Ex-UBS Executive Weil Knew of Tax Conspiracy, Jury Is Told

Raoul Weil, who once ran UBS AG’s global wealth-management business, should be convicted of conspiring to help U.S. clients defraud the Internal Revenue Service by cheating on their taxes, a prosecutor argued to a Florida jury.

Weil, 54, knew that UBS, the largest Swiss bank, used sham corporate structures to help U.S. clients hide their identities from the IRS, and its bankers employed cloak-and-dagger methods to deliver them cash and account statements, Mark Daly, a Justice Department trial attorney, told federal jurors in closing arguments today before they began deliberations.

“This conspiracy lasted for years and years, all done to conceal this business and hide these clients,” Daly said in summarizing a case that began Oct. 14 in federal court in Fort Lauderdale. “It’s a pyramid. At the top, you’ve got the senior executives who have the power to either grow or shut down this business.”

Weil is the highest-ranking official among three dozen foreign bankers, lawyers and advisers charged in a seven-year U.S. investigation of offshore tax evasion. He was indicted in 2008 on charges of conspiring to help as many as 17,000 U.S. taxpayers hide $20 billion from the IRS. He was arrested last year in Bologna, Italy, and waived extradition.

Ex-Banker’s Testimony

Weil didn’t testify at the trial, where several former UBS bankers and clients appeared as prosecution witnesses. Martin Liechti, the former UBS head of banking in the Americas, testified that Weil knew in 2002 that thousands of accounts didn’t comply with U.S. tax law. Liechti testified under an immunity agreement with prosecutors.

Defense lawyer Matthew Menchel argued that prosecutors failed to prove that Weil was part of a single conspiracy involving taxpayers. He also said that Weil was unaware of the activities of a group of bankers below him.

“There’s no evidence in this case that Mr. Weil knew and much less participated in activities by low-level bankers who were violating the bank’s own policies,” Menchel told the jury.

Menchel argued that Liechti, the prosecution’s star witness, lied about Weil.

“Mr. Liechti took this stand right in front of you and not only would he lie, but when I would catch him in that lie, he would lie to cover his lie,” Menchel said.

Weil was also told by lawyers that the existence of the U.S. cross-border business, including that portion that allowed taxpayers to not declare accounts, was agreed to by the IRS and permitted by U.S. tax law, Menchel argued.

If convicted, Weil faces as long as five years in prison.

Maximum Penalty

UBS avoided prosecution in February 2009 by admitting it helped clients evade taxes from 2000 to 2007 and by turning over data on 250 secret accounts to the IRS. It later agreed to reveal information on 4,450 more. Jurors heard that UBS paid a fine, without being told the details.

Since that deal, more than 70 U.S. clients and three dozen offshore bankers, lawyers and advisers have been charged with tax crimes. More than 100 Swiss banks and 43,000 U.S. taxpayers applied to the U.S. to avoid prosecution over offshore accounts. Credit Suisse Group AG’s main bank subsidiary pleaded guilty and paid a $2.6 billion penalty.

In instructing the jury, U.S. District Judge James Cohn told the panel it must decide if “a single overall conspiracy did exist” and, if it did, who its members were.

The judge said that if Weil acted in good faith, “sincerely believing himself to be in compliance with the law,” then he didn’t act willfully to violate the law.

The case is U.S. v. Weil, 08-cr-60322, U.S. District Court, Southern District of Florida (Fort Lauderdale).

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