Features
Unlocking the Vault
How U.S. criminal tax investigations blew open the vaults of Swiss banking secrecy
By Kara Carnley Murrhee
Jeffrey A. Neiman (JD 01) has what he considers the best job a lawyer can have.
“Getting to stand up in court and say, ‘Jeffrey Neiman, on behalf of the United States,’ it doesn’t get much better than that.”
His position as an assistant U.S. attorney for the Southern District of Florida placed him at the epicenter in 2008 of one of the largest financial crime investigations the United States has ever seen—one that involved charges against Swiss mega-bank, UBS, which, for decades, had concealed its banking practices from criminal tax investigations behind a shroud of secrecy.
It was a case Neiman could not have imagined for himself when he joined the Department of Justice through the Attorney General’s Honors program after graduating from law school. Neiman cut his teeth for nearly four years in the department’s tax division, investigating and prosecuting criminal tax cases across the nation, primarily in Las Vegas and South Florida.
“It was litigating out of a suitcase,” Neiman said.
He then spent more than two years with the Department of Justice’s criminal division in Washington D.C., litigating corporate securities, health care fraud and other types of white collar crimes before returning to his own South Florida backyard to join the United States Attorney’s Office in 2008.
“One day, I got a phone call from one of my old colleagues, Kevin Downing, at the tax division in D.C. He called me up and said, ‘Hey, we’ve got a case and have venue in your district. Do you have any interest in working with us?’ And I said, ‘Of course, let’s go.’ ”
With that call, Neiman plunged head-first into the UBS case. He and his team devoted the next 18 months to interviewing and investigating UBS bankers, managers, clients and executives. With sufficient evidence, they indicted former UBS banker Bradley Birkenfeld for helping an American client conceal $200 million from the Internal Revenue Service.
Neiman’s team also obtained the indictment of Raoul Weil, the No. 3 individual at UBS and overseer of the global wealth management unit. Weil was charged in the Southern District of Florida for conspiring to help approximately 19,000 wealthy Americans hide as much as $20 billion of taxable income from the IRS.
But the revelations didn’t end there. Neiman and his team discovered that in one year, UBS sent bankers to the U.S. on more than 3,800 occasions to wine and dine potential clients at events such as the annual NASDAQ tennis tournament on Key Biscayne and Art Basel on Miami Beach, he said. These bankers were trained to maintain a specific modus operandi to avoid detection while in the U.S.
“Dress as tourist when you get off the airplane, indicate that you are not here for work purposes when you fill out the immigration paperwork, don’t stay in a hotel for more than one night, don’t bring any documents with you and delete any client files from your computers before you go back to the airport,” Neiman said. “Those were some pretty amazing steps being taken by a huge financial institution, one of the largest banks in the world, to help Americans evade taxes,” Neiman said.
Soon after, the bank entered into a deferred prosecution agreement to avoid criminal indictment, which Neiman helped negotiate. In the settlement, the bank agreed to pay $780 million in restitution to the U.S. government and to refuse to provide banking services to U.S. clients unless they agreed to disclose the accounts to the IRS. Neiman said that the most groundbreaking element of the investigation, however, was that for the first time in the history of Swiss secrecy, the Swiss bank doors were open for the public to see.
“It has made banks around the world—in Switzerland, Hong Kong, Singapore or wherever they may be—more cognizant of the fact that they have a problem if they are helping Americans cheat on their taxes,” Neiman said.
Although there have already been nine guilty pleas of U.S. citizens to various tax crimes, Neiman expects others will follow. The success of the investigations has also opened up a floodgate of 14,000 U.S. taxpayers who have made voluntary disclosures of their tax sins, resulting in an influx of leads for investigating offshore accounts in other tax havens and banks, he said.
Jeffrey H. Sloman, the U.S. Attorney for the Southern District of Florida and Neiman’s ultimate supervisor, said the results of the deferred prosecution agreement with UBS are unprecedented.
“Neiman brings energy and commitment to his work, which reflects positively on the U.S. Attorney’s Office,” Sloman said. “The case has changed the landscape of offshore banking.”
The investigation has also caused Switzerland and other counties to enter into new treaties with the U.S., which provides for broader disclosure of information in banking procedures, Neiman said.
For their hard work, Neiman and his team were awarded the John Marshall Award, the highest award presented to an attorney for contributions and excellence in legal performance, at the 57th annual Attorney General Awards Ceremony in the nation’s capitol. He hopes the investigations will be a priority of the government for years to come.
“There’s always going to be somewhere to hide the money, but we have to make it as difficult as possible for people to do so,” he said.
