Nov. 12, 2008 -- A federal grand jury has indicted the CEO of Global Wealth Management at UBS AG for allegedly moving $20 billion out of the United States to evade income taxes for U.S. clients.
Swiss citizen Raoul Weil, who also sits on the executive board of the financial services giant, faces one count of conspiracy, according to the indictment returned by a federal grand jury in Florida. UBS said in a statement Wednesday that Weil "has determined that, in the interest of the firm and its clients, and in order to defend himself, he will relinquish his duties at this time pending the resolution of this matter."
The conspiracy charge alleges that Weil, along with other top executives, bankers at UBS and clients of the Swiss banking giant, conspired in a cross-border business and knowingly failed to pay taxes on income earned in the Swiss bank accounts.
The indictment claims that 17,000 of 20,000 clients of UBS who participated in the Wealth Management program concealed their identities from the IRS.
Weil's attorney, Aaron R. Marcu of Covington & Burling, sent a statement to ABC News, calling the indictment "totally unjustified and without any factual basis." Weil denies any involvement or awareness of the alleged activity, which represented "only a tiny percentage" of the business he oversaw, according to Marcu.
"Mr. Weil is a highly respected banking executive in Switzerland with an unblemished record for integrity. We fully intend to fight this indictment and look forward to vindicating Mr. Weil's good name," the statement concluded.
UBS is not named in the court papers as the Justice Department has not charged the financial institution.
"As announced on July 17, 2008, UBS will cease providing cross-border private banking services to U.S.-domiciled clients through its non-U.S. regulated units," the company statement added. "UBS is fully committed to continuing its efforts to cooperate with the investigation of its U.S. cross-border business and to working in a responsible manner with all relevant authorities towards a satisfactory resolution of this matter."
Weil's indictment comes after developments in the case last June when the Justice Department and the IRS subpoenaed documents and information from UBS. The case also comes several months after a former UBS banker, Bradley Birkenfeld, pleaded guilty to conspiracy to assist his U.S. clients who avoided paying federal income and other taxes to the IRS.
Birkenfeld organized numerous schemes to assist his clients, which included buying jewels, artwork and luxury items with funds from the Swiss accounts while overseas and using Swiss bank credit cards, claiming the records could not be traced by US authorities. In July, UBS decided to stop offering off shore accounts to U.S. clients as a result of the probe.
The indictment against Weil notes that other UBS executives are unindicted co-conspirators in the case. "These executives occupied positions at the highest levels of management within Swiss Bank [UBS] including positions on the committees that oversaw legal, compliance, tax, risk, and regulatory issues related to the United States."
The indictment also notes that the UBS US clients are also, "unindicted co-conspirators not named as defendants herein. These United States clients knowingly concealed from the United States government, including the IRS, approximately $20 Billion in assets held at Swiss Bank [UBS] and willfully evaded United States income taxes owed on the income earned on these secret Swiss Bank accounts."
According to the indictment, Weil and other executives at UBS called the U.S. arm of the company's wealth management operations "toxic waste" and "they knew that it was not being conducted in a manner that complied with U.S. law."
If convicted, Weil could face a maximum penalty of five years in prison and a $250,000 fine.