Jailed UBS Employee Gets $104 Million From IRS For Exposing Swiss Bank Account Holders
Just in case there wasn't enough excitement and fury directed at Swiss bank account holders, which continue to dominate the presidential election "debate" above such mundane topics as the economy, or, say, reality, here comes the IRS, which as we noted yesterday collected $192 billion less than the government spent in the month of August alone, and have awarded Bradely Birkenfeld, a former UBS employee who in 2008 pleaded guilty to conspiracy to defraud the United States and was sentenced in 2009 to 40 months in prison, but received preferential whistleblower status after a prior arrangement to expose numerous Americans with Swiss bank accounts, has just been awarded $104 million.
U.S. tax authorities have awarded $104 million to a whistleblower in a major tax fraud case against Swiss bank UBS AG that widened a government crackdown on Americans avoiding taxes in Switzerland, his lawyers said on Tuesday.
Bradley Birkenfeld, freed last month from prison, was not present at the news conference where his attorneys announced the reward made under an Internal Revenue Service whistleblower program that has come in for some criticism in Congress.
Birkenfeld had sought a large payout for his role in a tax-dodging case that resulted in early 2009 in UBS entering into a deferred prosecution agreement and paying $780 million in fines, penalties, interest and restitution.
Some more on the Birkenfeld pro- then anti-tax evasion odyssey:
Birkenfeld began working at Credit Suisse in 1996, followed by Barclay's Bank in 1998.
In October 2001, Birkenfeld began working at UBS in Geneva, Switzerland as a private banker. His principal job responsibility was to solicit wealthy Americans to invest in the bank and thus avoid paying U.S. taxes. Although UBS was not permitted to give investment advice in the U.S., the bank instructed Birkenfeld and other similar employees to lie about the purpose of their trips to the U.S. Birkenfeld advised American clients how to avoid IRS scrutiny, including placing cash and jewels in Swiss safe deposit boxes. One of Birkenfeld's wealthiest clients was a California real estate developer, Igor Olenicoff. In 2001 Olenicoff and Birkenfeld met in Geneva, the result of which was a transfer of $200 million to UBS accessible by credit cards supplied by Birkenfeld.
Whistleblowing and arrest
In 2007, Birkenfeld decided to tell the DOJ what he knew about UBS's practices. At the same time, he wanted to take advantage of a new federal whistleblower law that could pay him up to 30% of any tax revenue recouped by the IRS as a result of Birkenfeld's information. Birkenfeld also wanted immunity from prosecution for his part in UBS's transactions. In April 2007, Birkenfeld's counsel sent the DOJ a summary of the Birkenfeld's information. The DOJ responded that it was not part of the IRS's whisteleblower program and that it would not grant Birkenfeld immunity. Nonetheless, Birkenfeld met with the DOJ. When communications between Birkenfeld and the DOJ stalled, Birkenfeld contacted the Securities and Exchange Commission, the IRS, and the U.S. Senate. In April 2008, Birkenfeld's lawyers told the DOJ that he would assist the DOJ in return for immunity. One or two months later, Birkenfeld was arrested. The DOJ's top tax lawyer said, "With regard to whistleblowers: those who seek to be treated as true whistleblowers need to know they must come in early and give complete and truthful disclosures.... Mr. Birkenfeld did not come in and give complete and truthful disclosures. Therefore, he is not entitled to whistleblower status."
Birkenfeld's plea and sentencing
On June 19, 2008, Birkenfeld pleaded guilty to a single count of conspiracy to defraud the United States. On August 21, 2009, although the prosecution recommended 30 months, Birkenfeld was sentenced to 40 months in prison. He began serving his sentence on January 8, 2010. His projected release date is November 29, 2012.
Birkenfield did not appeal the conviction. On April 15, 2010, his attorneys filed a Petition for Commutation of Sentence. As of July 7, 2012, Birkenfeld is still in prison in Pennsylvania
And now, he is $104 million richer.
Implication: Uncle Sam wants you, dear concerned citizen, to expose all other such evil Swiss bank account holders (electoral campaign implications here being painfully obvious). You will be richly rewarded. But watch your back, dear concerned citizen, if you ever succeed in escaping into the rarefied air of having 2 nickels to rub together, and decide to save them not on US soil, for some inexplicable reason, but, say, Zurich or Geneva.