Sold 1000 shs of Citigroup NYSE:C at 3.32
Was too greedy and didnt sell when it reached $3.45 earlier..
it is heading downward and I decided to take a small profit instead of risking to turning into a loss
profit take before the year end
P&L + $110
UBS Whistleblower Gets Rewarded With Jail Time: Commentary by Ann Woolner
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UBS Whistleblower Gets Rewarded With Prison Time: Ann Woolner
2009-08-26 01:00:00.0 GMT
Commentary by Ann Woolner
Aug. 26 (Bloomberg) — If he had kept his mouth shut and
his head low, Bradley Birkenfeld would be a free man today. He
didn’t, so now the former UBS AG banker wears an electronic
bracelet on his ankle and, beginning in January, will spend
three years and four months in a federal penitentiary.
He’s headed for prison even though he blew the whistle on a
multibillion-dollar international tax fraud conspiracy.
Birkenfeld’s information let the U.S. pierce Swiss bank secrecy
laws as never before possible.
“We will be receiving an unprecedented amount of
information on taxpayers who have evaded their tax obligation by
hiding money offshore at UBS,” Internal Revenue Service
Commissioner Doug Shulman said in a statement last week.
Because of Birkenfeld, the feds are now going after
hundreds, possibly thousands, of tax evaders. They have
collected a $780 million fine from UBS and forced the bank’s
cooperation in finding previously secret customers.
The list of those so far charged in the scheme numbers
nine, led by Raoul Weil, the former chief executive officer of
global wealth management for UBS.
So why is the man who blew the whistle on a mammoth tax
fraud facing prison time? The feds will tell you it’s because he
played a role in the conspiracy, a fact he failed to mention
when he first stepped forward.
So far he has gotten rougher treatment than those who were
content to hide in the shadows. Birkenfeld’s biggest ex-
customer, California billionaire Igor Olenicoff, got only
probation (and only two years of that!) for hiding as much as
$200 million from the IRS. He also paid the government $52
million in back taxes, interest and penalties, thanks to
Birkenfeld.
Return to Switzerland
Birkenfeld’s ex-boss, who ran the global tax-fraud
business, made out even better than Olenicoff. Held as a
material witness for some months in 2008, Martin Liechti pleaded
the Fifth Amendment when called before Congress and was allowed
to return to Switzerland, a free man, charged with no crime.
Birkenfeld got slammed because, for all the good he did, he
didn’t tell on himself. So prosecutors sought a 30-month prison
term for him, and a federal judge in Fort Lauderdale, Florida,
ratcheted it up to 40 months at sentencing last week.
U.S. District Judge William Zloch offered no explanation
why he rejected the defense plea for home detention and bumped
up even the prosecution’s recommendation for prison time. But
Zloch clearly considers Birkenfeld a bad guy.
“You’re not going to have boy scouts in the room” when
illegal activity is planned, says Dean Zerbe, special counsel to
the National Whistleblowers Center.
Grand Larceny
“In the pantheon of tax crimes, he’s subject to a charge
of jaywalking, and he’s brought in people charged with grand
larceny,” Zerbe says.
Home confinement and a long probation would have been
plenty under the circumstances. What you don’t want is to scare
off other insiders considering blowing the whistle.
If you’re looking to ferret out waste, fraud and abuse,
that notorious trio of government parasites, there is nothing
like an insider.
That is why Congress has for years passed laws encouraging
whistleblowers by offering job protection to government
employees and a cut of any funds recovered because of their
informing.
The Birkenfeld sentence stands as an insult to any claim
that the government wants whistleblowers to step up. Fear of
retaliation and career suicide make it hard enough to rat on
your boss. Now you can add the possibility of prison time as
payment for your effort.
Private Banker
Birkenfeld joined UBS as a Geneva-based private banker in
2001. Four years later he spotted an internal legal document
that barred some of the very practices that UBS was using. It
looked like the bank’s recruitment of wealthy Americans wanting
wealth-hiding services wasn’t entirely on the level.
So he notified his supervisors, to no avail. Then he
formally took it to higher-ups within UBS’s compliance and legal
offices.
When that produced no clarification, he left the bank, only
to begin receiving “threatening letters reminding him” he
could be prosecuted if he violated client confidentiality, his
lawyers wrote in a court brief.
UBS withheld a promised bonus.
Birkenfeld went to the U.S. government in early 2007, with
his lawyers seeking full immunity from prosecution for him. He
didn’t get it, but he told the IRS and the Justice Department
what UBS had been up to, anyway.
He spent three full days talking to agents and prosecutors,
giving them documents and suggesting strategies for uncovering
UBS’s gigantic tax fraud scheme.
Big Picture
He gave them the big picture and the details, including the
names of bankers involved and clients. He handed over internal
documents, e-mail and presentations.
“He gave them the keys to the kingdom,” Zerbe says.
Birkenfeld went to the Securities and Exchange Commission.
And the information he gave Congress sparked an investigation
there, where Zerbe was working as tax counsel at the Senate
Finance Committee.
Nonetheless, believing he hadn’t been forthcoming about his
own crime, prosecutors got an indictment against him in April
2008 for tax evasion conspiracy. He quickly pleaded guilty and
continued cooperating with the government.
Beyond the resulting indictments of others, there were
resignations, too. UBS Chairman Peter Kurer stepped down, and so
did Liechti.
Finally, the Swiss government agreed to ease bank secrecy
and this month struck a deal with the U.S. government to hand
over thousands of names of American clients of Swiss banks.
More than Snipes
And yet, Birkenfeld’s 40-month sentence is longer than the
three years actor Wesley Snipes got for failing to pay $15.6
million in taxes. And Snipes has yet to admit he did it, much
less cooperate.
In fact, he berated a government employee for finding that
his $4 million tax refund claim was frivolous. Nonetheless he
was allowed to travel to England and Thailand for filming while
his conviction is on appeal, even as Birkenfeld has a curfew and
ankle bracelet to confine him.
Now the government is claiming bragging rights for forcing
the Swiss government to relent, at least a bit, on secrecy for
U.S. tax evaders.
Prosecutors better hope that Birkenfeld’s tips will last
them a very long time. They shouldn’t expect more whistleblowers
to show up any time soon.
(Ann Woolner is a Bloomberg News columnist. The opinions
expressed are her own.)
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