The whistleblower, Bradley Birkenfeld, provided the agency with information about overseas tax evasion at the Swiss bank. Birkenfeld served about two and a-half years of prison time for fraud conspiracy related to this case, leading to a $780 million fine against UBS, said The Christian Science Monitor. UBS was also mandated to provide thousands of names of American tax dodgers to the agency, had to admit it fostered tax evasion from 2000 to 2007, and had to release data on 250 Swiss accounts said Bloomberg Businessweek. Since, UBS agreed to provide information on 4,450 additional accounts; some 33,000 Americans also voluntarily disclosed their information.
Birkenfeld told authorities that UBS bankers came to this country to court wealthy Americans, managing some $20 billion in assets and helping them defraud the IRS, said Businessweek. Birkenfeld reported UBS’ activities to the Justice Department, the U.S. Senate, the IRS, and the Securities and Exchange Commission (IRS).
“The IRS today sent 104 million messages to whistleblowers around the world—that there is now a safe and secure way to report tax fraud and that the IRS is now paying awards,” said Birkenfeld’s attorneys, according to The Christian Science Monitor. “The IRS also sent 104 million messages to banks around the world—stop enabling tax cheats or you will get caught,” the attorneys added.
Birkenfeld said that, while the IRS does not typically confirm individual award amounts, it did sign a waiver allowing for confirmation of his award. Birkenfeld has received significant notoriety over the sheer magnitude of the case and that, even after cooperating with authorities, he was jailed, noted The Christian Science Monitor. According to federal prosecutors, Birkenfeld withheld information about his dealings with a former UBS client who, in 2007, pleaded guilty to tax charges. “The comprehensive information provided by the whistleblower was exceptional in both its breadth and depth,” the IRS said in a summary of the award provided by Birkenfeld’s lawyers, wrote The Christian Science Monitor.
As we’ve explained, a whistleblower is an employee, former employee, or member of an organization—especially a business or government agency—who reports misconduct to people or entities with the power and presumed willingness to take corrective action. Generally, the misconduct is a violation of law, rule, regulation, and/or presents a direct threat to public interest, such as fraud, health/safety violations, and corruption. Whistleblower complaints focus on conduct prohibited by a specific law and that may cause damage to public safety, that may waste tax dollars, or that may violate public trust in an honest, accountable government.
As we’ve explained, the hope is that massive financial debacles, such as what was seen in the historic Bernard Madoff Ponzi scam, are averted. “The potential for this program is tremendous, and it’s up to the IRS to continue paying rewards and demonstrating to whistleblowers that the process will work and that they will be heard and protected,” said Senator Chuck Grassley (Republican). Grassley helped write the law, noted The Christian Science Monitor. “An award of $104 million is obviously a great deal of money, but billions of dollars in taxes owed will be collected that otherwise would not have been paid, as a result of the whistleblower information.”
Whistleblowers often face retaliation for revealing illegal acts. Employers may refuse a whistleblower pay increases or promotions and, in some cases, companies have fired whistleblowers. In some very extreme cases, governmental agencies have even filed criminal cases against whistleblowers, as was seen in this case.