Tuesday, September 11, 2012

U.S. whistleblower nets $104m, more will come 'out of the woodwork'

From the U.S. National Whistleblower Center:
"The Internal Revenue Service (IRS) has awarded former UBS banker Bradley Birkenfeld a whistleblower reward of $104 Million for his contributions in providing the U.S. Government with insider information on UBS’ illegal offshore banking scheme. This is believed to be the largest reward ever given to an individual whistleblower in the United States and the first major reward issued under the IRS tax whistleblower law.

In a joint statement, Mr. Birkenfeld’s attorneys, Stephen M. Kohn and Dean A. Zerbe stated:

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. The IRS also sent 104 million messages to banks around the world – stop enabling tax cheats or you will get caught."
The episode, which involved Birkenfeld serving 31 months in prison for assisting tax evasion, has so far resulted in the IRS collecting some $5 billion in back taxes. The Financial Times adds:
Since the UBS settlement, US prosecutors have filed criminal charges against several bankers at UBS, Credit Suisse and Julius Baer; dozens of US citizens; and Wegelin, the private Swiss bank. The scope of the investigation is moving beyond Swiss banks to others in Israel and Asia, according to people familiar with the matter have said.
Whistleblowing has an important role to play in the enforcement of tax crimes, just as with many other crimes, and this sends a very positive signal. As Swissinfo notes:
"The outcome of the Birkenfeld case could have "enormous implications" for other whistleblowers pursuing awards and who will be watching closely, said Andrew Carr Monday, a lawyer with law firm Bateman Gibson in Tennessee. He is representing another IRS whistleblower in a separate case."
"Bryan Skarlatos, a tax lawyer with law firm Kostelanetz & Fink LLP, said the IRS whistleblower program is likely to become a bigger deal now, "people will come out of the woodwork."


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