Former UBS AG banker Brad Birkenfeld first reported in 2007 that he and his colleagues had encouraged rich Americans to store more than $20 billion in offshore Swiss bank accounts and cheat the IRS. After he came forward, he was convicted of conspiracy and sentenced to prison. Well, he was released from prison in August, and on Tuesday the IRS vindicated his actions with a $104 million award under the IRS whistleblower program.
UBS ultimately paid $780 million to resolve the investigation, admitted to criminal wrongdoing, and closed the unit where Birkenfeld worked. His disclosure also prompted at least 33,000 Americans to report offshore accounts to the IRS, generating more than $5 billion. The IRS is now investigating at least 11 other banks.
Stephen Kohn talking:
it’s the largest whistleblower award in history, but it’s—Birkenfeld turned in the largest financial frauds. He turned in 19,000 felons and $20 billion in one unit. But we also know 33,000 people are turning themselves in and that the total amount of U.S. dollars in illegal offshore accounts is over $5 trillion. That’s the estimation from a Senate report. What the IRS did was try to change the dynamic. When the Justice Department prosecuted Bradley Birkenfeld in one of the most absurd and misguided efforts, they took an asset, a person who turned in the keys to the kingdom, the first whistleblower to expose exactly how illegal Swiss banking worked and illegal offshore banking was working across the world, and instead of using him, they persecuted him. The IRS is now turning that around.
The IRS—I think one of the reasons they had to give such a big award is because they need informants. They need other bankers to step forward. And what the Justice Department did had a devastating impact on their whistleblower program. So they’ve turned around, and they’ve given the largest whistleblower award ever. We worked on that for over three years, through the process, trying to make sure he won, because his victory is really a victory against offshore illegal banking, where millionaires and billionaires stash their wealth, where corrupt politicians put in their money, drug dealers. When you’re looking at this illegal offshore banking, it’s really a handmaiden to corruption. So it’s extremely important public policy, public interest, to go to war against these banks. So, this award to Mr. Birkenfeld, in our view, is one of the most important step forwards to try to induce other bankers to step forward and really tackle illegal offshore banking.
– source democracynow.org
Stephen Kohn, co-counsel for UBS whistleblower Brad Birkenfeld and executive director of the National Whistleblowers Center. He’s also the author of The Whistleblower’s Handbook: A Step-by-Step Guide to Doing What’s Right and Protecting Yourself.