(Bloomberg) Raoul Weil, once the head of UBS AG’s global wealth-management business, didn’t know that “rogue” underlings were helping Americans evade taxes, his lawyer told jurors at the start of a trial in Florida.
Weil, 54, was indicted in 2008 for conspiring to help as many as 17,000 U.S. taxpayers hide $20 billion in accounts from the Internal Revenue Service. He was arrested last year in Bologna, Italy, and waived extradition to face trial in Fort Lauderdale, where jurors got an overview of the case yesterday.
Defense lawyer Aaron Marcu said the U.S. case hinges on “rogue” bankers from UBS, the largest Swiss bank, and clients who will implicate Weil to save their own skins. Marcu said one such banker is Hansruedi Schumacher, who once ran UBS’s cross- border business. Weil is the highest-ranking official among three dozen foreign bankers, lawyers and advisers charged in a seven-year U.S. crackdown on offshore tax evasion.
“All of the people who come in this courtroom, the clients who cheated on their taxes, they’re coming here because they want to avoid going to prison,” Marcu said in his opening statement. “The bankers will be trying to pin their own misconduct on their boss. That’s their get-out-of-jail-free card.”
Justice Department attorney Mark Daly told jurors that Weil directed a complex scheme to avoid investigation using everything from specially configured laptops with hidden hard drives to blind bank statements without account numbers, names or even the UBS logo on them.
“From 2002 to 2008, the defendant, Raoul Weil, was responsible for this business,” Daly said. “You’ll hear evidence that problems with this business were brought to Raoul Weil’s attention again and again. Raoul Weil had the authority to shut down this business, to close it, to sell it. But he didn’t” because it would have to be disclosed by the bank.
One witness against Weil will be Martin Leichti, another former head of cross-border banking at UBS, Daly said.
Schumacher, a former UBS and Neue Zuercher Bank AG manager, was indicted in August 2009 in Fort Lauderdale for helping U.S. citizens evade taxes on UBS and NZB accounts. He was declared a fugitive in December 2009.
Schumacher surrendered on Oct. 6 and made his initial appearance in court the next day, entering a not-guilty plea, according to court records. He was released on $500,000 bail and will be allowed to travel in the U.S. and to Switzerland as his case is pending.
Schumacher is expected to testify today, his attorney Peter Raben said in an interview, declining further comment.
Leichti signed an agreement on July 2, 2008, in which the Justice Department agreed not to prosecute him for tax crimes. In exchange, he agreed to testify for prosecutors.
UBS, the largest Swiss bank, avoided prosecution in February 2009 by admitting essentially the same conduct for which Weil stands accused. UBS admitted it helped clients evade taxes from 2000 to 2007, turned over data on 250 secret accounts to the IRS and agreed to reveal information on another 4,450 accounts. More than 50 UBS clients and four bankers have pleaded guilty.
In the Weil case, prosecutors allege that 60 private bankers he supervised came to the U.S. to give unlicensed banking and investment-advisory services to American clients. They cloaked their activities through dummy corporations and numbered accounts and used encrypted laptops and other counter-surveillance techniques, according to the U.S.
Weil became the chairman and chief executive officer of global wealth-management and business banking in 2007, taking over from Marcel Rohner, who was appointed UBS CEO.
From 2002 to 2007, he was head of the wealth-management international unit. Weil joined Swiss Bank Corp., which later merged with Union Bank of Switzerland to form UBS, in 1984.
Weil last year became the CEO of Reuss Private Group AG, which manages more than 7 billion Swiss francs ($7.4 billion). Weil was later replaced as CEO, an outside representative for Reuss at Farner Consulting AG in Zurich said two days ago.
The case is U.S. v. Weil, 08-cr-60322, U.S. District Court, Southern District of Florida (Fort Lauderdale).
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access