Raoul Weil from UBS Declared A Fugitive
Toomre Capital Markets LLC ("TCM") has previously written of the bubbling scandal regarding the Swiss banking giant UBS and its activities in helping American citizens participate in various tax-avoidance schemes. Such posts included Former UBS Private Banker To Plead Guilty, Wealthy Americans Under Scrutiny in UBS Case, UBS Global Wealth Chairman Raoul Weil Indicted, and UBS Poised To Name US Tax Dodgers.
On January 13th 2009, this story is back in the news. U.S. District Judge James Cohn declared that Raoul Weil, 49, the former chairman of the global wealth management division at UBS, was a fugitive from American justice. Apparently, Mr. Weil, the head of the division in which UBS private banker Bradley Birkenfeld once worked, did not surrender to United States judicial officials on charges of conspiring to help wealthy Americans hide assets from U.S. tax authorities. In the indictment unsealed in November 2008, Mr. Weil and other unidentified bankers conspired to help approximately 20,000 Americans hide as much as twenty billion of assets in Swiss bank accounts without declaring them to U.S. tax authorities and hence paying any income taxes generated from them.
This scandal stems from the December 2007 case in which Orange County, California billionaire Igor Olenicoff pled guilty to a charge of filing a false tax return and agreed to pay $52 million in back taxes, penalties and interest. An American based in Switzerland, Bradley Birkenfeld, worked for Raoul Weil (who then oversaw UBS cross-border private banking services, including those offered to wealthy American citizens) and was the private banker for Mr. Olenicoff. Mr. Birkenfeld himself then pled guilty to conspiring to tax avoidance charges and is rumored to be cooperating with American authorities.
Mr. Weil was based in Switzerland and was a member of UBS' executive board until he stepped down after the indictment was made public. Apparently, Switzerland does not consider tax-avoidance charges serious enough to merit the extradition of its citizens. Hence, there always has been some doubt about whether Mr. Weil might ever appear before United States judicial authorities. Mr. Weil's failure to appear, though, likely will increase the pressure on his now former employer UBS to release the complete list of American citizens who had cross-border private banking accounts in Switzerland before UBS unilaterally made the decision to close them last summer.
As Toomre Capital Markets LLC has stated before, UBS is caught in a difficult place. Swiss strict banking laws prevent the revelation of account information simply for suspicion of tax-avoidance schemes. On the other hand, American judicial officials can criminally charge UBS which potentially would forever prevent the banking giant from conducting business in America. The reader might remember that UBS has a large presence in America both in its institutional bank and investment bank units as well as what was known as the former PaineWebber.
This declaration of Mr. Weil as a fugitive is likely to be yet another step in turning up the heat on UBS. Apparently many wealthy Americans have been making proffers to American tax authorities about their hidden assets and how hence they thus filed false income tax returns. Surely before this saga is over, a number of criminal lawsuits will be launched to further deter others from participating in tax-avoidance schemes. The interesting question is whether UBS will be criminally charged and what that fall-out might be. Until this scandal is resolved, this might not be the best time to be a retail investor with an account with UBS.