U.S. Jury Clears Ex-UBS Manager In Tax Evasion Case

Jury foreman Howard Farber, a 69-year-old retired insurance agency owner, said prosecutors failed to link Weil to the criminal conduct of his subordinates. Five ex-UBS bankers or managers testified against Weil. They included three who secured deals to avoid prosecution, one under indictment and one who pleaded guilty. That banker, Renzo Gadola, was sentenced in 2011 to five years’ probation and moved back to Switzerland.

“There was really no proof that went directly to Weil,” Farber said by telephone in his first public remarks since the trial. “We all felt that the government overstepped its bounds. They really should not have gone after him.”

Menchel assailed the credibility of the former bankers who cooperated with the government, particularly Hansruedi Schumacher, an ex-UBS and Neue Zuercher Bank AG manager indicted in 2009, and Martin Liechti, ex-head of cross-border banking at UBS. The questioning resonated with jurors.

‘Most Culpable’

Those most culpable were “the ones who turned state’s evidence, Schumacher and Liechti,” Farber said. “On cross- examination, Liechti was so evasive that he would never really answer questions that were asked of him. He talked of meetings he had with Weil, but there was no documentation whatsoever.”

Menchel said last month, “The Justice Department may have gotten comfortable that any banker they charged would just roll over. They shouldn’t take it for granted that any Swiss banker will give in and seek a plea bargain.”

At future trials, prosecutors may have a hard time proving a connection between client advisers who knowingly broke the law and their senior managers, unless there’s a “smoking gun” that shows the supervisors had knowledge, according to Milan Patel, a lawyer with Anaford AG in Zurich.

Most of those under indictment, including former bankers at Credit Suisse and Julius Baer, were client advisers or heads of teams of employees, rather than senior executives at Weil’s level.

Making Deals

“Client advisers who committed egregious offenses are probably trying to cooperate and strike a deal with the Justice Department,” Patel said. “Bankers fear coming to the U.S. because the DOJ can detain them on arrival pending trial. Therefore, walking around freely in Switzerland may be a more appealing option, even if the charges remain unresolved.”

Stefan Buck, who was Bank Frey & Co.’s head of private banking, was indicted last year in New York. His lawyer filed a motion seeking bail without Buck’s first having to appear in a New York courtroom. Buck ultimately “wishes to leave the ‘safe haven’ of Switzerland to appear in a U.S. court to clear his name,” the filing said. Prosecutors oppose his bail motion, which is pending.

Josef Dorig, who founded a Swiss trust company after working 36 years at Credit Suisse, pleaded guilty in April, admitting he created phony structures to help clients cheat the IRS. Dorig, 72, cooperated with U.S. prosecutors and is slated for sentencing Jan. 16 in federal court in Alexandria, Virginia.

Probation Sought

In a pre-sentencing memorandum filed with the court, his lawyers said he deserves probation because he accepted responsibility and was not extraditable from Switzerland.

“Mr. Dorig had absolutely no incentive to voluntarily enter the United States to answer the charges against him or cooperate with the government,” his lawyers wrote. “He easily could have stayed in Switzerland and lived the rest of his life peacefully and happily in his homeland. But he did not.”

The U.S. probe has benefited from voluntary disclosures by at least 45,000 taxpayers and more than 100 Swiss banks seeking to reduce penalties through non-prosecution agreements. Information passed to U.S. authorities contains thousands of employee names, according to Douglas Hornung, a Geneva-based lawyer who represents Swiss financial workers.

“Weil’s acquittal was far from good news for bank employees lower down the food chain,” Hornung said. “After losing face in court in November, U.S. prosecutors will redouble their efforts to pursue smaller fish.”

The Weil acquittal doesn’t lessen the Justice Department’s commitment to holding offshore tax evaders and those who help them accountable, a spokeswoman, Nicole Navas, said.

UBS was charged in 2009 with conspiracy and avoided prosecution by paying $780 million and admitting it helped Americans evade taxes. In a landmark blow to Swiss bank secrecy, UBS handed over information on about 4,700 accounts.