Six years into the government’s latest crackdown on offshore tax evasion, federal prosecutors have yet to win a signature jury trial. Of the 38 persons indicted since 2008, 25 have yet to be tried, so the government has plenty of opportunities to bag the heretofore elusive white whale. Most of these 25 defendants are Swiss nationals, and after recent events, the thoughts of pending offshore tax evasion charges may not exactly be keeping these bankers up at night.

The Raoul Weil saga has been well-chronicled, both in this space and elsewhere, in part because it has a number of object lessons. Fist of all, Big Brother is watching. Mr. Weil was indicted back in 2008. He was living in Switzerland at the time, which will not extradite a person to face financial crimes charges in another jurisdiction. But, Mr. Weil decided to take a trip to Naples. He was in an Italian jail before he could say “buongiorno.” Despite all of this adversity, Mr. Weil’s case had a happy ending, with an astonishing “not guilty” verdict that led to a major setback in the Department of Justice’s crusade to hold the “top brass” of foreign banks accountable for the crimes committed by their banks.

Born to Lose?

Domestic tax cheat cases are generally cut and dried. Accurate returns were filed prior to the deadline, or they were not. But an offshore case is a horse of a different color, especially when a banker is the defendant. The government must prove participation in a conspiracy, and most of these bankers only gave advice. You may tell your brother-in-law where he may acquire a cheap handgun, but that fact generally does not make you an accessory if he later goes off the deep end and robs a convenience store in the wee hours of the morning.

Many of these cases are lost at the charging phase. Government prosecutors typically try to charge the most severe offense that the facts can support, to gain leverage during plea negotiations. So, instead of an offense akin to giving aid and comfort to tax cheats, the lawyers draw up a conspiracy indictment. The grand jury dutifully indicts the defendant. But once defense lawyers get to examine the cases and advocate for their clients, things look a lot different. That ironclad case does not look quite as strong.

To win a conviction in a conspiracy case, the government must prove agreement, knowledge and overt act. The objective third prong is easy to establish. Any act, however minute, is an overt act. Buying a stamp to mail a tax return is an overt act. But the objective first and second prongs are a bit more difficult to prove, at least beyond a reasonable doubt.

Let’s return to the brother-in-law example. You may have furnished the information, and you may even know that Jim, Harry, Joe, or whatever his name is, is up to no good. He could be planning to threaten his boss, kill his neighbor, rob a bank, execute a murder for hire, or any number of nefarious deeds. One of the best ways to create reasonable doubt is to present a reasonable alternative theory to the government’s case, and there are too many reasonable alternative theories in this instance. Even if, by some miracle, the government can prove knowledge, there was certainly no agreement, formal or informal.

MEGO

My Eyes Glaze Over. Some graybeards may remember the O.J. Simpson murder prosecution back in 1995. There were a number of contributing factors to the shocking not guilty verdicts, but one of them may have been snoozing jurors. During the 10-month trial, prosecutors presented countless hours of DNA testimony. The jurors were able to stay engaged for a while, but a person’s average attention span is eight seconds. After two or three flow charts from Dr. Know-It-All, the jurors understandably began to wonder if there was a new episode of Matlock on TV that night.

The same thing applies in financial crimes cases. After hearing hours of testimony about offshore accounts, online meetings, and statutory subsections, most people are lost. Also, bear in mind that most jurors are not allowed to take notes and none of them are familiar with specific events in the case. How long could you last?

2015 should be an interesting year. Will these Swiss defendants come forward to face the music, and what tune will be playing when the judge soberly asks “has the jury reached a verdict?”