Success Stories: Positive Outcomes
Whistleblower Bradley Birkenfeld Wins His Lawsuit Against Swiss Bank UBS AG
IRS awards $104 million to UBS tax case whistleblower Bradley Birkenfeld Birkenfeld had been in prison and was freed last month; he turned over information about UBS to the authorities, but later he was jailed after the government said he withheld other information. 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. Betsy Combier: "What is shocking about this case is the prosecution and lies of the US Department of Justice."
IRS awards $104 million to UBS tax case whistleblower Bradley Birkenfeld
Birkenfeld had been in prison and was freed last month; he turned over information about UBS to the authorities, but later he was jailed after the government said he withheld other information
TUESDAY, SEPTEMBER 11, 2012, 10:28 AM
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.
The outcome of the Birkenfeld case has "enormous implications" for other whistleblowers pursuing awards and who will be watching closely, said Andrew Carr Monday, a lawyer with law firm Bateman Gibson in Tennessee. He is representing another IRS whistleblower in a separate case.
Birkenfeld turned over information about UBS to the authorities, but later he was jailed after the government said he withheld other information.
UBS entered into a deferred prosecution agreement in early 2009 and paid $780 million in fines, penalties, interest and restitution. The case was a key turning point in a U.S. effort to combat tax evasion in Switzerland and elsewhere overseas.
The IRS had no immediate comment.
In January 2010, Birkenfeld began serving a prison term for admitting to conspiracy in helping a former rich client conceal large sums at UBS. Birkenfeld was released from prison last month. He is represented by the National Whistleblowers Center.
The IRS whistleblower office gathers information from people who want to alert the tax-collecting agency about tax misconduct. Whistleblowers can get monetary rewards under the IRS program, which was overhauled in 2006.
Over the years, the office has brought in hundreds of millions of dollars in tax revenue for the U.S. government that would not have been collected without tips from whistleblowers.
But the office collected only $48 million in tax revenues in fiscal 2011, down from $464 million in fiscal 2010, the IRS reported to Congress in June. That was the lowest collection level since at least fiscal 2004. The drop in collections coincided with a decline in new whistleblower cases.
Republican Senator Charles Grassley, who wrote 2006 legislation that overhauled the program, said in June that the IRS had been driving away whistleblowers.
Some lawyers have complained that the office is slow to process cases and leaves whistleblowers in the dark about the status of their cases after they turn over information.
Justice for Birkenfeld
UBS Bank Insider Celebrated for Exposing $20 Billion
Tax Evasion Scheme
$104 Million Paid to the Whistleblower
Video of press conference will be available shortly.
Washington, D.C. September 11, 2012 – The Internal Revenue Service (IRS) has awarded former UBS banker Bradley Birkenfeld a whistleblower reward of $104 Million for his contributions in providing the U.S. Government with insider information on UBS’ illegal offshore banking scheme. This is believed to be the largest reward ever given to an individual whistleblower in the United States and the first major reward issued under the IRS tax whistleblower law.
In a joint statement, Mr. Birkenfeld’s attorneys, Stephen M. Kohn and Dean A. Zerbe stated:
The IRS today sent 104 million messages to whistleblowers around the world – that there is now a safe and secure way to report tax fraud and that the IRS is now paying awards. The IRS also sent 104 million messages to banks around the world – stop enabling tax cheats or you will get caught.
In granting the award, the IRS described Mr. Birkenfeld’s contributions as follows:
Birkenfeld provided information on taxpayer behavior that the IRS had been unable to detect, provided exceptional cooperation identified [and] identified connections between parties to transactions . . . The comprehensive information provided by the whistleblower was exceptional in both its breadth and depth. While the IRS was aware of tax compliance issues related to secret bank accounts in Switzerland and elsewhere, the information provided by the whistleblower formed the basis for unprecedented actions against UBS.
A copy of the IRS Award Report is attached.
Stephen Kohn, who also serves as the Executive Director of the National Whistleblowers Center, stated that the NWC was initiating an international campaign to educate employees regarding their rights under new whistleblower reward laws covering tax evasion, securities fraud and violations of the Foreign Corrupt Practices Act: “Employees throughout the world need to know that there is a safe haven to blow the whistle on major frauds. As demonstrated by the IRS’ decision in the Birkenfeld case, these laws can be effectively used to combat corruption, illegal offshore tax evasion and money laundering,” Kohn said.
Mr. Birkenfeld's disclosures directly resulted in: a fine paid to the U.S. by UBS bank in the amount of $780,000,000.00; over 35,000 taxpayers participating in “amnesty” programs to voluntarily repatriate their illegal offshore accounts; and the collection of over $5 billion in back taxes, fines and penalties. Mr. Birkenfeld's disclosures also forced the Swiss government to change its tax treaty with the United States, resulting in UBS turning over the names of over 4,900 U.S. taxpayers who held illegal offshore accounts. These "taxpayers" are now being investigated and prosecuted.
Whistleblowers can visit www.whistleblowers.org to learn about their rights and to find out how they can report fraud confidentially.
UBS Whistleblower Gets $104M for Shattering Swiss Banking Secrecy
by Jesselyn Radack on September 11, 2012 ( The Whistleblogger/2012)
After recent rumors of a turnaround for financial whistleblowers seeking rewards under the Internal Revenue Service's (IRS) whistleblower reward program, it is fitting that one of its rare financial awards goes to United Swiss Bank (UBS) whistleblower Bradley Birkenfeld. Not only is Birkenfeld the biggest tax fraud whistleblower in history (who handed the IRS key information on a silver platter), but he is especially deserving as he is the only person to go to prison among the thousands of Swiss bank account tax cheats he exposed. (Easy to understand now that we have a presidential candidate who hides money in offshore tax havens.)
Birkenfeld was released from prison in August after an usually harsh sentence. Despite the fact that Birkenfeld shattered 75 years of Swiss bank secrecy when he approached investigators about a UBS tax evasion service involving thousands of illegal offshore accounts – held by some of your favorite actors, politicians, and sports figures – and billions of U.S. dollars. Instead of targeting UBS kingpin Martin Liechti, the Justice Department turned on Birkenfeld. To add insult to injury, the prosecutor, Kevin Downing, is now in private practice at Miller & Chevalier defending the very tax cheats Birkenfeld turned in.
Until recently, to say the Internal Revenue Service (IRS) had been slow to implement the IRS whistleblower reward program would have been an understatement. The IRS' implementation (or lack thereof) was so extreme that this summer it caused longtime whistleblower supporter Charles Grassley (R-IA) to object to two Department of Treasury nominees.
The award for Birkenfeld marks a much-needed turnaround for the IRS' whistleblower office, and will hopefully encourage other financial whistleblowers to come forward.
I wrote extensively about Birkenfeld's case during his prosecution and sentencing (here, here, here, and here). After complaining internally to UBS for two years, in June 2007 Birkenfeld voluntarily met with Justice Department prosecutors and an IRS Special Agent during three full days in which he provided unprecedented and voluminous information about UBS’s cross-border and offshore business activities, the UBS offices and private bankers that were directly involved, and the details of 19,000 UBS accounts for its American customers.
Birkenfeld had the potential to change an entire industry designed to evade U.S. taxes. Instead, the U.S. has been soft on UBS: letting bank kingpin Martin Liechti go free; under-fining the bank only $780 million for a multi-billion dollar fraud; settling for only 4,500 customer names of the 52,000 our government originally sought; and setting up an amateurish amnesty program that allowed the worst offenders to avoid criminal liability by paying fines. But worse, the Justice Department’s treatment of Birkenfeld is chilling would-be financial whistleblowers from coming forward, and will continue to do so for decades, to the detriment of the U.S. economy and all taxpayers – something that should be inconceivable during a global financial crisis.
The award for Birkenfeld is hopefully just the beginning for the burgeoning IRS whistleblower reward program, which, by encouraging disclosures from financial whistleblowers, will likely save the taxpayers billions.
KKC Urges Strong Public Support In Requesting Clemency For Bradley Birkenfeld
Bradley Birkenfeld made history by being the first international banker to blow the whistle on illegal off shore accounts held in Switzerland by U.S. Citizens. His disclosures have resulted in an unprecedented recovery currently estimated at over $1.4 billion, including a $780 million civil fine paid by the United Bank of Switzerland. Mr. Birkenfeld made these disclosures voluntarily without grant of immunity despite the fact he worked on these illegal programs. Instead of rewarding Mr. Birkenfeld for his unprecedented contribution to the American taxpayers, the Department of Justice indicted him on one count of conspiracy to commit tax fraud.
August 21, 2009, at the request of the federal court, the DOJ sentenced Mr. Birkenfeld to a 40-month prison term. Leading public interest groups have protested this sentence explaining how it does not serve the public interest. Mr. Birkenfeld's new attorneys, which include the law firm of Kohn, Kohn and Colapinto, LLP, have reviewed the sentencing documents and have concluded that the sentence was based on false factual assertions by the DOJ. Mr. Birkenfeld's attorneys have requested U.S. Attorney General Eric Holder to personally review the matter.
On January 8, 2010, Mr. Birkenfeld surrendered himself to US authorities and began serving a 40-month federal prison sentence. Each day Mr. Birkenfeld remains in jail is another step backwards in the fight against corruption. Mr. Birkenfeld deserves to be commended for courageously stepping forward and reporting the illegal banking practices of UBS. Instead, he has lost his freedom.
Bradley C. Birkenfeld Goes To Prison After Blowing The Whistle On UBS, Switzerland's Largest Bank
Bradley Birkenfeld Will Soon Go To Prison, But May Reap $ Millions For Whistleblowing Swiss Bank Giant UBS