A former top banker who headed global wealth management at UBS AG (UBSN.VX) (UBS.N) was found not guilty on Monday on U.S. charges of conspiring with wealthy Americans to hide $20 billion in secret offshore accounts.
Raoul Weil, the highest-ranking Swiss banker to stand trial in the United States, was accused in South Florida federal court of conspiracy to defraud the Internal Revenue Service.
The verdict was a major setback to the U.S. Justice Department which spent six years seeking to prosecute Weil, including extraditing him from Italy last year.
The jury took only 75 minutes to reach its verdict after a three-week trial that ended abruptly on Monday when Weil's defense team decided not to call any witnesses, saying the government had failed to make its case.
The defense team jumped up in joy as the verdict was read. Weil, 54, held his sobbing wife in a lengthy embrace.
"The jury sent a strong message to the government. This case should never have been brought," said Weil's lawyer, Matthew Menchel.
Weil declined to comment upon leaving the courthouse.
Legal experts said that while the government presented plenty of evidence that bankers at UBS defrauded the IRS, including some who testified at the trial, it failed to show that Weil was intimately involved in those schemes.
"For a jury to acquit after only an hour means that there were some huge holes in the government's case," said David Weinstein, a former federal prosecutor now in private practice in Miami.
In a defense motion for acquittal filed last week, the defense argued that the government offered no evidence "to show that Mr. Weil ever knowingly agreed with any U.S. client to defraud IRS."
Instead, the defense said the while government presented evidence of wrongdoing by UBS bankers, it focused most of its case "on witnesses who offered testimony of misconduct that was never connected to Mr. Weil."
As a result of the verdict, future efforts by the U.S. government to bring tax fraud cases "will require more than just the word of former alleged co-conspirators," said Weinstein. "Corporate defendants will also be less likely to cooperate with the government and may instead choose to begin fighting the allegations made against their institutions," he added.
Weil was arrested in October 2013 while on vacation with his wife at an upscale hotel in the northern Italian city of Bologna. He pleaded not guilty last year after being extradited to the United States.
The trial pitted Weil against several former UBS colleagues who chose to cooperate with U.S. authorities in exchange for favorable sentencing. They testified about using numerous James Bond-like tactics to avoid detection while in the United States, and to help U.S. clients keep their accounts hidden from tax authorities.
During his closing argument, Menchel said the prosecution's case rested on the testimony of ex-employees of UBS who were more guilty of crimes than Weil.
"Who are the real criminals here?" Menchel said. "Who should be getting punished instead of getting sweetheart deals?"
Assistant U.S. Attorney Jason Poole told the jury that Weil knew what he was doing was wrong and orchestrated efforts by UBS to circumvent U.S. tax law.
"Mr. Weil was aware and participated in helping UBS U.S. clients cheat on their taxes," Poole said. "That was the business model."
The Weil verdict was the second trial loss for the Justice Department in an offshore tax case in a matter of days.
On Friday, a federal jury in Los Angeles acquitted Shokrollah Baravarian, a former senior vice president at the local branch of Israel's Mizrahi Tefahot Bank, of conspiring to help U.S. clients defraud the IRS through the opening of secret foreign bank accounts.
Weil's attorneys blame rogue bankers under him for the illegal activity and said offshore private banking was only a tiny fraction of his job.
If convicted, Weil faced up to five years in prison for conspiracy to commit tax fraud.
The United States in recent years pursued Swiss banks for their role in aiding tax evasion and has increasingly pressured individual bankers.
In 2009 UBS admitted to helping U.S. taxpayers hide money and paid a $780 million fine. Credit Suisse pleaded guilty in May to a U.S. criminal charge and will pay more than $2.5 billion in penalties.
UBS is also under investigation in France and Germany over whether it helped wealthy individuals there dodge taxes.
