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 Raoul Weil, 54, is the highest ranking Swiss banker to be arrested
in the United States and prosecutors are seeking to paint him as a
facilitator of efforts that helped conceal up to $20 billion in
taxpayers' assets in secret offshore accounts.
Weil's main defense has been that these efforts were done by people
below him and that the U.S. cross border business was a tiny
fraction of his overall responsibilities. If convicted, Weil faces
up to five years in prison for conspiracy to commit tax fraud. Weil
and his attorneys declined comment on the trial.
At the trial, which pits Weil against several former UBS colleagues
who have chosen to cooperate with U.S. authorities in exchange for
favorable sentencing, Swiss bankers have testified about using an
arsenal of James Bond-like tactics to avoid detection while in the
United States, and to help U.S. clients keep their accounts hidden
from tax authorities.
Bankers were given laptops with two hard drives, Hansruedi
Schumacher, who formerly ran UBS' cross-border business, told the
trial, which began on Oct. 14 and is expected to run for about four
weeks.
One hard drive was filled with anything from family photos and
personal emails while another contained a password-protected
database with the U.S. citizens' code-named bank records. Another
witness said the drive with the bank details could be wiped simply
by typing in a short password.
"It was known all those account holders were not paying their taxes,
and for the Swiss bank it was a very profitable business,"
Schumacher said during testimony at the trial.
Eskander Ensafi, who banked with UBS, told the court about a
clandestine meeting in 2005 at a Los Angeles hotel with bank adviser
Claude Ullman. The adviser handed him roughly $50,000 in U.S. bills
wrapped in newspaper, Ensafi testified, tax-free interest from a
Swiss bank account in the name of Ensafi's father, who had just
suffered a debilitating stroke.
Ullman was sued by a number of U.S. individuals -- who were jailed
for not paying U.S. taxes by hiding their money in Swiss bank
accounts -- for alleged racketeering, along with UBS and a number of
high ranking bankers, including Weil, in a 2009 lawsuit in the
Eastern District of California. The case was dismissed with
prejudice in September 2014. An attorney for Ullman did not respond
to a request for an update on the case.
German businessman Juergen Homann, 72, who pleaded guilty to a U.S.
charge of failing to report a foreign account to the Internal
Revenue Service (IRS) in 2009, told the court one UBS client
adviser, Hans Thomann, helped him set up a Hong Kong-based shell
company. The company, the Prodon Foundation, was then used to funnel
income Homann made from his raw minerals business venture in China.
Attempts to reach Thomann for comment were unsuccessful.
In 2012, he was charged in the Southern District of New York with
conspiracy to defraud the United States and conducting an unlicensed
money transmitting business.
SHADOW OF SECRECY
Switzerland's biggest banks have paid a heavy price to settle their
U.S. tax evasion cases. UBS admitted to helping U.S. taxpayers hide
money and paid a $780 million fine in 2009, while Credit Suisse
pleaded guilty in May to a U.S. criminal charge and will pay more
than $2.5 billion in penalties.
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Since U.S. authorities began to chip away at the wall of Swiss
banking secrecy in 2008, details have trickled out of the
extraordinary lengths bankers would go to in order to smuggle assets
in and out of the United States.
A U.S. Senate report published earlier this year described how a
customer at Swiss bank Credit Suisse was given statements tucked
into the pages of an issue of Sports Illustrated magazine at a hotel
meeting. Former UBS financial adviser Bradley Birkenfeld admitted in
2008 to smuggling diamonds in a tube of toothpaste for a client.
Birkenfeld was a whistleblower in the tax fraud case against UBS and
won a record-setting $104 million reward from the U.S. Internal
Revenue Service.
On top of the fines forked out by Switzerland's two biggest banks,
about a dozen smaller Swiss players are still under U.S. criminal
investigation and face serious penalties, while many more have
joined a government-brokered program allowing them to make amends if
they aided tax evasion by wealthy Americans.
The United States is not the only jurisdiction that has cracked down
on tax evasion by its wealthiest citizens.
UBS is under investigation in France over whether it helped wealthy
individuals there dodge taxes. Investigating magistrates have
proposed that UBS pay a fine of 4.88 billion euros ($6.2 billion),
according to a judicial source.
The bank also booked a near-$300 million charge in the second
quarter of this year, mainly to settle claims it helped wealthy
Germans evade taxes.
The bankers who helped move clients' money around undetected are
themselves faced with a legal bind that goes beyond financial
penalties.
Since 2009, the U.S. Justice Department has charged more than 30
bankers and advisers in the offshore investigation, including
several Swiss bankers set to testify at Weil's trial, while others
have been arrested by European authorities.
In some cases, the accused can cooperate with foreign authorities in
exchange for lighter penalties. However, such a move could put them
at risk of violating Swiss banking secrecy laws, an offence
punishable by up to three years in prison and a fine of up to
250,000 Swiss francs ($262,000).
Failure to cooperate, though, can expose the bankers to the danger
of being detained by foreign authorities whenever they leave
Switzerland.
(Editing by David Clarke)
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