WASHINGTON -- First, the government threw Bradley Birkenfeld in prison for helping a former client at UBS AG hide his wealth from the Internal Revenue Service. Now, as part of the same case, the IRS has awarded the former banker $104 million yes, million for helping expose the widespread tax evasion scheme by the Swiss banking behemoth.
The sum is the largest government whistleblower award ever to an individual, said Stephen M. Kohn, one of Birkenfelds attorneys and executive director of the National Whistleblowers Center, a nonpartisan group.
The award marks a dizzyingly abrupt turnabout in the life of Birkenfeld, who was arrested in Miami in 2008 and accused of helping UBS clients evade their U.S. taxes. Birkenfeld then pled guilty in Fort Lauderdale federal court and agreed to cooperate with authorities in the case against the Swiss bank.
The size of the award, announced Tuesday by Birkenfelds lawyers and confirmed by the IRS, reflects an investigation that resulted in UBS being fined $780 million. It also led to an unprecedented agreement requiring UBS to give the U.S. government the names of 4,700 Americans who held secret overseas accounts and the recovery by the IRS of $5 billion in back taxes and penalties from other taxpayers with overseas accounts under agency amnesty programs, Kohn said. More broadly, he said, the award is a signal to other financiers with information about tax wrongdoing that the IRS program will treat them properly.
Birkenfeld, a Boston native, has become something of a cause célèbre among whistleblowers because of the magnitude of his case and the fact that he was jailed after cooperating with authorities. His lawyers say Birkenfeld, who was a director in UBS private banking division from 2001-2006, discovered the bankss illegal activities in 2005, and after the company failed to change them, he went to U.S. authorities with the information in 2007.
Birkenfeld, 47, served 31 months of a 40-month prison sentence after pleading guilty in 2008 to a count of conspiracy to defraud the U.S. related to his work for UBS. In his plea agreement, he described some of his illegal activities, including smuggling diamonds in toothpaste tubes to his U.S. clients. Birkenfeld, who also had traveled often to South Florida, mentioned the exclusive events that the regions private bankers enjoyed, such as the Sony Ericsson Open tennis tournament and Art Basel Miami Beach. UBS is the main sponsor of Art Basel.
The Justice Department said Birkenfeld did not reveal his own misconduct in helping a client, a charge his attorneys say is not true.
As Birkenfeld entered prison in 2010, he called his treatment an injustice, saying, Im a proud American who did the best I could for my country and this is how they reward me.
His time was cut short for good behavior in prison.
Kohn said Birkenfeld left prison in August, is confined to a house in a New Hampshire conference center, and works as a groundskeeper. He said his home confinement ends in November, when he will begin three years on parole.
Herald writer Anna Edgerton contributed to this.