Raoul Weil is on trial for helping American customers of UBS evade U.S. income taxes. Unlike so many Swiss bankers before him, Weil didn’t take a plea deal. He says that although once the head of UBS’ private wealth division and a a member of the bank’s executive committee, he didn’t assist customers evade taxes and avoid filing FBAR forms to report their Swiss accounts.
During the last several weeks, we wrote several stories about the Weil prosecution. You can read them here and here. The case is interesting in part because so few ever go to trial. The testimony allows readers to get a rare glimpse of how Swiss bankers attempted to lure Americans into opening Swiss accounts.
Before I go any further, it is important to know that owning a foreign bank account is not illegal. In fact, there are some very good reasons to have one. Opening the account to hide money from the IRS or evade income taxes, however, is a felony.
U.S. law requires taxpayers maintaining foreign financial accounts (bank accounts, certain annuities, precious metal accounts) report those accounts annually if the aggregate balance of their offshore holdings exceeds $10,000. Offshore accounts are reported on Schedule B of the individual income tax form and on an FBAR form – Report of Foreign Bank and Financial Accounts.
Yesterday, a former colleague of Weil’s testified for the prosecution. Hansruedi Schumacher is one of the government’s key witnesses. He is also indicted for helping Americans evade taxes but has agreed to cooperate with proctors in the hopes of a lighter sentence.
Summary of Witness Testimony
Schumacher testified that bankers at UBS developed a “code” to differentiate which customers had unreported accounts (called “black” or “simple”) from those who had filed FBARs (called “white” or “complex” accounts.)
Because many U.S. customers didn’t report their accounts, Swiss bankers had to be careful communicating with those clients. For an extra fee, the bank would not send statements to those customers that requested to remain off the radar.
Instead of getting monthly statements like most bank customers, the UBS Swiss bakers would fly to the U.S. and meet personally with their clients. To avoid getting caught, they would mail ahead statements to the hotel where they were staying. Sometimes if they had many clients to meet in any one city, they would move from hotel to hotel to avoid suspicion. They also told immigration officials that their visit was social and not for work purposes. Even business cards carried no addresses or reference to the Swiss bank.
How this ties back to Weil remains the interesting question. Assuming all of Schumacher’s testimony is true, how does that tie to knowledge and participation by Weil? There is much riding on the answer to that question. As new details emerge, we will update this post or publish a new one.
If you are accused of conspiracy to defraud the IRS or face other federal criminal tax offenses, let us help. We also help those under audit, in collections or finding themselves with unfilled FBAR forms. For more information about criminal tax defense, contact the author of this post, Brian Mahany at or by telephone at (414) 704-6731 (direct). Have questions about FATCA, FBAR, or unreported Swiss accounts? Contact attorney Bethany Canfield at or by telephone at (414) 223-0464. All inquiries kept in confidence and protected by the attorney – client privilege.