Whistleblower Protection Blog : Whistleblower Lawyer & Attorney : National Whistleblower Legal Defense and Education Fund : Whistleblower Protection, Fraud Claims : Washington DC

The Washington Post is running a story today by David Hilzenrath on page A11 called, "Change in IRS rules could block rewards for whistleblowers." The story focuses on a manual by the Internal Revenue Service (IRS) called the Internal Revenue Manual (IRM). The new IRM recognizes that if a whistleblower provides information leading to a payment to the IRS, the whistleblower would be entitled to a reward of up to 30%. However, the revised IRM adds that if the information reduces a credit or stops a refund, then no reward is made. It also bars rewards arising from criminal penalties. My friend Michael Sullivan of Atlanta told Hilzenrath, "There's apparently an institutional resistance to rewarding whistleblowers that will take some time to dissipate." UBS whistleblower Bradley Birkenfeld (pictured) provided information the led to the bank's $780 million settlement with the IRS.  His whistleblower claim with the IRS is pending while he serves a prison sentence for having followed the bank's orders in connection with the tax evasion scheme he revealed. Hilzenrath's story reports that Sen. Charles Grassley has written to the Treasury Department asking that it delay the IRM revision.  Sen. Grassley was a proponent of the IRS whistleblower reward program. Hilzenrath quotes a former IRS official saying that the reward program is "unseemly." Perhaps when the IRS whistleblower program starts to bring in as much money as the False Claims Act does, then attitudes will change and the government will see the wisdom in promoting rewards as a way to increase revenue. You can support Birkenfeld's campaign for clemency by following this link.

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The Swiss parliament finally approved the deal made between UBS and the U.S. government that requires UBS to turn over the names of 4,450 U.S. citizens who held accounts at the Swiss bank. The NWC issued the following release:

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*This post was drafted by Meryl Grenadier (NWC fellow)

In the past 24 hours there have been significant developments in the case of UBS whistleblower Bradley Birkenfeld. Three years ago, the former UBS banker provided the U.S. government with detailed information on how to identify the names of 19,000 American citizens who held illegal secret bank accounts at UBS bank in Switzerland (read the letter from Mr. Birkenfeld's attorneys outlining this information here). He reported the largest tax fraud scheme in history, and for the first time there was a crack in the vault of Swiss bank secrecy.

Bradley Birkenfeld also warned that Swiss politicians would do everything in their power to protect Swiss bank secrecy and block the release of UBS client information. This prediction became reality yesterday when the Federal Assembly of the Swiss parliament rejected a part of the deferred prosecution agreement between UBS and the U.S. Department of Justice. This part of the agreement requires UBS to turn over the names of 4,450 American tax criminals by August 20 of this year, a small fraction of the 19,000 clients.

In response to the vote, Senator Charles Grassley sent a letter to the U.S. government, expressing his outrage at the mishandling of information provided by Mr. Birkenfeld and the misguided reliance on the Swiss government for UBS USA information. Senator Grassley wrote (read the full letter here):

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This Sunday's Washington Post featured an article that details Bradley Birkenfeld's actions as a whistleblower, and how those actions landed him in federal prison. The article discusses the contradictory messages sent to potential whistleblowers by the U.S. government:

Birkenfeld's story turned into a cautionary tale for would-be informants and a test of the U.S. government's attitude toward them. Should people who come forward with inside knowledge of a crime be rewarded, punished -- or both? Can the government simultaneously woo such whistleblowers with financial enticements and threaten them with incarceration?

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TAKE ACTION

Today, Bradley Birkenfeld, the whistleblower who exposed the $20 billion illegal UBS tax fraud scheme, submitted a direct appeal to President Barack Obama and filed an official petition requesting clemency. Mr. Birkenfeld blew the whistle on a $20 billion program run by UBS designed to recruit wealthy Americans and assist them in evading U.S. taxes.

The clemency petition was submitted on April 15^th, the deadline for Americans to file their taxes, because the information Mr. Birkenfeld provided has led to the recovery of billions of tax dollars by the IRS.

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TAKE ACTION!

Attorneys for Bradley Birkenfeld, the Swiss banker who exposed the massive ($20 billion) tax evasion scandal at UBS, Stephen M. Kohn and  Dean Zerbe wrote an op-ed piece entitled “April 15 Plea: Pardon Tax Whistleblower” published on Forbes.com. Mr. Kohn and Mr. Zerbe criticize the Department of Justice decision to prosecute Mr. Birkenfeld and list the negative consequences of putting the whistleblower in jail, including the radical chilling effect that discourages other potential whistleblowers from coming forward, a major step backwards in the fight against corruption and billions of dollars in tax revenue lost.

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TAKE ACTION!

Washington, D.C. April 14, 2010. Former UBS banker Bradley Birkenfeld , who is currently serving a 40-month sentence for one count of conspiracy to defraud the United States at Schuylkill County federal prison, will file a formal request for clemency to President Barack Obama on Tax Day, April 15, 2010.

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UBS bank whistleblower Bradley Birkenfeld spoke with the Wall Street Journal's Arden Dale in a story released Friday. The WSJ story, "UBS Whistle-Blower Rues the Tack, Not Tune," appears on page C-2 of today's Money and Investing section. Birkenfeld says that he would still want to expose the way UBS helped thousands of millionaires evade their taxes, but he would do it differently.  The interview is a lesson for how other tax whistleblowers might want to proceed in the future. The article recognizes that Birkenfeld was "the central informant in an investigation that led to a wide-ranging IRS crackdown on secret offshore bank accounts." He is also the only figure in the case sentenced to substantial prison time, 40 months. Birkenfeld attorney, Stephen M. Kohn (who is also Executive Director of the National Whistleblower Center), explained to Dale how going to the Department of Justice was a mistake. One of their jobs, after all, is to put people in jail. Kohn says that tax whistleblowers should instead consider going to the whistleblower office of the Internal Revenue Service (IRS). That office would be more focused on using the whistleblower's information to collect taxes.  It is also the office that will decide on financial rewards for whistleblowers.  Federal officials declined to talk to Dale for this story.

Meanwhile, Reuters is running a story called, "Special Report: How the U.S. cracked open secret vaults at UBS." A U.S. government attorney involved in the case did speak to Reuters, and their story barely mentions Birkenfeld, and then only to mention his participation in UBS' crimes before he decided to cooperate with U.S. authorities. The Reuters story misses how Birkenfeld asked the Department of Justice to issue a subpoena to him to allow him to name all the names. That's why we bought the Wall Street Journal on Friday.

Want to take action to support Brad Birkenfeld?  Follow this link.

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Today, the Department of Justice (DOJ) issued an extremely misleading press release on the departments “successes” in tax enforcement. However, as NWC Executive Director, Stephen M. Kohn responded, the “DOJ spends much ink describing the importance of the UBS case without finding the space to add two more words - the name of the whistleblower who made it all possible - Bradley Birkenfeld.”

Instead, the DOJ has the audacity to trumpet their efforts to prosecute the whistleblower, Bradley Birkenfeld. Even more amazing is the fact that while they applaud themselves for throwing the whistleblower in prison, they neglect to tell the American taxpayers that they allowed the architect of the entire UBS illegal offshore tax fraud program, Martin Liechti, to return to the safety of Switzerland without prosecution. 

For more on the NWC’s response to the DOJ’s refusal to recognize that their “treatment of Mr. Birkenfeld is not only a generational setback for tax whistleblowers, it will cost the American taxpayers billions of dollars” please click here.

To TAKE ACTION in support of Mr. Birkenfeld's clemency campaign please click here.

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An article written by Bradley Birkenfeld appears in the Spring 2010 issue of the World Policy Journal, released by the World Policy Institute.  The “Crime + Corruption” issue examines how corruption occurs, its effect on society, and how to stop it. Birkenfeld’s article, “Inside the Cartel,” is displayed in the “Upfront” section of the journal, which gives readers first-hand insight into corruption schemes across the globe.

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