Declaring it a “great day for honest Americans” and a “terrible day for big time tax cheats” a convicted white-collar criminal has revealed that he’ll be paid a cash reward of more than $100m for lifting the lid on tax fraud at the Swiss bank UBS.
Lawyers for Bradley Birkenfeld, a 47-year-old whistleblower, announced on Tuesday that their client is to receive the record-breaking windfall for telling US Internal Revenue Service (IRS) officials how the bank helped thousands of wealthy Americans illegally evade taxes.
His reward of $104m [£65m] reflects the case’s importance in blowing open Swiss banking secrecy laws, which have for generations helped criminals launder dirty money and allowed plutocratic foreigners to shield their fortunes from tax authorities.
Birkenfeld’s inside information saw UBS pay $780m to avoid criminal prosecution. With the approval of Switzerland’s parliament, following months of heated debate, the bank was also forced to hand over account information regarding 4,500 US clients.
The case caused panic among the so-called “one per cent” of wealthy Americans, who then were told to either disclose details of their Swiss bank accounts – and pay fines and back taxes – or face prosecution. Roughly 33,000 of them agreed, and the IRS has so far collected $5 billion from them.
One of their number could very well have been Mitt Romney, the Republican Presidential candidate. He is known to have a Swiss bank account, along with holdings in such tax havens as the Cayman Islands. However, his campaign is controversially refusing to release tax returns for years which would reveal whether he took part in the amnesty.
Birkenfeld’s windfall came at a price. The information he handed over to authorities saw him prosecuted for having helped clients at the firm, at which he was a tax advisor, to illegally shield assets from the authorities. He spent 30 months in prison and is currently in New Hampshire, finishing his sentence under home confinement.
In court, Birkenfeld once admitted smuggling diamonds into the US in a tube of toothpaste on behalf of a client. He says that after realising the extent of fraud at UBS, he attempted to raise concerns with company compliance officers, but was rebuffed. That prompted him to turn informant.
A spokesman for the IRS said that the reward reflects their “commitment to the law”. Since 2006, guidelines have allowed them to give rewards of up to 30 per cent of recovered funds to whistleblowers, although the agency stressed that such rewards represent fully taxable income.Reuse content