Raoul Weil, the former head of UBS AG's global wealth management business accused of conspiring to help Americans evade taxes, was ordered to post bail of $10.5 million before trial, according to a court filing.
Weil, 54, appeared today in federal court in Fort Lauderdale, Florida, for the first time since he was indicted in October 2008 and declared a fugitive. U.S. Magistrate Judge Patrick Hunt said Weil must post a $9 million personal surety bond with a cash deposit of $4 million, as well as a $1 million corporate surety bond and a $500,000 personal surety bond, according to minutes of the hearing.
Weil's lawyer has said he is innocent. He is the highest-ranking banker among about 100 people charged since 2008 by the U.S. in a crackdown on offshore tax evasion. About three dozen foreign bankers, lawyers, and advisers were charged. Tax lawyers not involved in the case said they expect Weil to plead guilty, cooperate with prosecutors, and seek leniency at sentencing.
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"There's a good chance he'll be ready to cooperate, and he'll be throwing his people under the bus," said attorney Edward Robbins of Hochman, Salkin, Rettig, Toscher & Perez in Beverly Hills, California. "He knows where all the dead bodies are. To the extent that the government missed any, he can tell them where they are."
In the hourlong hearing today, Hunt said Weil's $9 million bond must be co-signed by his wife, and that the $500,000 personal surety bond must be co-signed by friends in New Jersey. He can travel to the Southern District of New York, Southern District of Florida, and New Jersey. He must report to the court's Pre-Trial Services office in New Jersey, according to the filing.
Weil's attorney, Aaron R. Marcu of Freshfields Bruckhaus Deringer LLP in New York, and Dena Iverson, a Justice Department spokeswoman, didn't immediately respond to e-mails seeking comment on the bail conditions.
Weil, who lived and worked in Switzerland, was arrested Oct. 19 after checking into a hotel in Bologna, Italy. He was extradited to the U.S., and arrived Dec. 12 at the Broward County Jail, according to the county sheriff's website. His arraignment is scheduled for Jan. 7.
He is accused in the indictment of running a cross-border business that used secret Swiss accounts to conceal $20 billion in assets from the Internal Revenue Service.
Marcu wouldn't comment on whether Weil may cooperate.
"He has consistently denied doing or knowing of anything unlawful, and we look forward to the opportunity to present his case in court," Marcu said yesterday in a statement.
'Toxic Waste'
Weil, who referred to the U.S. cross-border business as "toxic waste," ordered that his bankers attract more clients as Zurich-based UBS helped them hide accounts from the IRS, according to the indictment.
Four months after Weil's indictment, U.S. prosecutors charged UBS. The bank avoided prosecution by paying $780 million, admitting it fostered tax evasion, and handing over information on more than 250 U.S. accounts. It later disclosed data on another 4,450 accounts. Dozens of UBS account holders were among about 70 taxpayers charged by the U.S.
If Weil cooperates with prosecutors, they can urge a judge to give him a shorter sentence. He faces as many as five years in prison.
"It is the policy of the Department of Justice to try to have people enter into pleas and get their sentences reduced by assisting the U.S. government in going after others," said tax attorney Martin Press of Fort Lauderdale. "He could be a treasure trove of additional information."
Since the UBS deferred-prosecution agreement, more than 38,000 U.S. taxpayers have avoided charges by voluntarily disclosing their secret accounts to the IRS while identifying the offshore banks that enabled them. Those disclosures, along with data handed over by UBS, could make Weil less effective as a witness, according to tax attorney Nathan Hochman.
"The window for his cooperation has shrunk and shrunk and shrunk as the U.S. government has gathered huge amounts of information from UBS and from taxpayers through the Offshore Voluntary Disclosure Program," said Hochman of Bingham McCutchen LLP in Santa Monica, California. "What may have been useful five years ago is certainly a lot less useful today."
Still, Weil's "only choice is to win at trial or turn over information that the U.S. government doesn't have," he said.
Precedent for Cooperation
Some Swiss enablers have cooperated with prosecutors.
Former UBS banker Renzo Gadola pleaded guilty in 2010, admitting he serviced hundreds of secret Swiss accounts from 1995 to 2008. He cooperated with prosecutors and got five years of probation. The judge cited his "extraordinary cooperation."
Former UBS banker Bradley Birkenfeld, who disclosed the UBS tax scheme to U.S. authorities in 2007, later pleaded guilty. In 2009, he got 40 months in prison, 10 more than prosecutors sought. In 2012, the IRS awarded him $104 million for blowing the whistle, the largest individual payout in U.S. history.
Swiss lawyer Edgar Paltzer pleaded guilty in New York on Aug. 16, admitting he conspired for more than a decade to commit tax fraud by helping U.S. clients hide millions of dollars. Paltzer is cooperating with U.S. authorities, said his lawyer, Thomas Ostrander.
On Oct. 14, former UBS banker Martin Lack surrendered to U.S. authorities in Miami to face a 2011 indictment that he conspired to help Americans evade taxes. Lack, a Swiss resident and investment adviser, was arraigned and released on a $750,000 bond. The U.S. agreed to let him return to Switzerland.
The case is U.S. v. Weil, 08-cr-60322, U.S. District Court, Southern District of Florida (Fort Lauderdale).
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