Swiss banker turned whistleblower ended up with a prison sentence
Sunday, May 16, 2010
Former Swiss banker Bradley Birkenfeld had secrets he was burning to tell, secrets so profound they could change lives and fortunes, beginning with his own.
They could make him rich, and they could send him to prison. They could expose thousands of Americans who had hidden money from the Internal Revenue Service, and they could implicate one of the world's most powerful financial institutions in a far-reaching fraud against the U.S. government. They could topple Switzerland from its vaunted position as secret banker to the world.
The question was how to tell them.
How could the Massachusetts native strike a blow against the malefactors and claim a potentially astronomical reward without destroying himself in the process?
Three years ago, communicating with his Washington lawyers from Swiss hotels and pay phones to avoid discovery, Birkenfeld began a delicate and dangerous dance with the U.S. government. He wanted to stake a claim under a new federal whistleblower law that offers informants up to 30 percent of the tax revenue they help the IRS recoup. Before spilling his secrets to federal investigators, he also wanted immunity from prosecution for his participation in the cross-border scheme.
Birkenfeld's story turned into a cautionary tale for would-be informants and a test of the U.S. government's attitude toward them. Should people who come forward with inside knowledge of a crime be rewarded, punished -- or both? Can the government simultaneously woo such whistleblowers with financial enticements and threaten them with incarceration?
By now, results of the famous case have reverberated around the world. UBS, Switzerland's largest bank, admitted to helping Americans dodge taxes, and it agreed to pay the U.S. government $780 million. In a departure from its own legal standards,
the Swiss government divulged client secrets. Alarmed by the whole affair, many depositors pulled their money out of UBS, and thousands of tax-dodging Americans have come clean with the IRS.
Not as well known is a distinctly Washington drama: how Birkenfeld, 45, came in from the cold but ended up in a federal prison camp.
With the new whistleblower law, Congress had hung an open-for-business sign on the IRS, part of a strategy to collect some of the billions of dollars of taxes that go unpaid each year. However, to secure immunity, Birkenfeld had to deal with the Justice Department. In effect, he had to put his head in the lion's jaws.
In March 2007, Washington lawyer David H. Dickieson of the firm Schertler & Onorato asked Justice for a meeting. The agenda: a mystery client.
"This is a 'once in a career' case for the lucky government attorneys willing to follow up on the hard leads that our client is prepared to provide," Dickieson wrote in an e-mail to prosecutor Karen E. Kelly. "We look forward to working on the same side as you and the government in this matter."