The Justice Department and the Internal Revenue Service have accused a senior executive at UBS of helping U.S. taxpayers evade income taxes on approximately $20 billion in assets.
Raoul Weil, who oversaw the Swiss bank's cross-border private banking business, has been charged with conspiring with other executives, managers, private bankers and clients of the firm to defraud the U.S. government.
Between 2002 and 2007, Weil oversaw a business that helped about 20,000 U.S. clients hide their assets from the IRS. Weil allegedly referred to the business as "toxic waste" but ordered his employees to grow the cross-border practice even though he knew it violated U.S. law.
According to the indictment, when he was given a choice to wind down, sell or spin off the cross-border business, Weil chose to continue the business because of its profitability. Between 2002 and 2007, the U.S. cross-border business generated about $200 million a year in revenue for the bank.
The indictment alleges that Weil and others at the bank used nominee entities, encrypted laptops, numbered accounts and other counter-surveillance techniques to help U.S. clients hide their identities and offshore assets from the IRS.
Swiss bankers allegedly traveled regularly to the U.S. to market Swiss bank secrecy to clients who were interested in evading federal income taxes. In 2004 alone, Swiss bankers, who ultimately reported to Weil, traveled to the U.S. approximately 3,800 times to discuss their clients' Swiss bank accounts. Clients of the cross-border business filed false tax returns that omitted the income earned on their Swiss bank accounts and failed to disclose the existence of those bank accounts to the IRS.
UBS has been under investigation for providing tax havens to U.S. residents and violating the qualified intermediary rules that require foreign banks to report on the holdings of U.S. residents. Another UBS banker, Bradley Birkenfeld, pled guilty to tax evasion conspiracy charges in June (see Ex-UBS Banker Pleads Guilty to Tax Evasion Conspiracy). The bank said in July it would stop offering offshore banking to U.S. residents (see UBS to Discontinue Tax Havens for U.S. Residents). UBS said it planned to issue a statement in response to the latest charges.
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