The fate of 52,000 American clients of Swiss banking giant UBS, believed to be holding nearly $15 billion in secret accounts, is contained in details of a settlement agreement reached Wednesday between Swiss and U.S. negotiators.
And experts say one thing is inevitable -- indictments of UBS clients that have been hiding money from the U.S. government in Swiss accounts and potentially the professionals that helped them, including lawyers and accountants.
The U.S. has sought the names of suspected American tax evaders as UBS and the Swiss government have resisted, arguing that to do so would violate Swiss banking confidentiality laws.
Details have not been released, but Swiss and U.S. negotiators told a Miami federal judge they have initialed agreements.
"It will take a little time for the agreements to be signed in final form," Stuart Gibson, senior litigation attorney for the U.S. Justice Department's tax division, told U.S. District Judge Alan Gold in a conference call. "When the final documents are signed, the parties will file a stipulation of dismissal."
Zurich-based UBS agreed in February to pay $780 million in penalties in exchange for deferred prosecution on charges it aided tax evasion and released about 300 names at the time.
Three UBS clients have pleaded guilty in Fort Lauderdale to hiding their assets from the IRS. Clients have been allowed to come forward under an amnesty program.
Following Wednesday's announcement, speculation turned to how many UBS clients will be prosecuted, how many names will be released and whether they will ever be made public, and the effects on international banking.
"The United States government could get additional names and what we're going to have is the Swiss taking the position that they've determined there are additional violations of Swiss law. That will free them up to give the information necessary," said David Garvin, a Miami criminal defense attorney.
"Whether it's going to be all of the names remains to be seen. I will be a little surprised if it is all of them, but it could be a substantial portion."
Garvin said a settlement would likely include a political way for the Swiss government to try to keep intact its bank secrecy laws while appeasing the U.S. and deterring Swiss bankers from promoting what are perceived as illegal tax shelters.
He said that prosecutors would likely start with biggest offenders.
"The whole policy behind voluntary compliance is that you go after the most egregious, the most high profile, the one that you anticipate there is no way you can lose, and then you make an example of those," Garvin said. "Then you put fear into everybody else so that they voluntarily comply. The rest you hit with a civil fraud penalty of up to 75 percent and you teach them a lesson that way, but you don't need to put everybody in jail."
Miami attorney Andrew Hall, who specializes in the trial of complex commercial cases, said that the next level of the UBS case is that a large number of these clients "were undoubtedly facilitated in what they did by professionals in tax planning or tax return preparers: Accountants and lawyers."
They also have problems, because it would be a violation of their professional responsibilities, he said. Because of the settlement, no legal precedent has been established, said Clemente Vazquez-Bello, international banking attorney with Gunster in Miami.
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