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January 8, 2015


Prominent Swiss Banker Acquitted by South Florida Jury

The acquittal of the former CEO of Global Wealth Management and Business Banking at UBS AG could affect the handling of more than twenty other cases involving Swiss “enablers,” many of whom are currently fugitives. A US jury rejected charges that Raoul Weil knew UBS bankers had used deception and shell corporations to conceal accounts owned by American clients.

Considered by some to be the US government’s number one target for offshore tax evasion, Weil was indicted by US authorities in 2008. Switzerland does not have a treaty with the US that allows for extradition of persons charged with tax crimes. However, when Weil visited Italy, he was arrested and extradited to the US to stand trial. After a three week trial, he was acquitted on all counts, leading one Swiss newspaper to label him a “national hero.”

To prove that bankers like Weil conspired with others to defraud the United States, prosecutors must prove intent. In an interview, the foreman of Weil’s jury said that prosecutors failed to show a connection between Weil and the criminal conduct of those who worked under him. Five former UBS bankers testified against Weil, in exchange for immunity or leniency. On cross-examination, Weil’s attorneys impeached these witnesses’ credibility and made sure that the jury was aware of their motives.

Switzerland has long been known for its strict bank secrecy laws, which led to it becoming one of the world’s most popular tax havens. Since 2009, the Department of Justice has aggressively pursued Swiss banks that have helped American clients evade US taxes. That year, UBS paid a $780 million fine to the IRS and turned over information about their American clients. The Department of Justice has since reached non-prosecution agreements with approximately one-third of Swiss banks. Under the terms of these agreements, the banks are required to turn over data related to their American clients and pay monetary penalties. Like dozens of other countries, Switzerland has also signed an agreement to implement the Foreign Account Tax Compliance Act (FATCA), which requires foreign financial institutions to provide information to the IRS regarding American clients, on an annual basis.

This defeat for the Department of Justice may inspire other Swiss bankers to take their chances in front of a jury, rather than accepting plea agreements or remaining fugitives. It came less than a week after Shokrollah Baravarian, a former Senior Vice President at an Israeli bank, was acquitted on similar charges in Los Angeles.

The Department of Justice is known for cherry-picking cases and prosecuting only the strongest, which is why they have a conviction rate above 90%. However, they have not yet shown any sign of backing down. Just weeks after Weil’s acquittal, the Department of Justice obtained an indictment against Martin Dunki, a former client advisor and Senior Vice President at Rahn & Bodmer Banquiers, another Swiss bank. It will be interesting to see how the recent high-profile acquittals could affect plea negotiations in this and other cases.

Offshore Accounts/International Tax Disputes