Trial of former UBS executive dredges up Swiss banks' shady past

Fri Oct 31, 2014 8:10am EDT
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By Francisco Alvarado, Zachary Fagenson and Joshua Franklin

FORT LAUDERDALE Fla./ZURICH (Reuters) - From bundles of cash inside scraps of newspaper to setting up shell companies, the trial in Florida of a former UBS executive is a reminder of the extreme methods some Swiss bankers used to hide clients' cash.

    Raoul Weil, 54, is the highest ranking Swiss banker to be arrested in the United States and prosecutors are seeking to paint him as a facilitator of efforts that helped conceal up to $20 billion in taxpayers' assets in secret offshore accounts.

Weil's main defense has been that these efforts were done by people below him and that the U.S. cross border business was a tiny fraction of his overall responsibilities. If convicted, Weil faces up to five years in prison for conspiracy to commit tax fraud. Weil and his attorneys declined comment on the trial.

    At the trial, which pits Weil against several former UBS colleagues who have chosen to cooperate with U.S. authorities in exchange for favorable sentencing, Swiss bankers have testified about using an arsenal of James Bond-like tactics to avoid detection while in the United States, and to help U.S. clients keep their accounts hidden from tax authorities.

    Bankers were given laptops with two hard drives, Hansruedi Schumacher, who formerly ran UBS' cross-border business, told the trial, which began on Oct. 14 and is expected to run for about four weeks.

    One hard drive was filled with anything from family photos and personal emails while another contained a password-protected database with the U.S. citizens' code-named bank records. Another witness said the drive with the bank details could be wiped simply by typing in a short password.

    "It was known all those account holders were not paying their taxes, and for the Swiss bank it was a very profitable business," Schumacher said during testimony at the trial.   

    Eskander Ensafi, who banked with UBS, told the court about a clandestine meeting in 2005 at a Los Angeles hotel with bank adviser Claude Ullman. The adviser handed him roughly $50,000 in U.S. bills wrapped in newspaper, Ensafi testified, tax-free interest from a Swiss bank account in the name of Ensafi's father, who had just suffered a debilitating stroke.   Continued...

Former UBS banker Raoul Weil, who is out on bail, arrives at federal court with his wife Susan in Fort Lauderdale, Florida October 22, 2014. REUTERS/Andrew Innerarity