Top UBS Executive Indicted In Florida
Thursday, November 13, 2008
A senior Swiss banker has been indicted on charges of conspiring to defraud the U.S. government by helping about 20,000 U.S. clients hide $20 billion in assets from the Internal Revenue Service.
The indictment of Raoul Weil, a top executive at Swiss banking giant UBS, alleges that he conspired with a host of others at his bank, overseeing a business that used encrypted laptops, numbered accounts and counter-surveillance techniques to help American customers conceal their identities and evade taxes.
The bank marketed secret Swiss accounts to U.S. clients and generated about $200 million a year in revenue from the operation, according to the federal indictment unsealed yesterday. Bank employees claimed "that Swiss bank secrecy was impenetrable," the indictment said.
The indictment is part of a larger clash between the U.S. government and the tradition of secrecy that has been central to Switzerland's lucrative banking industry. It ratchets up the government's pressure on UBS to relinquish client secrets.
The indictment indicated a possible line of attack against the bank itself, alleging that employees based in Switzerland surreptitiously provided banking services and investment advice in the United States without the proper licenses or registrations. Weil, who turns 49 today, and other executives were warned about improprieties in the cross-border business but would not rein it in because it was too profitable, the indictment states.
Weil's attorney, Aaron Marcu, said his client denied wrongdoing.
"Today's indictment is totally unjustified and without any factual basis. Mr. Weil denies any suggestion that he was aware of, engaged in or tolerated any illegal conduct in the operation of UBS's U.S.-cross-border business," Marcu said in a statement.
Justice Department spokeswoman Alicia Valle said that Weil is believed to be in Switzerland and that Switzerland does not extradite its citizens for any crime.
In targeting Weil, the government has reached into UBS's inner sanctum. UBS's Web site said Raoul Weil was head of UBS's wealth management international business from 2002 to 2007. He has since been promoted and is one of a dozen members of a top management committee that answers directly to the UBS board, according to the UBS site.
In a statement, UBS said Weil would give up his duties until the case is resolved. The company, which stopped providing cross-border private banking services to U.S. clients in July, pledged to cooperate with the investigation.
Other bank employees, including executives "at the highest levels of management," are unindicted co-conspirators, the indictment says.
The indictment, handed up by a Fort Lauderdale, Fla., grand jury, alleges that bank managers organized a meeting in Switzerland with outside lawyers and accountants to discuss "the creation of structures and other vehicles" for clients who wanted to conceal their accounts from tax authorities. Employees helped clients prepare IRS forms that falsely stated such "offshore structures" were the owners of their accounts, the indictment adds. The bank allegedly trained employees to conduct business discreetly by using mail that would not show the bank's name, by changing hotels while traveling, and by using encrypted computers when visiting clients in the United States.