Ex-UBS Banker Weil Gets $9 Million Bail in Tax Dodge Case
Raoul Weil, the former head of UBS AG (UBSN)’s global wealth management business, was granted $10.5 million bail after appearing in a U.S. courtroom for the first time to face charges that he helped Americans evade taxes.
Weil, 54, didn’t enter a plea today in federal court in Fort Lauderdale, Florida, where he was indicted in October 2008 and declared a fugitive. He is set to be arraigned Jan. 7, when he will plead not guilty, according to his lawyer, Aaron Marcu. U.S. Magistrate Judge Patrick Hunt let Weil post a $9 million personal surety bond with a cash deposit of $4 million, a $1 million corporate bond and a $500,000 personal bond.
“We are pleased that the court agreed that Mr. Weil should be released on bail,” Marcu, of Freshfields Bruckhaus Deringer LLP in New York, said in an e-mail. “We are not engaged in negotiations with the government at this time. We look forward to sitting down to work with him on preparing his defense.”
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. Weil will probably plead guilty, cooperate with prosecutors, and seek leniency at sentencing, tax lawyers not involved in his case said in interviews.
“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, who was chief of the tax division for a decade at the U.S. Attorney’s Office in Los Angeles. “He knows where all the dead bodies are. To the extent that the government missed any, he can tell them.”
Weil, who lived and worked in Switzerland, was arrested Oct. 19 after checking into a hotel in Bologna, Italy. He was extradited to the U.S., and arrived Dec. 12 at the Broward County Jail, according to the county sheriff’s website.
He is accused in the indictment of running a cross-border business that used secret Swiss accounts to conceal $20 billion in assets from the Internal Revenue Service.
Marcu told the judge today that while prosecutors say Weil sat at the apex of a criminal organization that managed $20 billion, he actually sat atop a $4 trillion business and oversaw thousands of employees worldwide. Weil was unaware of what a small group of advisers did with U.S. clients, Marcu told Hunt.
He wouldn’t comment on whether Weil may cooperate.
“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.
In the hearing today, Hunt said Weil’s $9 million bond must be co-signed by his wife, and that the $500,000 personal surety bond must be co-signed by friends in New Jersey. He can travel to the Southern District of New York, which includes Manhattan, the Southern District of Florida, and New Jersey.
“It will take a couple days to get the financial arrangements in place,” Marcu said today in an e-mail.
Weil will stay with his New Jersey friends and be subject to electronic monitoring with a global positioning system, he said.
Dena Iverson, a Justice Department spokeswoman, didn’t immediately respond to e-mails seeking comment on the bail conditions.
Weil, who referred to the U.S. cross-border business as “toxic waste,” directed his bankers to attract more clients as Zurich-based UBS helped them hide accounts from the IRS, according to his 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 4,450 more accounts. Dozens of UBS account holders were among about 70 taxpayers charged by the U.S.
If Weil cooperates with prosecutors, they can urge a judge to give him a shorter sentence. He faces as long 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, who had represented clients with offshore accounts. “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 former top tax prosecutor in the Justice Department.
“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.
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 first joined Swiss Bank Corp., which later merged with Union Bank of Switzerland to form UBS, in 1984. He has a degree in business and economics from the University of Basel.
Weil this year became the CEO of Reuss Private Group AG, which manages more than 4 billion Swiss francs ($4.4 billion) in assets. He was previously an adviser to the company, according to an April statement on the Swiss firm’s website.
The case is U.S. v. Weil, 08-cr-60322, U.S. District Court, Southern District of Florida (Fort Lauderdale).
To contact the reporter on this story: David Voreacos in federal court in Newark, New Jersey, at firstname.lastname@example.org