Toomre Capital Markets LLC ("TCM") has previously written of the bubbling scandal regarding the Swiss banking giant UBS and its activities in helping American citizens participate in various tax-avoidance schemes. Such posts included Former UBS Private Banker To Plead Guilty, Wealthy Americans Under Scrutiny in UBS Case, UBS Global Wealth Chairman Raoul Weil Indicted, and UBS Poised To Name US Tax Dodgers.

On January 13th 2009, this story is back in the news. U.S. District Judge James Cohn declared that Raoul Weil, 49, the former chairman of the global wealth management division at UBS, was a fugitive from American justice. Apparently, Mr. Weil, the head of the division in which UBS private banker Bradley Birkenfeld once worked, did not surrender to United States judicial officials on charges of conspiring to help wealthy Americans hide assets from U.S. tax authorities. In the indictment unsealed in November 2008, Mr. Weil and other unidentified bankers conspired to help approximately 20,000 Americans hide as much as twenty billion of assets in Swiss bank accounts without declaring them to U.S. tax authorities and hence paying any income taxes generated from them.

This scandal stems from the December 2007 case in which Orange County, California billionaire Igor Olenicoff pled guilty to a charge of filing a false tax return and agreed to pay $52 million in back taxes, penalties and interest. An American based in Switzerland, Bradley Birkenfeld, worked for Raoul Weil (who then oversaw UBS cross-border private banking services, including those offered to wealthy American citizens) and was the private banker for Mr. Olenicoff. Mr. Birkenfeld himself then pled guilty to conspiring to tax avoidance charges and is rumored to be cooperating with American authorities.

Mr. Weil was based in Switzerland and was a member of UBS' executive board until he stepped down after the indictment was made public. Apparently, Switzerland does not consider tax-avoidance charges serious enough to merit the extradition of its citizens. Hence, there always has been some doubt about whether Mr. Weil might ever appear before United States judicial authorities. Mr. Weil's failure to appear, though, likely will increase the pressure on his now former employer UBS to release the complete list of American citizens who had cross-border private banking accounts in Switzerland before UBS unilaterally made the decision to close them last summer.

On Friday November 28th from London, The Financial Times is reporting UBS Poised To Name US Tax Dodgers in an article written by Haig Simonian. At the shareholder meeting held the day before to approve the latest round of capital raising for UBS, "The 2,395 investors gathered in a dingy suburban hall and heard for the first time that the world's biggest wealth manager looked poised to bow to US pressure and release the names of an unspecified number of US customers who may have committed tax fraud in squirrelling away their assets."

One has to wonder whether the "limited number" of such cases that were announced to have been identified (among the roughly 19,000 US citizens who held offshore accounts with the bank's Geneva, Zurich and Lugano offices) were the result of shall one say "illegal" activities, such as proceeds from drug transactions, bribery or other criminal enterprise behavior. Certainly the public revelation that mod and drug traffickers were hiding their money with UBS will create a great political uproar in the United States.

Perhaps the Swiss government hopes by releasing only the names of such known individuals who clearly committed crimes under both United States and Swiss law, there will be less pressure to expose the names of the other American account holders. From the story, "Peter Kurer, UBS chairman, gave no details, and officials stressed that the decision to transmit names to foreign authorities remained a government matter." But in noting the discovery of tax fraud "under both US and Swiss law", Mr. Kurer added: "Contrary to the idea conjured up in public discussions, bank secrecy is not absolutely valid. It is not there to protect cases of tax fraud." However, these comments suggest that there soon may be a settlement with the US authorities in their long-running investigations into alleged tax evasion in Switzerland.

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.