Swiss Banker Raoul Weil Arrested in Italy

Another Swiss executive joins the growing list of Swiss bankers and executives who have been charged with allegedly aiding wealthy Americans in tax evasion. Raoul Weil, former head of UBS’s global wealth management business and a Swiss Citizen, was arrested in Bologna on October 19. In November 2008, when he was still working with UBS, United States charged Weil for conspiring to help 17,000 Americans hide assets in Switzerland worth $20 billion. A few months later, after he failed to surrender to authorities, he was declared a fugitive.

Reuss Private Group, a Swiss wealth management institution where Weil is now Executive, revealed on Monday that the banker was arrested on a private visit to Italy at the “I Portici” Hotel in central Bologna and taken to city’s Dozza prison. Raoul Weil disputes these allegations. Luca Sirotti, Raoul Weil’s lawyer in Italy, said he would “challenge the regularity of the arrest procedures”. When Weil was first charged in 2008, his U.S. attorney stated that the charges are unsubstantiated and called the allegations against him “completely unjustified”. Weil will remain in jail in Italy until the justice minister decides on pending extradition to the United States. Sources said that he does not have the option to apply for bail. U.S. Department of Justice spokeswoman Dena Iverson had no comments on his arrest.

In 2008, a former employee of the Swiss global financial services institution, UBS, made a statement that the Swiss bank was actively helping U.S. Citizen Accountholders to evade US tax liability. This sparked the United States law called FATCA (Foreign Account Tax Compliance Act), which not only requires individuals to report their financial accounts held outside of the United States, but also compels foreign financial institutions to report to the Internal Revenue Service (IRS) about their American clients. Thus, Switzerland’s well-known banking secrecy is now compromised, at least for United States accountholders.

As a result of this new law, many Swiss banks and bankers were charged with similar offenses. The United States Department of Justice is taking active steps to charge and prosecute suspect institutions and individuals. UBS had to pay $780 million to the IRS and turned over the names of more than 4,000 U.S. taxpayers holding secret accounts to settle U.S. charges, ending decades of Swiss bank secrecy. Following this scandal, earlier this year, Wegelin and Co., Switzerland’s oldest bank, ceased its operations after confessing to helping U.S. taxpayers hide their assets abroad. Fourteen other Swiss banks remain under criminal investigation for similar charges. In August of this year, Edgar Paltzer, a high profile Swiss lawyer, was charged for helping American taxpayers hide their assets abroad. Paltzer pleaded guilty and agreed to cooperate with the U.S. authorities. In September, Swiss Private Bank Rahn & Bodmer joined the rank of other Swiss banks under investigation by U.S. authorities. Credit Suisse, Julius Baer and state-backed regional bank Zuercher Kantonalbank are a few Swiss banks that are already the scanner of the US Department of Justice for helping their clients in avoiding US tax liability.

It remains a mystery why Weil, 54, chose to cross the border, given that he was publicly indicted by U.S. prosecutors. Switzerland does not extradite its citizens in cases of tax fraud. Italy, which acted on an Interpol warrant, has given the United States six weeks to seek Weil’s transfer for trial.

The Bologna Court of Appeal will set a hearing in Weil’s case. In the past, Italy’s justice system has cooperated with the United States in cases of extradition. The only exceptions have been crimes that would warrant a death penalty, a punishment that is banned in Italy. As per the United States’ legal system, a conviction on the grounds of tax evasion may lead to fines and imprisonment.

Following his indictment in 2008, Weil, the head of UBS’ global wealth management business and a member of its bank’s board, was discharged from his duties at the financial services institution. In 2010, he joined Reuss Private Group and became Chief Executive at the beginning of this year.

Vic Abajian, a former IRS tax attorney, continues to assist taxpayers with foreign account and asset issues before the IRS. He currently represents dozens of clients with foreign accounts both within the IRS offshore voluntary disclosure program and those that are involved in civil audits. He also represents several clients who have received grand jury subpoenas requesting information related to offshore bank accounts. Mr. Abajian has also consulted with foreign banks. To learn more about options and how to make a voluntary disclosure of an offshore bank account, please contact Los Angeles Tax Lawyer Vic at 818-396-5059. We have offices in Irvine and Glendale, California and represent taxpayers throughout the nation and those located in foreign countries.