Bradley C. Birkenfeld has entered the pantheon of whistleblowers.
The former UBS banker helped break the secrecy of the Swiss bank - a practice that not only sustained uncounted spy novels, but was widely considered inviolable.
Birkenfeld, 44, has pleaded guilty to conspiracy and is scheduled to be sentenced tomorrow in Fort Lauderdale. He could receive as much as five years in prison; his lawyers have asked for probation, in recognition of his cooperation with authorities. Prosecutors have requested a three-year sentence.
More than three years ago, Birkenfeld sent a letter to a top bank executive, saying he wanted to invoke his rights under UBS whistleblowing policies. He intended to tell authorities about the bank’s efforts to help Americans evade U.S. taxes, and to illegally sell securities to American customers.
In the chain of events since then, UBS has consented to payment of $780 million to avoid prosecution for helping U.S. tax cheats. It also agreed yesterday to release information on 4,450 accounts held by Americans. The agreement settles a U.S. lawsuit seeking information on 52,000 Swiss accounts.
The son of a Massachusetts neurosurgeon, Birkenfeld was an economics major who received an MBA in wealth management. He started working for UBS in Switzerland, in 2001. By 2005, his attorneys say in pre-sentencing documents, he realized that something was amiss.
Defense attorneys say Birkenfeld provided “detailed information about such misconduct to his superiors and to his
government, first internally at UBS in Switzerland and then (despite long-standing Swiss
banking secrecy laws) in the United States, his home country.” He left UBS in 2006.
In June 2008, he pleaded guilty to conspiracy, admitting that he helped California billionaire Igor Olenicoff dodge taxes on $200 million in hidden assets. Olenicoff later pleaded guilty to filing a false income tax return. He was sentenced to two years’ probation and agreed to pay $52 million in taxes and penalties.
As the Washington Post notes, the prosecution of Birkenfeld may have something to do with potential financial rewards.
Ordinarily, whistleblowers are eligible for payments of up to 30 percent of any money recouped through IRS prosecution of tax cheats. However, regulations say no rewards will be paid to those who are convicted of criminal activity connectedto the evasion.
Among those writing letters of support for Birkenfeld were a teacher from his former school, Thayer Academy in Braintree, MA; and former pro tennis player Rosie Casals, who stayed with the Birkenfeld family when she was playing the Virginia Slims Circuit in the early 1970s.
Casals wrote, “He is someone I would trust with my life and money and someone I know would always do the right thing no matter at what cost to himself.”
Update: Birkenfeld was sentenced Friday to 40 months in prison.
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