by Jesselyn Radack
Prosecuting Whistleblowers - U.S. Creates a Worst Case Scenario for Truthtellers
http://www.dailykos.com/story/2010/5/16/866891/-Prosecuting-WhistleblowersU.S.-Creates-a-Worst-Case-Scenario-for-TruthtellersThe government used to fire, blacklist and bankrupt whistleblowers. But now the government has upped its ante: it is prosecuting them.
Three weeks ago, former NSA whistleblower Thomas Drake was indicted for "leaking."
In today's Washington Post, there's a great article on financial whistleblower Bradley Birkenfeld, Washington Post. He complied with a whistleblower incentive law and ended up in jail. (
http://www.washingtonpost.com/wp-dyn/content/article/2010/05/15/AR2010051500089.html?wprss=rss_business)
This is a toxic trend that must stop.
Bradley Birkenfeld is a former banker with UBS, Switzerland's largest bank, who shattered 75 years of Swiss bank secrecy by blowing the whistle on American tax dodgers who hid money in Swiss bank accounts.
Birkenfeld's story is more than a cautionary tale. It is a glaring stop sign for any potential financial whistleblower. The new IRS Whistleblower Reward Program enticed him to come forward with a law that turned into virtual entrapment.
As the article explains:
UBS, Switzerland's largest bank, admitted to helping Americans dodge taxes, and it agreed to pay the U.S. government $780 million. In a departure from its own legal standards, the Swiss government divulged client secrets.
What is not as well known is that the Swiss welched on a Deferred Prosecution Agreement to turn over a miniscule percentage of the total suspected tax dodgers, which begs the question why UBS is not now being prosecuted. Many depositors simply pulled their money out of UBS and put it in other offshore tax havens.
The IRS set up an amateurish amnesty program in which tax dodgers could come forward and avoid criminal liability. This netted thousands, but many of them were not UBS clients and many were low-net-worth account holders. Meanwhile, DOJ was too busy putting Birkenfeld in jail for a single count of fraud to follow up on the thousands of names Birkenfeld voluntarily provided.
In a scene that should be from a movie, not real life,
In March 2007, Washington lawyer David H. Dickieson of the firm Schertler & Onorato asked Justice for a meeting. The agenda: a mystery client.
"This is a 'once in a career' case for the lucky government attorneys willing to follow up on the hard leads that our client is prepared to provide," Dickieson wrote in an e-mail to prosecutor Karen E. Kelly. "We look forward to working on the same side as you and the government in this matter."
"Just what I need, a 'once in a career case'!!" Kelly answered.
This foreshadowed the Justice's lame use of the unprecedented information provided by Birkenfeld and its strenuous effort to shoot the messenger.
Birkenfeld voluntarily met with the Justice Department and gave them massive, unprecedented amounts of detailed information and UBS documents, including cell phone numbers, e-mail addresses and the names of American hotels used by UBS salesmen. He recommended that the government trace their contacts with U.S. clients. He named the cultural events that the Swiss bankers attended (art shows, sailing regattas, tennis tournaments, etc.) to cultivate clients and suggested that the government arrest the bankers when they attempted to enter the country.
He turned over the name, account numbers and password of a high-net worth Middle Eastern oil trader, along with his posh New York address,
because he suspected the trader had terrorist connections.DOJ sat on its hands. By August, it appeared that someone tipped off UBS that Birkenfeld had told on the bank, which now 1) would make it harder to catch bankers in the United States, 2) allow clients to empty their accounts, and 3) endanger Birkenfeld (in government parlance, that is known as "burning your source".)
The Justice Department and Birkenfeld reached an impasse on immunity. It would be risky for him to tell prosecutors every last detail without immunity, and it would be risky for Justice to grant immunity without knowing all.
So Birkenfeld went to the SEC, IRS, and the Senate's Permanent Subcommittee on Investigations--who were all more receptive. The Senate offered Birkenfeld a "friendly subpoena," which Justice had steadfastly refused to do, and Birkenfeld testified to the Senate. In other words, the Senate upstaged the Justice Department. This ticked off the Justice Department, which arrested Birkenfeld in May 2008. He pleaded guilty to helping a single client evade taxes.
At Birkenfeld's sentencing last year, the prosecutor (Kevin Downing) said the banker's assistance had been indispensable.
I will say that without Mr. Birkenfeld walking into the door of the Department of Justice in the summer of 2007, I doubt as of today that this massive fraud scheme would have been discovered by the United States government.
The Justice Department has screwed this case up 8 ways to Sunday. It captured the UBS kingpin, Martin Liechti, and set him free. Switzerland reneged on its agreement to turn over 4,500 names of American tax cheats, and the Justice Department has not moved forward with prosecuting them. The Justice Department didn't take the 19,000 names that Birkenfeld offered, and instead set up its amnesty program which netted a couple thousand low-level tax cheats.
While some UBS clients have been prosecuted, Birkenfeld--the whistleblower--is the only one in jail. Prosecutor Kevin Downing, for his role in the pursuit of UBS, just received a Justice Department award. It's worth noting that UBS was one of President Obama's largest "bundlers" and UBS has contributed tot he campaigns of approximately a third of sitting congressmen.
Birkenfeld is more than just a causality of the terrifically bungled UBS case. His case sends an awful message to future whistleblowers: You must not only risk your career by following your conscience, you must risk your very freedom.
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