Raoul Weil, the former head of UBS AG (UBSN)’s global wealth management business accused of conspiring to help Americans evade taxes, may help U.S. prosecutors rather than go to trial, according to lawyers following the case.
Weil, 54, is set to make an initial appearance today in federal court in Fort Lauderdale, Florida, where he was indicted in October 2008 and later declared a fugitive. His lawyer has said he is innocent. Weil hasn’t entered a plea in the case.
Weil is the highest-ranking banker among about 100 people charged since 2008 by the U.S. in a crackdown on offshore tax evasion. About three dozen foreign bankers, lawyers and advisers were charged. Most are at large. Tax lawyers not involved in the case said they expect Weil to plead guilty, cooperate with prosecutors, and seek leniency at sentencing.
“There’s a good chance he’ll be ready to cooperate, and he’ll be throwing his people under the bus,” said attorney Edward Robbins of Hochman, Salkin, Rettig, Toscher & Perez in Beverly Hills, California. “He knows where all the dead bodies are. To the extent that the government missed any, he can tell them where they are.”
Justice Department spokeswoman Dena Iverson declined to comment on the case.
Weil lived and worked in Switzerland and was arrested Oct. 19 after checking into a hotel in Bologna, Italy, under his own name. The indictment accuses him of running a cross-border business that used secret Swiss accounts to conceal $20 billion in assets from the Internal Revenue Service.
Weil denies wrongdoing, according to his attorney, Aaron R. Marcu of Freshfields Bruckhaus Deringer LLP in New York.
“He has consistently denied doing or knowing of anything unlawful, and we look forward to the opportunity to present his case in court,” Marcu said yesterday in a statement. He wouldn’t comment on whether Weil may cooperate.
Weil, who referred to the business as “toxic waste,” ordered that his bankers attract more clients as Zurich-based UBS helped them hide accounts from the IRS, according to the indictment.
Four months after Weil’s indictment, U.S. prosecutors charged UBS. The bank avoided prosecution by paying $780 million, admitting it fostered tax evasion, and handing over information on more than 250 U.S. accounts. It later disclosed data on another 4,450 accounts. Dozens of UBS account holders were among about 70 taxpayers charged by the U.S.
Weil arrived Dec. 12 at Broward County Jail, according to the county sheriff’s website. At today’s court hearing, a judge will inform Weil of the charges against him and consider whether to grant him bail. Judges often deny bail to foreign defendants who were fugitives, seeing them as potential flight risks.
If Weil cooperates with prosecutors, they can urge a judge to give him a shorter sentence. He faces as many as five years in prison.
“It is the policy of the Department of Justice to try to have people enter into pleas and get their sentences reduced by assisting the U.S. government in going after others,” said tax attorney Martin Press of Fort Lauderdale. “He could be a treasure trove of additional information.”
Since the UBS deferred-prosecution agreement, more than 38,000 U.S. taxpayers have avoided charges by voluntarily disclosing their secret accounts to the IRS while identifying the offshore banks that enabled them. Those disclosures, along with data handed over by UBS, could make Weil less effective as a witness, according to tax attorney Nathan Hochman.
“The window for his cooperation has shrunk and shrunk and shrunk as the U.S. government has gathered huge amounts of information from UBS and from taxpayers through the Offshore Voluntary Disclosure Program,” said Hochman of Bingham McCutchen LLP in Santa Monica, California. “What may have been useful five years ago is certainly a lot less useful today.”
Still, Weil’s “only choice is to win at trial or turn over information that the U.S. government doesn’t have,” he said.
Some Swiss enablers have cooperated with prosecutors.
Former UBS banker Renzo Gadola pleaded guilty in 2010, admitting he serviced hundreds of secret Swiss accounts from 1995 to 2008. He cooperated with prosecutors and got five years of probation. The judge cited his “extraordinary cooperation.”
Former UBS banker Bradley Birkenfeld, who disclosed the UBS tax scheme to U.S. authorities in 2007, later pleaded guilty. In 2009, he got 40 months in prison, 10 more than prosecutors sought. In 2012, the IRS awarded him $104 million for blowing the whistle, the largest individual payout in U.S. history.
Swiss lawyer Edgar Paltzer pleaded guilty in New York on Aug. 16, admitting he conspired for more than a decade to commit tax fraud by helping U.S. clients hide millions of dollars. Paltzer is cooperating with U.S. authorities, said his lawyer, Thomas Ostrander.
On Oct. 14, former UBS banker Martin Lack surrendered to U.S. authorities in Miami to face a 2011 indictment that he conspired to help Americans evade taxes. Lack, a Swiss resident and investment adviser, was arraigned and released on a $750,000 bond. The U.S. agreed to let him return to Switzerland.
The case is U.S. v. Weil, 08-cr-60322, U.S. District Court, Southern District of Florida (Fort Lauderdale).
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