Snitches get stitches right? Well, how would you feel about snitching if it could make you millions? How about hundreds of millions? That's exactly what just happened to a former banker named Bradley Birkenfeld who blew the whistle on Swiss bank UBS which had been helping thousands of Americans hide money offshore to avoid paying taxes. Birkenfeld is $104 million richer today thanks to the IRS' relatively new "whistle blower" policy. But in an ironic and some say unjust twist of fate, the newly minted centi-millionaire is currently living on parole in a New Hampshire halfway house…
Bradley Birkenfeld was hired by UBS as a private banker in 2001. His main responsibility at UBS was to find wealthy Americans who needed investment advice. There was just two minor problems. 1) Legally speaking, UBS was not allowed to give investment advice in the United States and 2) the primary investment advice UBS offered these rich Americans was how to defraud the IRS. Birkenfeld and his team would advise clients to hide art, cash and jewels in Swiss safety deposit boxes. For example, Birkenfeld helped Florida billionaire Igor Olenicoff transfer $200 million un-taxed dollars to a UBS account which Olenicoff could access through a special credit card. One time, he even smuggled diamonds to the U.S. in a toothpaste tube for a client. In total, UBS shielded was making $200 million a year to manage over than $20 billion in shielded money…
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At the time, Birkenfeld claims he was unaware that UBS' actions were illegal. When he found out, he immediately quit and filed a complaint with the company's legal department. After not receiving any response to his complaint for several months, Birkenfeld eventually alerted the United States Department of Justice. When the dust settled, UBS admitted that they had helped over 20,000 Americans set up offshore accounts to avoid taxes. UBS was forced to pay $780 million in fines and give over the names of every single cheating client. The IRS gave the American clients a small penalty-free window to come forward and pay their proper tax amounts. The IRS has so far collected over $5 billion from these wealthy Americans.
For his part, Bradley Birkenfeld was looking at some good news and some bad news. The good news was he would eventually be the largest recipient of the IRS' whistleblower informant program, with a reward of $104 million! The bad news was that Bradley was also sentenced to 40 months in federal prison for his role in the fraud, specifically the Igor Olenicoff deal. Birkenfeld was released to a halfway house in August 2012 after getting a few months shaved off for good behavior. He will be fully released from parole on November 29, 2012.
So here's the million dollar question: Would you rat on your boss and potentially serve three years in federal prison for $104 million? I guess that's actually a $104 million question.
