Why Bradley Birkenfeld's Prosecution Was Unjustified

Published on January 05, 2010

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Why Bradley Birkenfeld’s Prosecution Was Unjustified

1. Bradley Birkenfeld served the public interest

Mr. Birkenfeld’s voluntary disclosures were historic in nature in terms of cracking the vault of bank secrecy. His official contributions forced UBS to pay $780 million to the United States in fines and penalties. His work also led to the creation of IRS amnesty programs, under which the United States recovered $20 billion for taxpayers from 33,000 people who admitted to holding illegal offshore bank accounts. Ultimately, UBS was forced to shut down its entire $20 billion program that existed to solicit and encourage wealthy Americans to hide their money in illegal offshore bank accounts. The NY Daily News asserted that “Bradley Birkenfeld deserves a statue on Wall Street, not a prison sentence.”

2. Bradley Birkenfeld never would have been charged if his original attorneys used whistleblower protection laws

Whistleblower protection laws apply to those who come forward with original information even if they have participated in illegal activity. Protection laws exclude only the narrowly-defined group of “planners and initiators.”

The effort to combat fraud against the government (such as tax evasion) is based on an old Civil War statute that provides protection and rewards for whistleblowers. When passed, Congress knew that people who participate in crimes are key sources of information. Senator Jacob M. Howard, the lead Senate sponsor, endorsed rewarding participants, stating that “setting a rogue to catch a rogue is the safest and most expeditious way I have ever discovered of bringing rogues to justice.”

Of the thousands of whistleblowers who have come forward under whistleblower protection laws (many of whom directly participated in underlying frauds), Bradley Birkenfeld is the first to face prosecution. The Justice Department’s treatment of Mr. Birkenfeld is unprecedented and undermines the integrity of America’s anti-fraud laws.

3. The crackdown of illegal offshore banking would not have begun withoutBradley Birkenfeld

The Department of Justice and UBS both agree (Section 15 to Exhibit C of Deferred Prosecution Agreement) that UBS could have solved all problems had they properly investigated Mr. Birkenfeld’s complaint. Brad Birkenfeld is a true whistleblower who tried to get UBS to fix the problem. UBS left him no choice but to resign and give up his international banking career.  At his sentencing hearing the Court asked the Justice Department prosecutor:  “But for Mr. Birkenfeld this scheme would not have been discovered by the U.S. government? The answer was clear:  “I believe that Your Honor, yes.” This finding was stated multiple times during Mr. Birkenfeld’s sentencing hearing. In addition, multiple government agencies, including the Securities and Exchange Commission, the Internal Revenue Service, and the Senate, have sent letters that point to the information revealed by Mr. Birkenfeld as crucial to the investigation of UBS.

4. Prosecutors based Bradley Birkenfeld’s sentence on a misrepresentation of his whistleblowing activity

At his sentencing hearing, the Department of Justice Attorney said that if Mr. Birkenfeld had turned in one of the biggest tax offenders, his former client Igor Olenicoff, in 2007, he would not have been prosecuted. In fact,Mr. Birkenfeld did voluntarily release this information in 2007 to the Senate Subcommittee on Investigations and other government agencies. The Senate has a transcript detailing all of the disclosures Mr. Birkenfeld made, including those regarding Mr. Olenicoff, which confirms that these disclosures were made before Mr. Olenicoff was indicted or submitted his plea.

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