The news today that former jailed banker Bradley Birkenfeld will be paid $104 million by the U.S. Internal Revenue Service as a whistleblower may be the biggest FCPA enforcement event of the year.
Anyone who had doubts about whistleblowing to the feds now knows the truth. Squealing pays. Even for bad actors.
Birkenfeld was in federal prison until August, serving a 31-month sentence. As a private banker for UBS, he helped people cheat the U.S. government out of taxes. He once smuggled diamonds in a tube of toothpaste for a client.
Now he’s rich.
He turned in his employer, which coughed up a fine of $780 million to Uncle Sam. And his information exposed 35,000 individuals who were hiding money from the IRS in overseas acconts. That led to the collection of $5 billion in back taxes, fines and penalties, his lawyer said.
Birkenfeld becomes the poster boy for whistleblowers just as the Dodd-Frank whistleblower bounty scheme kicks into gear. That program covers securities law offenses, including FCPA violations. (Birkenfeld wasn’t paid under Dodd-Frank but through a separate IRS program.)
Earlier this month, the SEC made its first award under Dodd-Frank, in a non-FCPA case.
Since penalties in FCPA cases can be enormous, dreams of becoming the next Birkenfeld will be dancing in many heads.
Before Birkenfeld hit the jackpot, the SEC was already receiving about eight tips a day from whistleblowers. We boldly predict a spike in tips now that Birkenfeld is deep in clover.
And corporate boards will be running for the door to self disclose any potential FCPA violations they learn of. With everyone hoping to be the next Birkenfeld, no information inside any reporting company is safe or protected.
Comments are closed for this article!