Exec with Swiss bank UBS indicted in tax probe

A senior executive with Swiss banking giant UBS AG was charged in a federal indictment unsealed Wednesday with conspiring to hide $20 billion in assets from the Internal Revenue Service using secret overseas accounts for thousands of wealthy customers.

Raoul Weil, chief executive officer of a UBS division handling cross-border business and private banking, is charged with one count of conspiring to defraud the U.S. through income tax evasion. But the indictment also says other UBS executives at high levels of the company took part in the conspiracy.

"Every American who pays his or her taxes should be offended that a select few use anonymous offshore accounts to avoid paying their fair share," said U.S. Attorney R. Alexander Acosta of Miami. Weil's lawyer said he is innocent.

The indictment charges that from 2002 and 2007, Weil, as chief of UBS's wealth management business, helped about 20,000 U.S. clients conceal assets in offshore accounts. About 17,000 of the customers hid their identities and their Swiss bank accounts from the IRS and many of them filed false income tax returns.

At the same time, the cross-border business earned about $200 million for UBS from 2002 to 2007, according to U.S. authorities. Prosecutors said Weil referred to the business as "toxic waste" because it put UBS at odds with U.S. tax law.

"The IRS is aggressively pursuing anyone who helps wealthy individuals hide their assets offshore and dodge the tax system," said IRS Commissioner Doug Shulman.

UBS aggressively marketed its tax evasion business to wealthy people in the U.S., making some 3,800 visits in 2004 alone to discuss accounts with clients. The bank used encrypted laptops, numbered accounts and other "countersurveillance techniques" to guarantee secrecy, the indictment says.

Sen. Carl Levin, D-Mich., chairman of the Senate Permanent Subcommittee on Investigations, said abusive tax havens and offshore accounts cost the U.S. government at least $100 billion in lost taxes each year. Levin said the Swiss have long used secrecy laws to inhibit access to accounts held by Americans.

The indictment, Levin said, "sends an overdue meessage that the United States will no longer tolerate tax haven banks helping U.S. clients hide money from the IRS."

Weil, a Swiss citizen who turns 49 on Thursday, faces up to five years in prison if convicted. His attorney, Aaron Marcu of New York, issued a statement declaring that Weil is innocent.

"Today's indictment is totally unjustified and without any factual basis," Marcu said. "Mr. Weil is a highly respected banking executive in Switzerland with an unblemished record for integrity."

Switzerland does not normally extradite its citizens to face criminal charges in foreign countries. Marcu's statement, however, said Weil does "fully intend to fight this indictment," which would mean appearing in a U.S. courtroom.

UBS issued a statement saying that Weil will step aside from his duties at the bank "pending resolution of this matter" and pledged anew to assist investigators.

"UBS is fully committed to continuing its efforts to cooperate with the investigation of its U.S. cross-border business and to working in a responsible manner with all relevant authorities towards a satisfactory resolution of this matter," the statement said.

The Weil indictment follows the guilty plea in July in federal court in Fort Lauderdale by former UBS executive Bradley Birkenfeld to a similar charge of conspiracy to defraud the U.S. Birkenfeld, whose clients included several people with South Florida ties, has yet to be sentenced and has been cooperating with federal investigators looking into UBS practices.

Earlier this year, a Miami federal judge authorized the IRS to obtain information from UBS about American taxpayers who have accounts with the bank but whose identities were unknown.

UBS disclosed earlier this month in corporate filings that the probe was focused on management of the cross-border business. UBS no longer offers these cross-border services in the U.S.

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Swiss Bank Executive Indicted in U.S. Inquiry

The New York Times

Thu Nov 13

2