UBS whistleblower Birkenfeld to be sentenced today

Update 18:08 Zurich, Switzerland and Miami, Florida (GenevaLunch) – Former UBS banker Bradley Birkenfeld was sentenced to 40 months in prison by a US court 21 August for helping to defraud the US government. He was also fined $30,000 and given three years probation after the prison term.

The sentence was harsher than expected. The prosecution had been demanding 30 months imprisonment, given Birkenfeld’s cooperation with the prosecution in the UBS tax evasion case.

Birkenfeld pleaded guilty to one count of defrauding the US government. He is the former UBS bank relationship manager for high net worth clients in the USA who sparked what eventually turned into a civil case in Florida, brought by the Justice Department against UBS.

Leniency demanded

The prosecution had asked the court for a 30-month jail sentence. His attorneys argued that his extensive cooperation with the US government, which led to a crisis between the US and Switzerland, and a serious step-down for UBS, warranted only a five-year probation.

Vengeance, whistleblower reward or a sense of duty?

Why Birkenfeld became a whistleblower remains a matter for speculation, but the US government noted that his refusal to admit to his own wrongdoing and to provide details caused a problem. A US whistleblowers’ organization in Washington, said late Friday Birkenfeld’s sentence might deter others. Yahoo/AP quotes Dean Zerbe, special counsel at the National Whistleblowers’ Center as saying, “‘It stuns me that the reward for a whistleblower who shined the light on extensive tax fraud and corruption is being sent to jail.'”

He invoked his employee rights as a whistleblower at the bank in March 2006, after leaving UBS when a six-month “gardening” leave ended, according to the Financial Times. Haig Simonien at the FT in Zurich was contacted by an anonymous caller who turned out to be Birkenfeld, in August 2007, when the former UBS manager wanted to his case against the bank to public attention. Simonien notes that Birkenfeld had won a case against the bank over his final bonus pay.

In 2007 he offered crucial information to the IRS, the US tax authority and registered as a whistleblower. Simonien says that for most bankers, Birkenfeld’s behaviour is simply inexplicable: he was successful and took an enormous risk that could well land him in prison, although he may initially have hoped to be given a deal that would leave him free. Under US law, an IRS whistleblower is entitled to compensation, 15-30 percent of tax monies collected. The FT reports that anyone, including convicted criminals, is eligible. (Ed. note: GL has not yet confirmed this detail)

Related: Miami Herald, TdG (Fre)

Background: UBS on the John Doe case, including Birkenfeld’s role, Investment News, May 2009,


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