Bradley Birkenfeld

Bradley Charles Birkenfeld (born February 26, 1965) is an American private banker, convicted felon, and whistleblower. During the mid- to late-2000s, he made a series of disclosures about UBS Group AG clients, in violation of Swiss banking secrecy laws, to the U.S. government alleging possible tax evasion.[1][2] Known as the 2007 "Birkenfeld Disclosure", the U.S. Department of Justice (DOJ) announced it had reached a deferred prosecution agreement with UBS that resulted in a US$780 million fine and the release of previously privileged information on American tax evaders.[3][4]

Bradley Birkenfeld
Born
Bradley Charles Birkenfeld

(1965-02-26) February 26, 1965
Brookline, Massachusetts, U.S.
NationalityAmerican
Alma materNorwich University
American Graduate School of Business
OccupationPrivate banker
Known for2007 Birkenfeld Disclosure
Criminal chargeConspiracy to defraud the United States
Criminal penalty40 months at the FCI Federal Penitentiary and US$30,000 fine

In the United States, he was convicted by the DOJ for a single charge of fraud conspiracy and served 40 months in a federal penitentiary from 2010 to 2012 with a fine of $30,000. After he applied for whistleblower status and protection, the Internal Revenue Service (IRS) awarded him a settlement of $104 million through their Whistleblower Office.[5]

Early life and education

Birkenfeld was born on February 26, 1965, in Brookline, Massachusetts, a suburb of Boston.[6][7] His father was a neurosurgeon. Birkenfeld attended Thayer Academy, a prep school, and graduated from Norwich University in Vermont in 1988.[8] Birkenfeld is Jewish, his paternal grandfather, Max, emigrated to the United States from Romania in 1922. He obtained a master's degree at the American Graduate School of Business in La Tour-de-Peilz, Switzerland.[6]

Banking career

Birkenfeld began his career in banking in the currency trading department of State Street Bank & Trust in Boston. Birkenfeld claims that he first blew the whistle on illegal activities while at State Street, approaching the Federal Bureau of Investigation (FBI) in 1994. The information did not lead to any indictments.[8] He says that he turned down an offer to join the FBI after the incident, but that claim has been disputed.[9] In 1996, he was hired as a private banker at Credit Suisse before moving on to Barclay's Bank in 1998.[6] In October 2001, Birkenfeld began working at UBS in Geneva, Switzerland, again as a private banker offering wealth management services.[10] His principal job responsibility was to solicit wealthy Americans to move their assets to the bank, enabling them to hide their funds due to Switzerland's strict banking secrecy laws and thus avoid paying U.S. taxes.[11] According to Birkenfeld, UBS sponsored events like art shows and yacht races in the United States to attract wealthy people as potential clients.[12]

Birkenfeld worked at Swiss investment bank UBS from 2001 to 2005 as a private banker.

Birkenfeld disclosure: 2005–2011
Main articles: UBS tax evasion controversies § Birkenfeld Disclosure: 2007, and UBS § Tax evasion

In United States

After learning about UBS Switzerland AG dealings in the U.S., Birkenfeld resigned on October 5, 2005 and became a partner at Union Charter Ltd., where he specialized in wealth management.[13] In 2007, he disclosed to the U.S. Department of Justice (DOJ) what he knew about UBS's illegal practices attempting to take advantage the Tax Relief and Health Care Act of 2006, a law that could pay him up to 30% of any tax revenue recouped by the IRS.[14] However, because he did not provide full and complete information to U.S. authorities, Birkenfeld was arrested in Boston on 7 May 2008 when he deplaned from Switzerland arraigned at the U.S. District Court, Southern District of Florida on 13 May.[11] Birkenfeld resigned his position with Union Charter on 3 June 2008 after agreeing to plead guilty to not disclosing accurate information. As a private banker, Birkenfeld advised California real estate developer Igor Olenicoff, to evade U.S. taxes worth approximately US$200 million.[10] Olenicoff subsequently pleaded guilty to tax evasion and paid a $52 million fine, but avoided a jail sentence.[15] U.S. District Judge William Zloch charged him with a single count of conspiracy to defraud the United States and sentenced Birkenfeld to 40 months in prison and a $30,000 fine.[16] Birkenfeld served his time at the Schuylkill County Federal Correctional Institution from January 2010 to August 2012, approximatley 31 months.[17] In 2012, as a consequence of his whistleblower status, the U.S. Internal Revenue Service (IRS) awarded him $104 million, 26% of the total $400 million in taxes returned.[5][18] It was the 4th reward paid to date since the IRS Whistleblower Program went into effect in 2006. [19]

In Switzerland

Birkenfeld is viewed as a criminal and a "traitor" by some members of the Swiss public and banking community as he broke the country's banking secrecy laws.[20] Although he left Switzerland before he disclosed banking client information, had he remained a resident, he would have been prosecuted by Zürich authorities for three and a half years in prison and commensurate fines.[20] When asked if he would ever return to Switzerland, Birkenfeld stated: "I don't believe I will."[21] UBS announced that it would cease providing cross-border private banking services to U.S.-domiciled clients through its non-U.S. regulated units as of July 2008.[22]

After Birkenfeld's award, the Swiss newspaper Blick claimed, “Birkenfeld was a blessing for the Swiss financial industry,” in that his revelations helped accelerate the industry's transition away from its reliance on “dirty” money by dooming the bank secrecy laws that enabled tax evasion.

Birkenfeld has compared the Swiss banking industry with gangsters. "In essence, bank secrecy is analogous to criminal racketeering — and the Swiss government, along with every Swiss private banker, is a co-conspirator."

Post-banking life: 2015–present

Brad Birkenfeld's three-year period of parole ran through November 2015; a year previous Birkenfeld's attorney petitioned the U.S. District Court to allow Birkenfeld to travel abroad.[23] While on parole, Birkenfeld engaged with a variety of charitable efforts: he allowed disadvantaged children to use his luxury suite at Boston Bruins hockey games and donated six electric bicycles to the Boston Police Department after the Boston Marathon bombings.[23]

In January 2015, Birkenfeld was subpoenaed by a French magistrate investigating the abetting of tax evasion and tax fraud by French citizens at UBS.[24] In February 2015, he was allowed to travel to France from 27 February to 1 March 2015 to appear before the French court.[25] The French court is investigating allegations that UBS marketed Swiss numbered bank accounts to French citizens to allow them to hide their assets.[26]

See also

References
  1. Browning, Lynnley (10 November 2008). "Indictments Said to Be Possible in UBS Inquiry". The New York Times. Retrieved 16 September 2013.
  2. Hilzenrath, David S. (10 November 2008). "U.S. Given A Look at Swiss Bank Accounts". Washington Post. Retrieved 16 September 2013.
  3. Baxter, Brian. "UBS to Pay $780 Million Fine in Tax Case Settlement". American Lawyer. Retrieved 16 September 2013.
  4. "UBS Enters into Deferred Prosecution Agreement: Bank Admits to Helping U.S. Taxpayers Hide Accounts from IRS; Agrees to Identify Customers & Pay $780 Million". U.S. Department of Justice. 18 February 2009. Retrieved 16 September 2013.
  5. Laura Saunders and Robin Sidel (September 11, 2012). "Whistleblower Gets $104 Million". The Wall Street Journal.
  6. "Petition for Commutation of Sentence" (PDF). Whistleblowers.org. April 15, 2012.
  7. Hilzenrath, David S. (May 16, 2010). "Swiss Banker Turned Whistleblower Ended Up With a Prison Sentence". The Washington Post. Retrieved July 6, 2012.
  8. Voreacos, David. "Banker Who Blew Whistle Over Tax Cheats Seeks Pardon". Bloomberg. Retrieved 25 August 2013.
  9. Voreacos, David. "Banker Who Blew Whistle Over Tax Cheats Seeks Pardon". Bloomberg News. Retrieved 20 January 2014.
  10. Pfeifer, Stuart (October 26, 2009). "He put a dent in tax evasion". Los Angeles Times. Retrieved July 6, 2012.
  11. Stier, Ken (6 October 2009). "Why Is the UBS Whistle-Blower Headed to Prison?". Time. Archived from the original on October 10, 2009. Retrieved 22 August 2013.
  12. Hilzenrath, David S. (16 May 2010). "Swiss banker turned whistleblower ended up with a prison sentence". Washington Post. Retrieved 25 August 2013.
  13. Carlyn, Kolker and David Voreacos (19 June 2008). "Ex-UBS Banker Birkenfeld Pleads Guilty in Tax Case (Update3)". Bloomberg. Retrieved 29 August 2013.
  14. Roland, Neil (March 3, 2009). "Justice Dept. chastises UBS chairman over IRS fraud probe". Investment News. Retrieved July 7, 2012.
  15. Voreacos, David (January 6, 2010). "Ex-UBS Banker, Informant Birkenfeld Seeks Probe of Prosecutors". Bloomberg. Retrieved July 7, 2012.
  16. "UBS whistle-blower gets 40 month-sentence", UPI, Aug. 21, 2009. "The judge socked it to Birkenfeld ....". Retrieved 2012-09-12.
  17. Sanders, Laura. "UBS Whistleblower Released From Prison". Wall St. Journal. Archived from the original on 2016-03-11. Retrieved 20 January 2014.
  18. Ramonas, Andrew (September 11, 2012). "Swiss Bank Whistleblower Wins $104M Reward from IRS". The Blog of the Legal Times. Retrieved 1 February 2013.
  19. "IRS Tax Fraud Whistleblower Awarded $104 Million". www.young-lawgroup.com. 2012-09-14. Retrieved 2023-08-03.
  20. Gonzalez, Juan. "UBS whistleblower Bradley Birkenfeld deserves statue on Wall Street, not prison sentence". New York: N.Y. Daily News. Retrieved 20 January 2014.
  21. Kroft, Steve (August 15, 2010). "Banking: A Crack In the Swiss Vault". 1 (published May 13, 2018) – via CBS.
  22. "Statement on Indictment of UBS Executive". BusinessWire. Retrieved November 12, 2008.
  23. Javers, Eamon (16 December 2014). "Why this Swiss bank whistleblower can't leave US". CNBC. Retrieved 2 January 2015.
  24. Letzing, John (14 February 2015). "UBS Whistleblower to Assist French Investigation Into Swiss Bank; Bradley Birkenfeld Summoned to Appear Before Judge in Paris". Wall Street Journal. Retrieved 24 February 2015.
  25. Voreacos, David (17 February 2015). "UBS Whistle-Blower Birkenfeld Allowed to Testify in France". Bloomberg. Retrieved 24 February 2015.
  26. Lettzing, John (18 February 2015). "Whistleblower Adds to UBS's Tax Woes in France". Wall Street Journal. Retrieved 24 February 2015.
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