WASHINGTON--A handful of potential witnesses in the upcoming
trial of a former top UBS AG executive are refusing to travel to
the U.S. to testify on behalf of the European banker out of fear
they'll be arrested by U.S. law enforcement, according to court
papers.
That sets the stage for rare testimony by videoconference in the
tax evasion conspiracy trial of former UBS wealth management chief
executive Raoul Weil, which begins Tuesday. Mr. Weil is the
highest-ranking executive so far to face criminal charges as part
of an ongoing U.S. crackdown on Swiss banks that help Americans
hide assets from the Internal Revenue Service.
Prosecutors will try to convince a jury in Fort Lauderdale, Fla.
that Mr. Weil aided the UBS wealth management group in a broad
conspiracy to solicit deposits from wealthy Americans trying to
avoid taxes and then employed cloak-and-dagger tactics to keep them
secret.
Mr. Weil's lawyers have signaled in court papers and previous
appearances they plan to argue their client--the No. 3 executive at
UBS--paid little attention to the private banking group's U.S.
cross-border banking business, which accounted for a fraction of
his overall responsibilities.
To aid their client's case, Mr. Weil's attorneys plan to elicit
testimony from several witnesses in Europe and South Africa. But,
in a twist, those individuals won't be appearing in the Florida
courtroom because they fear being ensnared in the government's case
and possibly arrested.
Mr. Weil's attorneys initially asked the judge to let witnesses
testify from Switzerland but the government opposed that move, in
part because Swiss law presented complications--including a ban on
U.S. law enforcement conducting official acts in that country. The
two sides agreed to allow some testimony from London and the
witnesses will appear on a screen in the courtroom. The witnesses'
names and affiliations haven't been released.
The case against Mr. Weil represents a rare instance of a
high-ranking executive at a big financial institution facing a
criminal charge in connection with widespread conduct that
allegedly occurred beneath him. Mr. Weil, who was indicted in 2008,
is the first target of the tax-evasion probe to take his case to a
jury. So far, a handful of other bankers pleaded guilty to charges,
while others received nonprosecution agreements in return for their
cooperation. One former UBS Americas banker, Martin Liechti, spent
four months at a Four Seasons Hotel talking to prosecutors after
being detained on a material witness warrant in Miami in 2008. He's
expected to testify against Mr. Weil.
In court papers, his lawyers argue the U.S. only indicted Mr.
Weil to scare both UBS and the Swiss government, which had
prevented the bank from turning over customer names. But jurors
might not hear that argument. Prosecutors have argued in court
papers that its motives for bringing a case against Mr. Weil are
irrelevant to his guilt or innocence.
UBS has also cooperated with the government. It agreed in 2009
to pay $780 million, cooperate with investigators and turn over
some client names to settle U.S. allegations that it aided tax
evasion. In May, Credit Suisse Group AG became the first financial
institution in nearly a decade to plead guilty to a crime when it
agreed to pay $2.6 billion and admit to conspiring to aid tax
evasion.
Mr. Weil, a Swiss national, remained free for five years after
his indictment. He was arrested late last year after he checked
into a hotel in Bologna, Italy and police--following a new
procedure--checked the guest register against outstanding warrants.
He was extradited in January.
In cases like the one against Mr. Weil, "given the defendant's
position and his level of education and intelligence, it can often
be hard for the defense to convince a jury that the person didn't
know what was going on or wasn't involved," said Peter Hardy, a
principal at the law firm Post & Schell who spent five years in
the Justice Department's tax division.
Write to Andrew Grossman at andrew.grossman@wsj.com
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