Yesterday marked the end of Bradley Birkenfeld’s prison term for conspiracy to defraud the United States. However, what he actually did was save taxpayers billions of dollars after exposing the secret corruption of UBS, the largest bank in Switzerland. UBS conducted a tax evasion scandal, allowing thousands of Americans to illegally evade taxes by using offshore bank accounts. After complaining to the UBS with no response, Birkenfeld blew the whistle to the U.S. government about the scheme. He provided extensive information about the company’s illegal operation, including the UBS agents directly involved and the details of 19,000 American-owned accounts.
In return, Birkenfeld was prosecuted, after pleading guilty to conspiracy in 2008. The DOJ claims Birkenfeld was not forthcoming about his status as a private banker for Igor Olenicoff, but Birkenfeld made his status known prior to the indictment in testimony to the Senate. In this same testimony, he revealed Olenicoff’s money laundering scheme. From GAP’s Jesselyn Radack:
After negotiations with the Justice Department broke down over its refusal to provide Birkenfeld a "friendly subpoena," which would provide the compulsory process necessary for him to reveal client names without violating Swiss bank secrecy laws, he reached out to the U.S. Senate Permanent Subcommittee on Investigations, which was investigating tax havens and more than happy to subpoena him. Accordingly, Birkenfeld testified to the Senate on October 11 and November 13 of 2007, in which he identified Igor Olenicoff by name as one of his biggest clients. At the same time, Birkenfeld also provided substantially the same information on Olenicoff to the IRS and the SEC.
In other words, prior to Olenicoff himself being charged criminally by the Justice Department, Birkenfeld had provided sworn testimony to the Senate identifying him, described his $200 million account at UBS, and detailed his own involvement as Olenicoff’s private banker at UBS.
For his truthful exposures, Birkenfeld spent two and a half years in prison, while those involved in the tax evasion scheme received little to no punishment. Martin Liechti – the UBS executive who led the illegal operation – returned to Switzerland without further punishment. As the kingpin walked with impunity, other small time crooks who assisted in the scandal were granted amnesty in return for small fines. The bank received a $780 million dollar fine, although the scandal cost the U.S. billions of dollars.
Perhaps worst of all is the message the U.S. is sending other potential international finance whistleblowers: expose fraud and you yourself might be put in jail. The chilling effect this may have on would-be whistleblowers – past and future – could cost obscene amounts of tax revenue and allow the financing of illegal activity.
Erin Neff is a National Security & Human Rights intern for the Government Accountability Projet, the nation's leading whistleblower protection and advocacy organization.