Ex-UBS bank executive to enter plea in tax fraud case

MIAMI Tue Jan 7, 2014 1:00am EST

MIAMI Jan 7 (Reuters) - A former high-ranking UBS banker charged with helping Americans dodge taxes through secret Swiss bank accounts is expected to plead not guilty on Tuesday to tax fraud conspiracy in federal court in Florida.

Raoul Weil, a 54-year-old Swiss citizen and former head of global wealth management at UBS, was charged five years ago with helping about 17,000 Americans conceal $20 billion in numbered accounts at the bank.

He initially disputed the charges and was declared a fugitive a few months later but was arrested on a warrant from Interpol in mid-October while on vacation in Bologna, Italy.

Weil's appearance in federal court in Fort Lauderdale on Tuesday will be his second since he was extradited from Italy last month. He was granted a $10.5 million bond pending his arraignment, when he appeared in shackles and a gray prison jumpsuit on Dec. 16.

Lawyers for UBS whistleblower Bradley Birkenfeld, the bank employee who revealed the tax fraud conspiracy to U.S. authorities in 2007, fear that Weil may be negotiating a "sweetheart" deal" that would spare him from a trial and ultimately shield secret account holders and other bankers from prosecution.

The lawyers, who note that Birkenfeld worked directly under Weil when he headed UBS's former cross-border banking business, have been highly critical of what they often describe as the U.S. government's failure to prosecute UBS and some of its former top executives.

"Weil can clearly bargain inside information he has that could be embarrassing to American officials or institutions for leniency," said Stephen Kohn, a Birkenfeld lawyer who also heads the Washington, D.C.-based National Whistleblowers Center.

"Weil knows where all the skeletons are buried," Kohn added. "The Justice Department must work closely with the IRS and Department of State to make sure that every person guilty of tax evasion in the UBS America's program are identified and prosecuted," he said.

Aaron Marcu, lead attorney for Weil, says his client has consistently denied wrongdoing in the case, however.

"Mr. Weil will appear in court in Ft. Lauderdale on Tuesday and intends to plead not guilty," Marcu of Freshfields Bruckhaus Deringer LLP said in an email to Reuters on Monday.

"We look forward to presenting our case in court, where we expect Mr. Weil to be exonerated," he added.

If convicted, Weil faces up to five years in prison for conspiracy to commit tax fraud.

In a case that shook Swiss banking to the core, UBS paid a record $780 million fine in 2009 and agreed to hand over the names of U.S. clients with secret accounts, breaking Switzerland's vaunted tradition of banking secrecy to avoid feared criminal charges against the bank or other executives.

Birkenfeld, who knew the inner workings of UBS and spilled many secrets about his former employer's dealings with U.S. clients, won a record-setting $104 million reward from the U.S. Internal Revenue Service for exposing the UBS tax fraud conspiracy. But he was jailed for 30 months after the government said he withheld information about a billionaire U.S. client.

The reward for Birkenfeld came as U.S. and European authorities were investigating a wide range of tax evasion cases involving people with accounts in Switzerland, a longstanding bastion of banking secrecy that is being forced to change.

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