An ex-banker, who supplied details about overseas tax cheats and served prison time for fraud conspiracy, has just been awarded the largest individual federal payout in US history.
Bradley Birkenfeld, the former UBS AG banker who exposed tax evasion practices of the prominent Swiss bank to the US Internal Revenue Service (IRS), has been awarded an unprecedented US$104m.
In a report by the BBC, Birkenfeld told authorities how UBS bankers came to the US to entice wealthy Americans, managed US$20bn of their assets and helped them cheat the IRS.
Birkenfeld himself admitted in 2008 that he helped an American client avoid paying tax on US$200m in assets.
In 2009, UBS AG admitted it fostered tax evasion from 2000 to 2007, and paid a US$780m fine to avoid prosecution. Birkenfeld was imprisoned for fraud conspiracy as part of the same case.
The bank later agreed to provide identities and account information of another 4,450 individuals suspected of cheating on their taxes, and another 33,000-plus have since voluntarily disclosed offshore accounts to the IRS – generating more than US$5bn.
The San Francisco Chronicle reports that the UBS case set a precedent and led to an erosion of the covert use of Swiss banks by America’s elite to cheat the IRS. At least 11 banks remain under criminal investigation and two dozen offshore bankers, lawyers and advisers, as well as 50 taxpayers, have been charged with crimes.
Birkenfeld remains on home detention after being released from prison on 1 August. His attorney, Stephen Kohn, is seeking a presidential pardon.
“The IRS sent 104 million messages to whistle-blowers around the world - that there is now a safe and secure way to report tax fraud,” he said at a Washington news conference.
The IRS confirmed the award in a statement: “The whistleblower statute provides a valuable tool to combat tax non-compliance, and this award reflects our commitment to the law.”
Whistleblowing: how it can lead to major risk management restructures
Olympus whistleblower wins award
Olympus whistleblower wins $15.5m in unfair dismissal claim
Whistleblowing policy: why it's crucial to have a clear definition