Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Whistleblower Bradley Birkenfeld’s payday comes six weeks after he was released from prison for helping a billionaire property developer avoid paying $7-million in taxes. (TIM SHAFFER/REUTERS)
Whistleblower Bradley Birkenfeld’s payday comes six weeks after he was released from prison for helping a billionaire property developer avoid paying $7-million in taxes. (TIM SHAFFER/REUTERS)

UBS tax evasion whistleblower awarded $104-million Add to ...

A former UBS AG banker was awarded $104-million (U.S.) under a whistleblower program for revealing a tax evasion scheme that cost the U.S. government billions of dollars in taxes and has resulted in criminal charges against Swiss banks and top executives.

The U.S. Internal Revenue Service granted the award – believed to be the largest bestowed on a whistleblower – to Bradley Birkenfeld, the former banker who reported allegations of tax evasion at UBS to U.S. authorities in 2007.

More Related to this Story

He is widely credited with uncovering the scheme, which led to UBS pleading guilty to criminal charges and paying $780-million to settle with the U.S. Department of Justice. As a result of the investigation, the U.S. government has collected $5-billion in back taxes.

“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,” Mr Birkenfeld’s lawyers said in a statement.

In granting the award, the IRS said: “The comprehensive information provided by the whistleblower was exceptional in both its breadth and depth. While the IRS was aware of tax compliance issues related to secret bank accounts in Switzerland and elsewhere, the information provided by the whistleblower formed the basis for unprecedented actions against UBS.”

The reward, which amounts to 2 cents for every dollar collected, is being heralded by whistleblower advocates. The payday comes six weeks after Mr. Birkenfeld was released from prison after serving 31 months of a 40-month prison sentence for helping a billionaire property developer avoid paying $7-million in taxes.

He is subject to home confinement until November, the U.S. Bureau of Prisons said. He did not receive permission to attend the press conference announcing the award, a spokeswoman for one of his attorneys said.

Prosecutors filed criminal charges against Mr Birkenfeld and, in 2010, he agreed to plead guilty to one count of conspiracy. At the time, the Justice Department was criticized for sending the wrong message to would-be informants.

The award comes as U.S. officials are trying to encourage more informants to come forward.

Congress created a whistleblower program as part of the Dodd Frank law to encourage Wall Street and corporate insiders to report suspicions of fraud to the U.S. Securities and Exchange Commission. The program was modelled after the IRS and informants can receive up to 30 per cent of the recovery. Last month, the SEC issued its first reward of $50,000 in a fraud that netted $1-million in penalties.

Since the landmark UBS settlement, U.S. prosecutors have filed criminal charges against several bankers at UBS, Credit Suisse Group and Bank Julius Baer & Co. Ltd., dozens of U.S. citizens and Wegelin, the private Swiss bank.

The scope of the wide-ranging investigation is moving beyond Swiss banks to others located in Asia and Israel, people familiar with the matter have said. Wegelin and most of the bankers have denied any wrongdoing.

Follow us on Twitter: @GlobeBusiness

 
Security Price Change
UBS-N UBS AG 18.48 0.24
1.316 %
Add to watchlist
Live Discussion of UBS on StockTwits
More Discussion on UBS-N

More Related to this Story

Topics:

In the know

Most popular video »

Highlights

More from The Globe and Mail

Most Popular Stories