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IRS whistleblower Birkenfeld wants to leave U.S., DOJ opposes early end to probation

Bradley Birkenfeld, the former Swiss banker who became an IRS whistleblower and was awarded $104 million after serving a U.S. prison sentence, wants his probation to end early so he can move back to Europe.

Birkenfeld was in federal prison until August 2012, serving a 30-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, the DOJ said.

Birkenfeld became a whistleblower against UBS. His information exposed 35,000 U.S. taxpayers who were hiding money from the IRS in overseas accounts. With Birkenfeld’s help, his lawyer said, the IRS collected $5 billion in back taxes, fines, and penalties. And UBS itself paid a fine of $780 million to the U.S.

Despite the help he gave to the IRS, the DOJ charged Birkenfeld with tax crimes. He pleaded guilty in 2008 to one count of conspiracy to defraud the United States. Days after his release from prison in September 2012, the IRS awarded him $104 million under its whistleblower program.

Last month he asked a federal judge in Fort Lauderdale, Florida, to end his probation or modify its terms so he can leave the U.S.

“The reason is simple,” Birkenfeld’s motion said. “As the end of his sentence approaches, Mr. Birkenfeld, who now resides in New Hampshire, seeks to return to Europe to rebuild his life.”

“It is also abundantly clear,” the filing said, “that Mr. Birkenfeld has been punished severely” by spending 30 months in prison after he helped U.S. authorities. He also served 20 months in pre-sentence home confinement, one month in community confinement, and three months in post-prison home confinement.

The court filing didn’t mention his $104 million whistleblower award.

Birkenfeld’s probation is set to end this year on November 28.

During his probation, he was arrested and convicted of driving while intoxicated in Portsmouth, New Hampshire, his court filing said.

Last week, the DOJ said it opposes early termination of Birkenfeld’s probation. The DOJ cited the seriousness of his original offenses and the DUI conviction.

A hearing date hasn’t yet been set for Birkenfeld’s motion.

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Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

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2 Comments

  1. To anyone unfamiliar with the Qui Tam process, this article reads like it must be a novel (i.e. fiction). It is self-evident that the US DOJ will take help from where-ever it can get it; however, there is something blatantly distasteful about awarding a person $104 million immediately after that person is released from prison when that person was allegedly part of the original scheme to assist wealthy US Taxpayers allegedly avoid US Taxes.
    As one who instructs on government contract compliance and avoiding the False Claims Act, I do joke about "winning the lottery" by being an employee of a government contractor who then becomes a relator filing a Qui Tam…even if that employee may have been an active participant in designing and executing the scheme. As they say, "it is what it is".

  2. The opposition to Mr. Birkenfels's motion shows the duplicity, enmity, ignorance of, and small-minded resistance to, the kinds of intelligent moves that support policy and send powerful signals (in support of those policies) to the community of potential whistleblowers. .

    That the DOJ even chose to oppose this man's recent motion demonstrates an enduring grudge held by the DOJ and administration against him (and possibly the WB community.)

    It bears noting that the DOJ was made to look the fool after claiming Mr. Birkenhead as the icebreaker that allowed the IRS & DOJ to pursue tax scofflaws and criminals making liberal use of secret off-shore bank accounts. Then later reversing course and downplaying earlier statements as they prosecuted their once essential WB; this happening, naturally, after he had provided them information in numerous follow-up interviews.

    It also bears noting that Mr. Birkenfeld only received a reward after Sen. Grassley, who clearly recognized the damage being done to the cause of whistleblowing by short-sighted bureaucrats, held the administration's feet to the fire and compelled a reward to Birkenfeld. (The reward itself, had it been in line with current rules would have been around $1.2 billion, but was presented as a take-it-or-leave-it offer.) Indeed, it is alleged that the IRS routinely cherry-picks and utilizes WB submissions before denying awards due to "lack of useful information provided" notifications to the WBs.

    The desperate antipathy and sheer buffoonery inherent in the DOJ's opposition should be obvious, not only for its citing original offenses from an industry in which this man will never be employed again, but the citation of his DUI (if the DOJ cared about safer American streets they would have let him expatriate himself from the U.S.)

    One has to wonder if the DOJ wants to leverage confinement to the U.S. as a way to persuade further "cooperation" from him at some future time.

    As a potential whistleblower monitoring the shambolic progress of the IRS WB program (and to a lesser extent the DOJ's False Claims Act Qui Tam program, specifically the attacks on the WSLA and the FCA by the U.S. Chamber of Commerce lobbing corporation), I can say that even for individuals such as myself that could provide solid information without fear of culpability, complicity, or conviction, the poor performance of every branch of federal government regarding WB's (except for that beacon of competence in the SEC WBO) gives me very little desire to see justice served regardless of any potential payoff to myself due to the kinds of disreputable actions taken by the DOJ vis a vis Mr. Birkenfeld and the stingy, obstructive and disheartening way the IRS WBO treats and cheats its WB's and the fear that like dealing with the mafia, once a WB is inside, the government can do whatever it wants to and with that WB.


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