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Last Updated:
Apr 24, 2009 - 5:31:05 PM |
US prosecutors on Wednesday charged a senior executive of Swiss banking giant UBS with tax evasion conspiracy, by helping rich clients evade federal income taxes. The court move is seen as a tactic to put pressure on the Swiss bank to reveal the names of their American clients.
Raoul Weil, who is 49 today, is a member of UBS' executive board, is accused of organizing a group of private wealth bankers to help hide from US tax authorities about $20 billion in assets belonging to about 17,000 of 20,000 UBS clients, who were US citizens, according to an indictment filed in US District Court in Fort Lauderdale, Florida. The alleged offenses occurred between 2002 and 2007, when Weil was the bank's head of international wealth management. Annual revenue for UBS was about $200 million.
According to federal prosecutors, Weil referred to the offshore business as "toxic waste" because of the risks they posed to the bank, but oversaw the expansion of the accounts because they were so profitable. If convicted on the felony charge of conspiring to defraud the US government, he could serve a maximum of five years in jail and be fined $250,000.
``Weil and other executives would not implement effective restrictions on the United States cross-border business because the business was too profitable for the Swiss bank,''according to the indictment, which identifies other, unnamed UBS executives as unindicted co-conspirators.
The Justice Department has been investigating whether the bank helped Americans evade taxes and the US Securities and Exchange Commission is looking into whether UBS failed to register as a broker-dealer or investment adviser. In June, former UBS private banker Bradley Birkenfeld pleaded guilty to helping a California billionaire evade taxes and he agreed to cooperate with prosecutors.
Last July, UBS announced at a US Senate hearing, that it would end offshore services for US residents.
A lawyer for Weil said he"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."
UBS said Weil is stepping down from his position "pending the resolution of this matter."
He lives in Switzerland where the process of foreign extradition is a complicated one.
The indictment says UBS held training sessions for bankers in 2004 to teach them"how to avoid detection by authorities when traveling in the United States," prosecutors allege. The bankers used encrypted laptop computers and erased references to the US banking clients in communications.
UBS said last week that in the third-quarter report clients withdrew 83.7 billion Swiss francs ($70.9 billion), a result the bank termed "disappointing."
Swiss laws generally prohibit banks from revealing the names of clients.
