The Financial Times just had a piece on whistleblower Brad Birkenfeld, the former UBS banker who gave the government its entire case against offshore tax havens on a silver platter, tied up with a bow, with a cherry on top: http://www.ft.com/...
Like it or not, the only people who are in a position to know about and blow the whistle on the Bernie Madoffs and UBS's of the world are insiders.
In UBS's case, Brad blew the whistle loudly. After being a voluntary cooperative witness for two years, all the bad actors have paid fines at most, or skipped town entirely and are living it up in Lichtenstein . . . And the only one to face jail time is the whistleblower, Brad Birkenfeld.
If you haven't had morning coffee and need a visual:
During a global financial crisis, when one would think that halting tax fraud would be at its pinnacle, the United States is sending a message that whistleblowers should keep quiet. The U.S. Treasury and the SEC are supposedly trying to make better use of whistleblowers and the tips they provide. But those who are contemplating blowing the whistle should look at the case of Brad Birkenfeld.
UBS is the largest bank in Switzerland and has a huge U.S. presence. Two years ago, Birkenfeld, a former banker in UBS’s private banking unit, registered as a whistleblower. He gave the Treasury, Justice Department, IRS, SEC and Senate their entire tax evasion case against UBS. During multiple meetings in 2007, Birkenfeld met with and provided extensive documentation and intricate testimony to Daniel Reeves (a lead IRS agent in the UBS case), John McDougal (an IRS special trial attorney) and Robert Roach (counsel and chief investigator of the U.S. Senate Permanent Subcommittee on Investigations). He cooperated fully in the prosecution of Lichtenstein banker Mario Staggl and billionaire real estate developer Igor Olenicoff, who evaded U.S. taxes on $200 million in assets hidden offshore.
The results? UBS kingpin, Martin Liechti, who knows where all the bodies are buried, testified before the Senate, took the Fifth, and got released back to Switzerland, where he is living large. Three months later, the government indicted Raoul Weil, who ran UBS’ wealth-management business, in a show maneuver, knowing it could not extradite him. Staggl returned to Lichtenstein where he lives life as normal. Olenicoff pleaded guilty to filing a tax return, paid $52 million, and walked. The U.S. settled possible criminal charges against UBS by allowing UBS to pay a $780 million fine and provide information on a couple hundred account-holders (out of more than 50,000) whose names were discovered in the investigation. The government then filed a civil lawsuit seeking the names of all U.S. citizens and residents with secret UBS accounts, vowing to settle for nothing less than full disclosure.
And it prosecuted Brad Birkenfeld.
Of all the characters in the UBS scandal, Birkenfeld, the whistleblower who broke open the tax haven scandal, is the only one to face jail time. To add insult to injury, despite U.S officials’ insistence that they were going to trial in the civil suit against UBS, the U.S. government settled its the case in exchange for the names of about 5,000 U.S. account-holders (a mere fraction of those sought).
It comes as no surprise that UBS contributed cash to more than half of all members of Congress. Putting aside the obvious conflict of interest in Congress taking money from the same company it’s supposed to be investigating, the Justice Department letting some 47,000 American tax dodgers off the hook.
The tax cheats can quietly close out their UBS accounts and open new ones with Credit Suisse or other international tax havens in the Cayman Islands, Singapore, and Liechtenstein.
And as Brad Birkenfeld faces sentencing for what appears to be selective and malicious prosecution, it sends a strong message that whistleblower protection is as much of a sham as tax havens, and that people inclined to tell the truth should keep quiet. The U.S. Treasury and the SEC are supposedly trying to make better use of whistleblowers and the tips they provide. They can start by sending the right message with Brad Birkenfeld, who has been on home confinement wearing an ankle bracelet for the past 7 months. He is due to be sentenced August 21.