Legal News

Hurry Up and Wait: UBS, DOJ Put Off Tax Fraud Trial

By Amir Efrati

Last week, as barbs flew across the Atlantic Ocean between the U.S. Justice Department and the Swiss Government over a tax-evasion case DOJ was pursuing, we'll admit we got a little excited.

The stage was set for a bench trial starting this morning in Miami's federal district court between DOJ, repping the Internal Revenue Service, and Swiss bank UBS AG, repped by Frank Barron of Cravath and Wachtell's John Savarese.

The prize: the names of 52,000 U.S. clients whom the U.S. wants to investigate for tax evasion. (Previous LB coverage here and here.)

Then, the inevitable: settlement talks, and a mutual request for a stay of the planned trial until early August, if a settlement isn’t reached first. Presiding Judge Alan Gold agreed to the joint request this morning reset the trial opening for Aug. 3. Here's the story from WSJ and NYT.

It all started a couple of years ago, when a former UBS executive began spilling his beans to the U.S. government about how UBS helped clients evade taxes. UBS in February of this year agreed to settle a criminal case by paying $780 million and turning over names of about 250 clients, some of whom have since been prosecuted.

But the U.S. wanted more. It continued a parallel civil inquiry that led to what was going to be a riveting court showdown today. Meanwhile, the Swiss government last week insisted that if DOJ won, it wouldn't allow UBS to violate Swiss secrecy law by handing over the names.

WSJ now reports that a possible settlement might involve UBS handing over some, but not all of the names. The compromise could see the names of only those clients who violated Swiss fraud laws get handed over to the Americans.

Full post as published by Law Blog - WSJ.com on July 13, 2009 (boomark / email).