November 4, 2014 / 11:19 PM / 3 years ago

Exclusive: U.S. lacked hard proof in tax trial of ex-UBS banker, jurors say

WASHINGTON (Reuters) - U.S. prosecutors did not present enough hard evidence to link a former top UBS AG UBSN.VX banker to subordinates’ schemes to help wealthy Americans hide $20 billion in secret accounts from tax authorities, jurors from the trial told Reuters on Tuesday.

Former UBS banker Raoul Weil, who is out on bail, arrives at federal court in Fort Lauderdale, Florida in this file photo taken October 22, 2014. REUTERS/Andrew Innerarity

A federal jury in South Florida on Monday took a little over one hour to acquit Raoul Weil, who headed the Swiss bank’s global wealth management unit, of conspiring to defraud the Internal Revenue Service. The verdict was a major setback for Washington’s efforts to crack down on offshore tax evasion by Americans, and raised questions about how aggressively the government will pursue similar cases against senior executives.

“There were no documents that tied that man to anything, that was our problem,” said Tracey Demyer, a 43-year-old medical assistant and one of two jurors who spoke to Reuters. “Ninety percent of the crucial documents did not have that man’s name on it.”

Prosecutors had obtained the cooperation of several of Weil’s colleagues who testified at his trial in Fort Lauderdale, but defense lawyers extensively cross-examined them in an attempt to undermine their credibility.

One banker, Hansruedi Schumacher, admitted under questioning from defense lawyer Matthew Menchel that Weil had nothing to do with a plan to distort legal advice against promoting certain offshore structures to American clients, according to a transcript of the trial.

The testimony of another of Weil’s underlings, Martin Liechti, was pivotal and unconvincing, a second juror, Miami physician Juan Carlos Palacios, said.

“The problem is that I believe Mr. Liechti, that he had discussions with Mr. Weil, but there was no evidence of that. That was the problem,” Palacios said.

Mark Daly, lead prosecutor on the case, declined comment.

A Justice Department spokeswoman earlier said the decision would not impact the agency’s efforts to hold offshore tax evaders and their enablers accountable.

As a result of the verdict, future efforts by the U.S. government to bring tax fraud cases “will require more than just the word of former alleged co-conspirators,” David Weinstein, a former federal prosecutor now in private practice in Miami, said when the verdict was announced.

“Corporate defendants will also be less likely to cooperate with the government and may instead choose to begin fighting the allegations made against their institutions,” he added.

“For a jury to acquit after only an hour means that there were some huge holes in the government’s case,” David Weinstein, a former federal prosecutor now in private practice in Miami, said when the verdict was announced.

At least 25 people, including bankers, lawyers and asset managers, have been charged by U.S. authorities with assisting tax evasion via Swiss banks since 2008.

Of that 25, six have pleaded guilty, but no trials for the other 19 are imminent as most of those charged are overseas.

The Justice Department suffered a similar loss on Friday when a federal jury in Los Angeles acquitted Shokrollah Baravarian, a former senior vice president at the local branch of Israel’s Mizrahi Tefahot Bank, of conspiring to help U.S. clients defraud the IRS through the opening of secret foreign bank accounts.

ARRESTED AT ITALIAN HOTEL

Weil, 54, was arrested in October 2013 while on vacation with his wife at an upscale hotel in Italy, and pleaded not guilty last year after being extradited to the United States.

Prosecutors had obtained an indictment against Weil in 2008, at the start of a lengthy crackdown under which UBS in 2009 paid a $780 million fine. Its Swiss arch-rival Credit Suisse AG CSGN.VX earlier this year paid more than $2.5 billion in penalties for helping wealthy Americans evade taxes.

The Weil verdict comes as the Justice Department has been under pressure to charge senior bank executives for crimes at their institutions, and suggests the government may have a tough time tying high-level officials to misconduct by employees.

”They said that he flew into Miami to meet clients with one of the other witnesses. Where are their hotel records? Where are their flight records?” juror Demyer said. “It just didn’t seem like they did enough digging.”

The jurors said they had discussed during deliberations the idea that Swiss banks were involved in helping Americans break the law, and that Weil, as a supervisor of the business, should have known what was going on, but that the jurors all came to an agreement that the government had not proved his involvement in the scheme.

“I know this is a business. These are bankers...we’re not stupid about this. Weil didn’t know about this? Give me a break,” said Palacios.

“I looked (at) the evidence over and over and we couldn’t get the connection,” he said.

Reporting by Aruna Viswanatha and Kevin Drawbaugh in Washington, with additional reporting by Francisco Alvarado in Fort Lauderdale, Zachary Fagenson in Miami, and Nate Raymond and Noeleen Walder in New York; Editing by Lisa Shumaker

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below