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Legal Issues

by Mike Masnick

Tue, Sep 11th 2012 12:35pm




Filed Under:
awards, bradley birkenfeld, conspiracy, doj, irs, jail, whistleblowers

Companies:
ubs


IRS Gives $104 Million To UBS Whistleblower... Who The DOJ Put In Jail

from the mixed-messages dept

Sometimes it seems that the federal government's left hand has no idea what it's right hand is doing. Bradley Birkenfeld, a former banker for Swiss banking giant UBS, blew the whistle on UBS practices of helping Americans hide their money offshore. For his troubles, the Justice Department charged him, leading to a plea deal in which he plead guilty to fraud conspiracy and was put in jail for a few years. He just got out a month ago... and now the IRS has handed him $104 million for the whistleblowing, which resulted in UBS paying $780 million to the government to avoid prosecution itself. The IRS claims they're doing this to encourage others to blow the whistle on tax fraud... though they might want to warn the DOJ not to put their whistleblowers in prison. That said... $104 million seems somewhat insane. I realize that it may have resulted in the US government getting a lot more money, but $104 million still seems like a giant sum of money to give a guy who, as the government's own efforts show, participated in fraud. If the idea is to "get the word out" to whistleblowers, you would think that smaller sums, still in the millions of dollars, would do the trick...

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  1.  
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    Lord Binky, Sep 11th, 2012 @ 12:43pm

    It normally takes a drug cartel to make life after jail that nice. Well done Mr. Birkenfeld.

     

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    Josef Anvil (profile), Sep 11th, 2012 @ 12:47pm

    Totally worth it

    A few years in jail for $104 million. I'll take that deal any day.

     

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    Anonymous Coward, Sep 11th, 2012 @ 12:50pm

    Maybe the left hand DOES know what the left hand did and is trying to compensate for that as well. If you wanted to encourage people to be whistleblowers even in the risk of prosecution then a hefty sum of $100+ million might be worth the risk. Paying someone a few thousand or even tens of thousands might not be enough to encourage anyone in the face of a overactive DOJ.

     

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    Brent (profile), Sep 11th, 2012 @ 12:53pm

    This seems like the clever ending to a Johnny Depp/Angelina Jolie movie..

     

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    Zenity (profile), Sep 11th, 2012 @ 12:56pm

    I think the sum involved can only be explained if you take into account most government departments aversion to decimal points, preferring whole numbers whenever possible.

    Compartmentalisation usually explains seemingly obtuse or perverse cases like this, many government departments really are totally unaware of each other, and often work in opposition to each other in some cases.

     

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    Anonymous Coward, Sep 11th, 2012 @ 12:59pm

    I think the reason for the high amount is that they fixed percentage of money recovered by whistle blowers, which in this case would work out to be 13.3333% of the money the government got back.

     

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    Brandon Pope, Sep 11th, 2012 @ 1:01pm

    well . . . . .

    Actually, the total that was recovered was closer to $5 *billion* when you include the amounts from the various people illegally hiding money. I think this award is something like .02% of what was recovered.

    Seems right to me . . .

     

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  8.  
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    Yartrebo (profile), Sep 11th, 2012 @ 1:01pm

    I think it's a fair payment considering he's been jailed for it and it's made him a lot of enemies.

    I know I wouldn't do it ... I value my life too dearly for even $100M.

     

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  9.  
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    DannyB (profile), Sep 11th, 2012 @ 1:04pm

    If you only offer whistleblowers a paltry few million to blow the whistle on a scheme that could make vastly more than that, they'll laugh at you rather than blow the whistle. It might be more profitable to participate in the behavior rather than blow the whistle on it.

    Furthermore, blowing the whistle is a *lot* more likely to get the DOJ to throw you in jail than to just stay quiet and participate in the crime.

     

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    Anonymous Coward, Sep 11th, 2012 @ 1:29pm

    forgetting about the money, i would have thought that immunity to prosecution would have been the clincher for people to help the government. throwing them in jail is really encouraging them, isn't it!

     

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    Anonymous Coward, Sep 11th, 2012 @ 1:39pm

    So one guy gets the goodies while all the other whistle blowers get a legal case and a good chance to go to jail for a long time. It's kinda like the lottery and under those odds, not really worth the idea of going to jail for the remote possibility that you could be lucky enough to win the next one compared to all the others that get nada.

     

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    Anonymous Coward, Sep 11th, 2012 @ 2:11pm

    When it comes to hiding money from the IRS. A whisle blower can receive a reward of up to %15 of the money recovered.

     

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    Anonymous Coward, Sep 11th, 2012 @ 2:13pm

    It seems you should stay away from US authorities if your name is Bradley. Rarely ends well.

     

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    Anonymous Coward, Sep 11th, 2012 @ 2:26pm

    Re: Totally worth it

    A roof over your head, a place to exercise, three square meals a day, and a check for $86,666.67/day for each of 1200 days in incarceration goes a long way to removing the sting of pleading to a felony.

     

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    Anonymous Coward, Sep 11th, 2012 @ 2:33pm

    Reporter: Bradley Birkenfeld, now that you are out of jail, would you like to expand on the reasons or divulge any aditional information perhaps produce some evidence involving your case?

    Bradley Birkenfeld: (looks at his bank account)..............no, comment!!!

     

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    Anonymous Coward, Sep 11th, 2012 @ 2:42pm

    The IRS ought to prosecute the DOJ for facilitating tax evasion.

     

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    Anonymous Coward, Sep 11th, 2012 @ 2:47pm

    Re:

    (j/k btw)

     

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  18.  
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    Coyne Tibbets, Sep 11th, 2012 @ 4:05pm

    It's just the holy grail of tax whistle-blowing: Turn someone in, get a percentage of the recovery. The size of the recovery isn't relevant.

     

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  19.  
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    Anonymous Coward, Sep 11th, 2012 @ 4:22pm

    Re: Totally worth it

    No you wouldn't. I have been to prison, and I assure you, you would not do it for even two million dollars. How is it that you think that it is just a walk in the park. You would probably be the one that is preyed upon. Damn you are stupid.

     

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  20.  
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    Brian Penny, Sep 11th, 2012 @ 5:02pm

    Whistleblowing Ain't Easy

    The path of a whistleblower is a difficult one. I know this firsthand. For doing the right thing, I ended up losing my car, my home, and my friends. I was forced to sell nearly everything I own and move to the other side of the country, where I'm now broke and sleeping on the floor of a stranger's apartment.

    You can read about my struggles as a whistleblower exposing the larges bank fraud in history here: http://thoughtforyourpenny.blogspot.com/2012/03/boy-who-cried-force-placed-insurance_02.html

     

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  21.  
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    Anonymous Coward, Sep 12th, 2012 @ 1:22am

    Re:

    Same thing happens when you help recover a stolen piece of art or recover the cargo of a sunken ship, the customary amount is 10%. Never a flat fee.
    If this is going to spurr an instant wave of whistleblowing is another thing though, a potential whistleblower might want to wait untill more fraud has been comitted to increase the size of the award money. The DOJ not granting immunity to the whistleblower is another thing that would definately deter many whistleblowers.

     

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  22.  
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    Ninja (profile), Sep 12th, 2012 @ 3:37am

    Re: Re: Totally worth it

    A doctor can fix your bottoms afterwards, no problem.

     

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  23.  
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    Ninja (profile), Sep 12th, 2012 @ 3:38am

    Re:

    That. And for violations of the Constitution.

     

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  24.  
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    Anonymous Coward, Sep 12th, 2012 @ 12:11pm

    Re: Re: Totally worth it

    No you wouldn't. I have been to prison, and I assure you, you would not do it for even two million dollars.

    Well $2 million is a hell of a whole lot less than $104 million...

     

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