Ex-UBS Banker Cleared, Espirito Santo, Bitcoin-N.Y.: Compliance

Nov. 4 (Bloomberg) — Raoul Weil, who once ran UBS AG’s global wealth-management business, was cleared at trial of tax conspiracy despite the bank’s historic admission in 2009 that it helped thousands of U.S. clients abuse Swiss bank secrecy to cheat the Internal Revenue Service.

The federal jury in Fort Lauderdale, Florida, reached its verdict after deliberating about 90 minutes yesterday. Weil, 54, was indicted in 2008 on a charge of conspiring to help as many as 17,000 U.S. taxpayers hide $20 billion from the IRS. Weil was arrested last year in Bologna, Italy, and waived extradition. Weil, who didn’t testify, had faced five years in prison.

Weil is the highest-ranking official of three dozen foreign bankers, lawyers and advisers charged in a seven-year U.S. probe of offshore tax evasion. UBS, the largest Swiss bank, avoided prosecution in February 2009 by paying a $780 million fine and admitting it helped clients evade taxes from 2000 to 2007.

“The verdict shows you the difficulty of going after senior management who can at times blame the bank’s customers and lower-level employees for the bank’s mistakes,” Nathan Hochman, a former assistant attorney general who oversaw the Justice Department’s tax division, said in a phone interview. “It’s difficult to prove a historical case beyond a reasonable doubt when the government heavily relies on witnesses who have received very favorable treatment.”

The Weil verdict was the second tax trial loss for the U.S. in less than a week after a Los Angeles jury acquitted a retired senior vice president at Israeli-based Mizrahi Tefahot Bank Ltd. on charges he helped U.S. customers conceal their assets from the IRS.

Prosecutors argued that Weil knew that UBS used sham corporate structures to help U.S. clients hide their identities from the IRS, and its bankers used cloak-and-dagger methods to deliver them cash and account statements.

Menchel argued in his summation that prosecutors failed to prove that Weil was part of a single conspiracy involving taxpayers. He also said that Weil was unaware of the activities of a group of bankers below him.

Matthew Menchel, Weil’s lawyer, said, “This case never should have been brought.”

The case is U.S. v. Weil, 08-cr-60322, U.S. District Court, Southern District of Florida (Fort Lauderdale).

Courts

Espirito Santo Parent Declared Bankrupt by Luxembourg Court

Espirito Santo International SA, a parent company of Portuguese lender Banco Espirito Santo SA, was declared bankrupt by a Luxembourg court, according to an e-mailed statement by the court about the ruling, which was rendered Oct. 27.

The court also appointed two trustees in connection with the bankruptcy.

Espirito Santo International earlier told the Luxembourg court that its payments had stopped and its credit weakened.

Interviews/Commentary

Bitcoin is Topic of Discussion at Money 20/20 Conference

Benjamin Lawsky, superintendent of New York’s Department of Financial Services, talked about the regulation and outlook for Bitcoin virtual currency.

Lawsky said he’d like to see Bitcoin companies thrive.

Blockchain CEO Nic Cary, Circle CEO Jeremy Allaire and Coinbase’s Adam White discussed the Bitcoin wallet business and prospects for the digital currency.

“Regulation is one of the biggest threats right now” to Bitcoin development, said White.

Lawsky, Cary, Allaire and White spoke with Erik Schatzker on Bloomberg Television’s “Market Makers” on the sidelines of the Money 20/20 conference in Las Vegas.

For the Lawsky interview video, click here, and for more about New York Bitcoin developments, click here.

For the Cary, Allaire and White discussion, click here.

HSBC Faces ‘Challenging Regulatory Environment’, Costa Says

HSBC Holdings Plc faces a “very challenging regulatory environment” stemming partly from the global nature of its business, according to David Costa, dean of Robert Kennedy College in Zurich and author of ‘The Art of Banking.’

HSBC Global Banking and Markets, which houses the London- based bank’s securities and trading arm, set aside $969 million in the third quarter for costs associated with probes into currency markets and U.S. mortgage securities, it said in a statement yesterday.

He spoke with Francine Lacqua and Richard Partington on Bloomberg Television’s “The Pulse.”

For the video, click here, and for more, click here.

–With assistance from Ambereen Choudhury and Julia Verlaine in London, Stephanie Bodoni in Luxembourg, Susannah Nesmith in federal court in Ft. Lauderdale, Florida and David Voreacos in Newark.

To contact the reporter on this story: Carla Main in New York at [e-mail] To contact the editors responsible for this story: Michael Hytha at [e-mail] Charles Carter