Former Banker Could Help Feds Learn More About Swiss Accounts

Jan 8, 2014
Originally published on January 8, 2014 6:20 am
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A Swiss banker has pleaded not guilty to charges that he helped thousands of Americans evade paying their taxes. Raoul Weil was one of the top managers at UBS. It's a Swiss bank that helped nearly 20,000 Americans hide their assets in secret accounts. UBS already agreed to pay a large fine and hand over the names of U.S. account holders. Now, the Justice Department is prosecuting the man allegedly behind the massive tax fraud scheme. Here's NPR's Greg Allen.

GREG ALLEN, BYLINE: Raoul Weil was the head of UBS's global wealth-management business. But Stephen Kohn, of the National Whistleblowers Center, says he was also something else.

STEPHEN KOHN: Weil is the kingpin. He ran the worldwide illegal bank program.

ALLEN: It's a program that catered to wealthy clients around the world, including thousands in the U.S. Prosecutors says UBS managers, led by Weil, broke U.S. and international laws by helping clients set up accounts intended to help them evade paying taxes. It all began to unravel in 2007, when a former UBS banker disclosed much of the scheme to U.S. authorities.

The U.S. indicted Weil the following year, charging him with conspiracy to commit tax fraud. He wasn't extradited to the U.S. though until last year, after he was picked up by Italian authorities while on vacation there. Yesterday, in federal court in Fort Lauderdale, Weil pleaded not guilty to conspiracy. Edward Robbins, former tax prosecutor with the Justice Department, says he thinks the government will try to make a deal.

EDWARD ROBBINS: He's a huge catch. So the goal here, I would think, for the prosecutors would be to get him to cooperate and find out what else is going on at UBS that they missed.

ALLEN: Despite all the walls that have come down, Stephen Kohn says there's still a lot about UBS and Swiss banking that prosecutors haven't uncovered - at least publicly. Kohn represented former UBS employee Bradley Birkenfeld, who first blew the whistle on the bank's overseas account practices.

Kohn worries the government may make a deal without requiring Weil to reveal all he knows about accounts held by government officials and other high-profile clients, including some from the U.S.

KOHN: There's been very few big fish identified. And we know through Birkenfeld that there are specific people that should have been identified and should have been prosecuted and still have not.

ALLEN: Until the scheme fell apart, nearly 20,000 Americans held secret accounts at UBS. Tens of thousands more held secret accounts in other offshore banks. In 2009, after months of negotiations, UBS agreed to pay $780 million and to turn over to the IRS the names of its U.S. account holders. Nathan Hochman, the former chief tax prosecutor for the Justice Department, says it was a landmark settlement.

NATHAN HOCHMAN: The UBS case sort of broke the dam on foreign bank secrecy.

ALLEN: With the UBS revelations, the Justice Department extended its investigation to include other Swiss banks. A series of indictments followed. At the same time, under an amnesty program, nearly 40,000 U.S. taxpayers disclosed once-secret offshore accounts, netting more than $5 billion in taxes and penalties.

And Hochman says a new law going into effect this year goes further. It significantly tightens the penalties for foreign banks that don't disclose information on their U.S. accounts.

HOCHMAN: The information that the IRS is going to start getting from foreign banks will be extensive. And U.S. taxpayers won't be able to keep their unreported tax income abroad without fear that the U.S. government is going to find out about it.

ALLEN: Former UBS banker Raoul Weil will be back in court in two weeks. In the meantime, he's posted bail of $10.5 million. Greg Allen, NPR News, Miami. Transcript provided by NPR, Copyright NPR.