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

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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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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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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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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The Associated Press reports that since Congress beefed up the rewards for tax whistleblowers late in 2006, the number of big money tips coming to the IRS has jumped from 116 in 2007 to 1,246 last year. "The tax code improvements are still new, and I hope more whistleblowers will come forward as word gets out," Sen. Chuck Grassley (R-Iowa) told the AP.  The Tax Relief and Health Care Act of 2006 guarantees a reward to tipsters who point the IRS to big tax cheats.  If the recovery is over $2 million, and the cheater has an income of over $200,000, then the tipster is entitled to a reward of between 15 and 30 percent of the recovery. The IRS may also reward tipsters in cases where the recovery is less, but those rewards are not guaranteed.

Stephen M. Kohn, executive director of the National Whistleblowers Center, raised a concern about this program in light of the government's prosecution of UBS whistleblower Brad Birkenfeld. Coming forward poses "a high level of risk and most people won't do it," Kohn told the AP. "You have to protect them if they are retaliated against and you have to reward them for coming forward." Kohn added that the best way to encourage more people to come forward is for the IRS to move faster and start rewarding those who already have.

A Reuters story reports that the IRS has still not paid any rewards under the program. "The real concern is that there has not been a single award... the wind is beginning to come out of the sails of this program," attorney Dean Zerbe told Reuters.

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Stephen M. Kohn, Executive Director of the National Whistleblowers Center (NWC), spoke today with Juan Gonzalez and Amy Goodman of Democracy Now about the forty-month sentence handed down to the UBS whistleblower, Bradley Birkenfeld. turned over the banking information that has permitted this unprecedented investigation. Kohn praised Birkenfeld for turning over information that exposed billions of dollars in tax evasion by UBS and its wealthy clients. "It was his information that entitled the government to collect the $700 billion-plus, his information that has led to this deal to turn over four or five thousand names," Kohn said. "instead of protecting him and using him as the resource, they indicted him and are sending him to prison."  

Kohn adds: 

This is the first major tax whistleblower since Congress enacted a law encouraging people just like Bradley to step forward with information. I think it’s new territory. And I think they don’t understand the pricelessness of getting someone like Bradley in that inside position. Face it, you’re not in those boardrooms if you’re a boy scout. But the point of the law is to get the insider to come out with the information. Without that, you’ll never have a case. But by putting the insider, not inside the Justice Department’s criminal investigatory task force, putting him in jail, serves no purpose. It undermines public policy.

Goodman and Gonzalez also interviewed journalist Sharona Coutts of ProPublica. Democracy Now's web page provides a transcript and the audio of this interview.

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