As a matter of politics and law, there is almost zero chance the Justice Department will walk away from the UBS AG civil lawsuit without at least some of the 52,000 names of account holders it seeks in a major tax evasion case. But with Switzerland going to the mat to protect its bank secrecy industry, the solution seems to be a negotiated settlement that will give the U.S. at least some of the names of suspected tax cheats.
Carrick Mollenkamp at the Wall Street Journal reports that settlement talks are focusing on some 7,000 accounts tied to offshore companies and trusts, “which are more susceptible to fraud,” according to a “person familiar with the matter.”
The Swiss bank has already given the U.S. the names of some 250 account holders suspected of using the Swiss accounts to evade taxes. That was part of an earlier $780 million settlement of criminal charges against the bank.
Getting the most important names of account holders would allow the U.S. to claim victory, while ending the growing diplomatic test of wills between the two countries. Switzerland would be able to say its bank secrecy remains intact by finding that fraud was potentially involved in the accounts that it does allow UBS to reveal.
A settlement that gets the U.S. a good bit of what it seeks isn’t the same as dropping the case, as the New York Times reported on June 22 the U.S. was considering doing. The Justice Department denied the report by Lynnley Browning. Browning filed this report Sunday saying in effect that she was right all along and suggesting the DOJ mislead folks with their denial. I don’t think that’s the right way to characterize matters. You can’t negotiate for anything if you’ve already “dropped” your case. By continuing to pursue the case, the DOJ had a big, big stick to force the Swiss to hand over thousands of names the U.S. otherwise wouldn’t have gotten.
Meantime, today’s much anticipated hearing before U.S. District Judge Alan Gold in Miami will now focus on a motion made Sunday by the U.S., Switzerland and UBS to delay a ruling in the case, pending outcome of the settlement negotiations.
