On Monday of last week, Raoul Weil’s defense counsel had the opportunity to cross-examine Martin Liechti, a critical prosecution witness in the criminal trial of Weil, former UBS Bank executive. The government says Weil helped Americans avoid FBAR filings and evade U.S. income taxes through unreported Swiss accounts.
Weil is charged with conspiracy to defraud the IRS. If convicted, he faces 5 years in prison. His attorney claims that he was unaware that his employees helped taxpayers hide accounts. UBS was prosecuted in 2009 and paid a record $780 million fine to settle charges against the bank.
US taxpayers are required to report foreign bank accounts to the IRS if the aggregate value of those accounts exceeds $10,000. Reporting is done on both Schedule B of the income tax form and on a Report of Foreign Bank and Financial Accounts (FBAR). Prosecutors say that UBS employees helped Americans hide their accounts and avoid FBAR filings through the use of nominee entities, secret accounts and by not mailing statements to the U.S.
The case against Weil requires prosecutors to show that he participated in the hiding of the accounts.
Liechti, a former UBS executive, testified last week that Weil was determined not to lose American clients and asked account executives to meet with and reassure their clients. His testimony is consistent with that of Georg Marti, another former UBS executive, who testified that Weil was present at a meeting in Miami in which a client was told not to worry about the bank disclosing information to the IRS.
Although Marti’s testimony was damaging, he couldn’t recall the name of the client or any key details of the meeting.
Liechti also testified last week that Weil was more interested in the bank’s profits and ignored warnings that account executives were illegally helping clients hide accounts.
During cross-examination, Liechti admitted to being present at client meetings but could not recall any bankers telling clients they could use nominee structures to hide their accounts from the IRS.
The government has made deals with many of the witnesses who are testifying against Weil. Those revelations have provided much fodder to Weil’s defense counsel who questions whether the government has picked the wrong person to prosecute.
It’s not just bankers who face prosecution in FBAR cases. Unlike the Weil prosecution, most banks and bankers charged by the Justice Department quickly cut deals. Those deals invariably require them to turn over the names of all their US clients and testify against them if required.
Although the threat of prosecution for most Americans remains low, the huge civil penalties imposed by the IRS in FBAR cases is a real risk. Those penalties can be up to the greater of $100,000 or 50% of the highest account balance for each unreported account.
Have an unreported account? Give us a call. Our FBAR lawyers have helped many U.S. taxpayers, dual nationals and green card holders with a wide variety of foreign reporting issues. Need more information? Contact attorney Beth Canfield at or by phone at (414) 223-0464. All inquiries kept in strict confidence. IRS tax services provided worldwide.