235589 (signed copy of amicus curiae url: www.solami.com/amicuscuriae.htm)

gold@flsd.uscourts.gov, Stuart.D.Gibson@usdoj.gov, Richard.D.Euliss@usdoj.gov, dottj@dottlaw.com, stephan.becker@pillsburylaw.com, estearns@swmwas.com, abarnett@swmwas.com, gmead@swmwas.com, gfischman@swmwas.com, jfsavarese@wlrk.com, mjearms@wlrk.com, rmlevene@wlrk.com, fbarron@cravath.com,