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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Whistle-blower wins big

Ex-banker gets millions for helping expose tax evasion

Alan Fram Associated Press

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 dizzyingly abrupt turnabout in Birkenfeld’s life leaves him with the largest government whistle-blower award to an individual, said Stephen M. Kohn, one of Birkenfeld’s attorneys and executive director of the National Whistleblowers Center, a nonpartisan group that defends employees’ disclosures of wrongdoing and waste.

The size of the award, announced Tuesday by Birkenfeld’s 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, the award is a resounding signal to other financiers with information about tax wrongdoing that the IRS’ program will treat them properly, said Kohn. Birkenfeld has become something of a cause celebre among whistle-blowers because of the magnitude of his case and the fact that he was jailed after cooperating with authorities. His lawyers say he discovered UBS’ 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. The Justice Department said Birkenfeld did not reveal his own misconduct in helping a client, a charge his attorneys say is not true.

Gordon Schnell, a New York lawyer who has handled whistle-blower work and is not involved in Birkenfeld’s case, said the huge award signaled a possible turnabout by the IRS whistle-blower office, which he said has had a reputation for doing very little. The agency’s latest annual report said that in 2011, its whistle-blower office received nearly 7,500 cases and had a staff of 18 people.