Toomre Capital Markets LLC

Real-Time Capital Markets -- Analytics, Visualization, Event Processing, and Intelligence

UBS Global Wealth Chairman Raoul Weil Indicted

Toomre Capital Markets LLC ("TCM") wrote yesterday about the likely coming indictments in the scandal concerning American citizen tax-avoidance schemes facilitated by the Swiss banking giant UBS. A day later the first of what are likely to be the first of several indictments was revealed.

On Wednesday, November 12th 2008, according to court papers unsealed that day, Raoul Weil, 48, chairman of global wealth management at UBS in Zurich, was indicted Nov. 6 in Fort Lauderdale, Florida. Mr. Weil is the top global wealth management executive at UBS. The case is U.S. v. Weil, 08-60322, U.S. District Court for the Southern District of Florida (Fort Lauderdale). A copy of the indictment is here.

According to the indictment, between 2002 and 2007 Raoul Weil supervised the Swiss bank's overseas activities that serviced some 20,000 US customers. The indictment alleges that by using encrypted laptops and other counter-surveillance techniques, Mr. Weil and his co-conspirators helped US customers conceal around 20 billion dollars in assets from the IRS. Mr. Weil apparently instructed fellow Swiss bankers to increase their cross-border activities knowing that such activity meant bankers would be violating US law.

Toomre Capital Markets LLC believes that it is significant that this very senior executive was indicted with only one charge: conspiracy. The maximum punishment apparently is a fine of $250,000 and/or imprisonment for up to five years. TCM believes that this indictment will serve to squeeze Mr. Weil to reveal what he might know about the activities of yet further more senior executives at UBS.

UBS as institution itself is likely to be the ultimate target of this tax-avoidance investigation. No doubt American prosecutors are planning for a full and complete accounting of all of the estimated 20,000 American names as part of any settlement discussions. Also, the prosecutors are also likely to seek information on how UBS facilitated the further transfer of assets to other jurisdictions such as Liechtenstein.

One also has to wonder how much of the information detailed in the indictment of Mr. Raoul Weil came as a result of the cooperation of former UBS private banking executive, Bradley Birkenfeld. Reader comments and thoughts are welcome.

Age of Information

The pressure now being applied to secret, tax-haven bank accounts is a token of the computer age. One of the techniques the US has employed against UBS is a computer analysis of UBS employee travel to the US. Such an analysis would have been impractical just a few years ago. In the age of information, the rich, the powerful and the authoritative surprisingly find that they can keep no secrets. Therefore putative secrets become liabilities. What do you think? --Ben http://hack-igations.blogspot.com/2007/12/people-in-authority-sometimes-abuse.html