Whistleblower Disclosures Result in Historic International Treaty

Posted on June 17, 2010 by Lindsey Williams

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:

 
Washington D.C. June 17, 2010. In an unprecedented move the Swiss parliament voted to approve a deal between the Department of Justice (DOJ) and UBS in which UBS has agreed to turn over the names of 4,450 U.S. citizens who held secret and illegal bank accounts at UBS.
 
Lindsey M. Williams, Director of Advocacy and Development of the National Whistleblowers Center, said:
 
"Today's news is bittersweet. While the Swiss government will finally be releasing the names, the outcome is far from a fairytale ending for taxpayers...

 

The agreement with UBS was only for a small portion of the names of tax cheats and the fine was a drop in the bucket compared to the entire $20 billion dollar illegal program.  In order to overcome the damage done by the Department of Justice's prosecution of the whistleblower, Bradley Birkenfeld, the IRS and President Obama should follow the intent of the law and issue Mr. Birkenfeld his reward and immediately commute his prison sentence."

 
Stephen M. Kohn, Executive Director of the National Whistleblowers Center and attorney for Bradley Birkenfeld, said:
 
"Bradley Birkenfeld is the most important fraud whistleblower in American history resulting in one of the largest collections ever, but the deal cut with UBS permits the majority of violators to get off scot-free.  The message from the Birkenfeld case should have been: if you illegally shelter the money you will get caught, if you turn in fraud you will be rewarded. Instead, the message being sent by the Justice Department and UBS is clear: if you get caught your wrist will be mildly slapped, if you turn it the fraud you will go to jail."
 
Dean Zerbe, co-counsel for Mr. Birkenfeld said, "Getting the swiss to agree to release the names is taking more dance steps then Fred Astaire. Clearly going forward the answer has to be for the IRS to work with whistleblowers and the information they provide and not wait for the swiss to finish their tap dancing."

The National Whistleblowers Center urges all members of the public to send letters in support of Mr. Birkenfeld's clemency petition, which is pending before the Pardon Attorney.
 
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Senator Grassley Backs UBS Whistleblower, Swiss Parliament Rejects DOJ UBS Deal

Posted on June 9, 2010 by Lindsey Williams

*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):

I am worried that the Internal Revenue Service ("IRS") is doing next to nothing to identify tax evasion by U.S. taxpayers utilizing these accounts while waiting for ratification of the treaty.

It seems this information [provided by Mr. Birkenfeld] would allow the IRS to trace individuals in the U.S. that had UBS bank accounts…  Using this information to identify U.S. clients would appear to be more productive than simply pursuing agreements and treaties with the Swiss, especially since those avenues seem limited to specific individuals. 

Today's vote in Switzerland only underscores the need for the IRS to encourage whistleblowers to come forward.  Mr. Birkenfeld blew the whistle on just one bank. What is the IRS doing to encourage more whistleblowers to come forward about offshore bank accounts?

As we have written before, the U.S. Justice Department admitted in court proceedings that "but for Mr. Birkenfeld" the illegal $20 billion tax evasion "scheme" by the Swiss banking giant UBS "would not have been discovered by the U.S. government."  Despite his historic contribution toward enforcement of tax laws, Mr. Birkenfeld remains the only banker prosecuted and incarcerated by the U.S. government.

The U.S. Senate estimates that $5-7 trillion in tax revenue is lost in undeclared offshore bank accounts. There must be consistent policies regarding the treatment and encouragement of whistleblowers throughout the U.S. government. It is our hope that Senator Grassley’s letter will encourage a full evaluation of how Mr. Birkenfeld’s information was used (or misused), the prosecution of the high-level UBS officials who initiated and planned the $20 billion tax evasion scheme, and justice for all honest American taxpayers.

It remains imperative that those who support whistleblowers, accountability and transparency continue to send letters in support of Mr. Birkenfeld’s clemency campaign. His prison sentence continues to have a chilling effect on all international bankers who posses similar information.
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UBS Whistleblower Files Clemency Petition

Posted on April 15, 2010 by Lindsey Williams

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 15th, 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.

 

In the appeal to President Obama, Mr. Birkenfeld’s attorneys, Stephen M. Kohn, Executive Director of the National Whistleblowers Center and Dean Zerbe former counsel to the Senate Finance Committee, wrote:

“There has never been such an important tax whistleblower in U.S. history. There has never been one courageous individual who, standing along and confronting (at the time) the largest bank in the world, made disclosures that resulted in the recovery for the U.S. taxpayers of billions of dollars.”

Despite the Department of Justice admission that “but for Mr. Birkenfeld” the illegal UBS scheme “would have gone undetected by the U.S. government,” Bradley Birkenfeld was prosecuted and sentenced to 40-months in federal prison, which he is currently serving. Mr. Birkenfeld’s attorneys pointed out the chilling effect this lengthy prison sentence will have on corporate whistleblowers, specifically those in the international banking industry.

The NWC is urging all members of the public to participate in Bradley Birkenfeld’s clemency campaign by sending letters of support to President Obama and the Pardon Attorney. To submit a letter, please click here.

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April 15 Plea for UBS Whistleblower

Posted on April 15, 2010 by Lindsey Williams

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.

 

The attorneys wrote:

Mr. Birkenfeld's whistleblowing put a big dent in these secret offshore accounts, but there is lots more out there. It took an insider to blow the whistle the first time and it is going to take another insider to do it again as account holders, especially the most flagrant tax evaders, are now moving monies to banks with even greater secrecy. When the government cannot stop offshore tax evasion, it is the honest American taxpayer who has to foot the bill.

The Forbes piece appeared the day before April 15, the deadline for Americans to file their taxes.  Mr. Birkenfeld filed his official petition for clemency today, and the National Whistleblowers Center has launched an international letter writing campaign on behalf of Mr. Birkenfeld. To write a letter, click here.

Mr. Kohn and Mr. Zerbe also submitted a direct appeal to President Obama, requesting that he pardon Mr. Birkenfeld on Tax Day as a symbol of support for the American taxpayers. According to Birkenfeld’s attorneys: 

Mr. Birkenfeld has served enough time. Today is the day for President Obama to use his pardon power to ensure that ‘justice’ does not come at the cost of what is in the best interest of the American taxpayers.




*Philip Barrett (NWC Intern) & Meryl Grenadier (NWC Fellow) contributed to this post

 
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UBS Whistleblower Bradley Birkenfeld Will File Official Clemency Petition on April 15th

Posted on April 14, 2010 by Lindsey Williams

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.

Mr. Birkenfeld is the most important tax whistleblower in U.S. history, and is credited with being the first international banker to shatter Switzerland's historic bank secrecy laws.  His allegations have directly resulted in billions of dollars in savings to the U.S. taxpayers.  Before his imprisonment,  Mr. Birkenfeld's case was highlighted on 60 minutes , and he was named Tax Notes "Person of the Year. "

During his sentencing proceeding, the Department of Justice admitted that "but for Mr. Birkenfeld" the illegal $20 billion tax evasion "scheme" by the Swiss banking giant UBS "would not have been discovered by the U.S. government." As a result of Mr. Birkenfeld's unprecedented and voluntary disclosures, the U.S. government stands to recover an estimated $3 to $5 billion in immediate tax recoveries.  Additionally, UBS was forced to agree to pay a $780 million fine to the United States and the IRS created an amnesty program under which 14,700 Americans came forward to report illegal offshore bank accounts.

 Mr. Birkenfeld stated the following in his petition for commutation:

"[Birkenfeld] made every effort to come to the United States on numerous occasions, at his own expense and risk to his life, to meet with the DOJ, IRS, SEC and U.S. Senate prior to his indictment by the DOJ.  He also came forth with hundreds of internal documents recording the illegal actions of UBS and U.S. taxpayers and testified about his involvement with Mr. Olenicoff before Olenicoff was indicted and was sentenced.  As the Justice Department rightfully stated in formal court filings:  'Birkenfeld has provided substantial assistance in the investigation and prosecution of others who have committed offenses.  This substantial assistance has been timely, significant, useful, truthful, complete and reliable.'"  Attachment 11, Motion for Sentence Reduction filed by the U.S. Department of Justice, U.S. District Court for the Southern District of Florida (No. 08-60099)(docketed August 18, 2009), page 4.  DOJ filing linked here.

Stephen Kohn, Executive Director of the National Whistleblowers Center and attorney for Mr. Birkenfeld said, "On Tax Day, it is absolutely critical that President Obama send a message that whistleblowers are welcome in the United States. He can send this message by exercising his constitutional authority and granting Bradley Birkenfeld his freedom."

In support of the clemency petition, the National Whistleblowers Center is organizing a worldwide letter writing campaign.  A copy of this international appeal letter is linked here .

The official clemency petition will be filed with the President of the United States and the Office of the Pardon Attorney on April 15, and will be made available online.

Please contact Lindsey Williams at 202-342-1903 or lmw@whistleblowers.org to arrange an interview with Mr. Birkenfeld's attorneys, Dean Zerbe or Stephen M. Kohn.

Links:

Department of Justice Motion to Reduce Sentence

NWC International Appeal

Photo of Bradley Birkenfeld, courtesy of the National Whistleblowers Center

 

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DOJ Demonstrates "Chutzpah"

Posted on April 7, 2010 by Lindsey Williams

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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While The Whistleblower Sits in Prison, More People May Walk Away

Posted on February 5, 2010 by Lindsey Williams

On January 28, 2010, the Washington Post announced that the Swiss government has suspended the disclosure of information about tax cheats to the United States under a February 2009 “deferred prosecution” agreement and may seek to renegotiate the deal.  Under the agreement the Swiss government was supposed to provide the U.S. with 4,450 accounts of the 52,000 secret accounts not declared to the IRS.

Basically, this means that 14,700 people walked away without prosecution under the IRS amnesty program, the head of entire illegal UBS program Martin Liechti was allowed to return to Switzerland without prosecution, the 4,450 tax cheats are likely to escape prosecution, and Bradley Birkenfeld (the person responsible for blowing the whistle and ending the illegal UBS program) is still the only banker sitting in prison.

When will the U.S. government wake up?  Bradley Birkenfeld’s prison sentence is not only unjust in terms of how they treated every other person associated with the UBS scandal, it is permanently harming national and international efforts to fight corruption.  Once again, what whistleblower is going to want to come forward after seeing how Mr. Birkenfeld was treated?

Please TAKE ACTION to stop this injustice now!

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UBS Tax Fraud Whistleblower Person of the Year Honor

Posted on January 3, 2010 by Lindsey Williams

Bradley Birkenfeld, the former international banker who blew whistle on the largest tax fraud in U.S. history just received the honor of being named Tax Analysts inaugural annual "Person of the Year." The award recognized Mr. Birkenfeld's contribution in exposing UBS bank's tax fraud scheme and helping the federal government recover over 1 billion dollars in lost tax revenue for U.S. taxpayers. Despite the government's recognition that they would not have discovered the UBS tax scandal without Mr. Birkenfeld, he is scheduled to report to jail on January 8, 2010.  You can do your part to help whistleblowers who are trying to protect our tax dollars by taking action and sending a letter to Attorney General Holder to immediately review Mr. Birkenfeld's sentence.

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Birkenfeld asks Justice Department to reconsider prosecution

Posted on January 1, 2010 by Richard Renner

Attorneys for UBS whistleblower Bradley Birkenfeld have written to U.S. Attorney General Eric Holder asking that he reconsider the Justice Department's prior recommendation that Birkenfeld be sentenced to prison.  The attorneys have asked specifically that the Justice Department investigate the veracity of statements made by the lead prosecutor in Birkenfeld's case.  The letter and documents show that Birkenfeld was desperately seeking a "friendly subpoena" to protect him from prosecution by Swiss authorities.  With a subpoena, he could reveal the names of particular clients who used UBS accounts to evade US taxes. The prosecutor claimed at Birkenfeld's sentencing hearing that he delayed disclosure of the names of his clients to further their tax evasion scheme. 

Birkenfeld's new attorneys, Stephen M. Kohn and Dean Zerbe of Kohn, Kohn & Colapinto, LLP, point to specific emails in which Birkenfeld's prior attorneys begged staffers of a Senate committee to issue a subpoena so that Birkenfeld could provide more detailed disclosures about the tax evasions of specific clients.  The Senate committee did then issue the subpoena, and Birkenfeld provided the names of UBS clients evading taxes before the Justice Department issued its indictment of Birkenfeld. Kohn and Zerbe have asked Attorney General Holder to review the prosecutor's claim of non-cooperation, find that it was untrue, and vacate both the recommendation of prison and the decision to indict Birkenfeld.

You can TAKE ACTION by sending your own letter to Attornery General Holder.

"Mr. Birkenfeld's case is unique in the history of tax law prosecutions," Kohn and Zerbe's letter states. Birkenfeld exposed a massive tax evasion scheme by the world's largest bank.  He helped the U.S. recover over one billion dollars in tax revenue.  His disclosures led to the identification of over 14,000 taxpayers who had used offshore accounts to hide their assets and avoid taxes. The letter concludes:

On its face it is troubling to imprison the only person responsible for exposing these massive and systemic frauds. However, the fact that the decision to indict Mr. Birkenfeld, and seek a long prison sentence for Mr. Birkenfeld, was predicated on false, misleading, inaccurate and incomplete information is simply intolerable.

The Wall Street Journal is reporting this letter to the Attorney General today.  You can follow this link to the WSJ Law Blog entry about it.

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Whistleblowing: A Get-Rich-Quick Scheme?

Posted on December 7, 2009 by Lindsey Williams

I have received calls and emails asking why the NWC supports UBS whistleblower Brad Birkenfeld.  This article published on Forbes.com helps answer that question.  Mr. Birkenfeld, like countless other employees, blew the whistle because he believed it was the right thing to do.  When Mr. Birkenfeld’s multiple efforts to correct the problem internally failed, he resigned.  However, Mr. Birkenfeld did not stop there. He voluntarily approached the federal government to report the UBS tax fraud scheme. Some of the steps he took occurred before the IRS passed its whistleblower reward programs.  Unfortunately, instead of protecting Mr. Birkenfeld, the Department of Justice (DOJ) chose to prosecute him.  Mr. Birkenfeld will be starting a 40-month sentence on January 8, 2010.  The precedent set by the DOJ treatment of Mr. Birkenfeld has sent a chilling message to future whistleblowers. Please take a minute to read “Whistleblowing: A Get-Rich-Quick Scheme?” and then TAKE ACTION by demanding that Attorney General Holder immediately and independently review Mr. Birkenfeld’s case.

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