A former banker for the Swiss giant UBS who blew the whistle on the biggest tax evasion scheme in US history is asking President Obama today for clemency to coincide with Tax Day, the day US income tax returns are due for most people. In January, Bradley Birkenfeld began serving a forty-month sentence despite playing a key role in uncovering the bank scandal. He first came forward to US authorities in 2007 and began providing inside information on how UBS was helping thousands of Americans evade taxes by hiding billions of dollars in secret Swiss accounts. [includes rush transcript]
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JUAN GONZALEZ: A former banker for the Swiss giant UBS [who] blew the whistle on the biggest tax evasion scheme in US history is asking President Obama today for clemency. The clemency request is being filed to coincide with Tax Day, the day US income tax returns are due for all of us.
In January, Bradley Birkenfeld began serving a forty-month sentence despite playing a key role in uncovering the bank scandal. Birkenfeld first came forward to US authorities in 2007 and began providing inside information on how UBS was helping thousands of Americans evade taxes by hiding billions of dollars in secret Swiss accounts.
AMY GOODMAN: Due in part to information provided by Birkenfeld, UBS pleaded guilty last year and paid a $780 million fine. UBS has also agreed to turn over the names of the nearly 4,500 of its American clients to the Justice Department. Meanwhile, thousands of other Americans with unreported offshore accounts have been allowed to belatedly disclose them and pay civil penalties.
The jailing of Birkenfeld has angered many advocates of whistleblowers. His attorney Stephen Kohn joins us now from Washington, DC. Kohn is executive director of the National Whistleblowers Center.
Welcome to Democracy Now!, Stephen Kohn. Start by explaining how exactly it is that this whistleblower, Bradley Birkenfeld, ended up in jail.
STEPHEN KOHN: Well, good morning.
And Mr. Birkenfeld did the right thing. He had information about the largest tax fraud ever turned in. And he walked it over to the Justice Department. He gave them the information. They said, “Thank you very much.” But because he was one of the bankers involved, they indicted him. So they put him in jail for voluntarily, without immunity, turning in the largest tax fraud ever, while thousands of people who profited by millions of dollars have escaped. They only went after — they went after the whistleblower.
JUAN GONZALEZ: Well, Stephen Kohn, the government claims that he didn’t provide all of the information on his biggest client, a Russian from California who was subsequently indicted on tax fraud, as well, and that he withheld vital information from the government.
STEPHEN KOHN: Yeah, and now our investigation has shown that was completely false. This billionaire, Mr. Olenicoff, had $200 million hidden offshore, for which he had for years and years. He was eventually indicted and given probation — no jail time — and a minor fine. Then they turned around to Birkenfeld and said, “Ha! He was your client. You should have turned him in. We’ll put you in jail for forty months.” Well, the record shows that Birkenfeld disclosed all of the information about Olenicoff voluntarily to the US Senate investigators before Olenicoff was indicted and before he was sentenced. So the government’s claim that he was withholding that information just was not true.
What’s incredible in this case is that Mr. Birkenfeld worked for a secret bank in Switzerland. It was UBS, the largest bank in the world, but this account that he worked in were the secret accounts where people could put money without disclosing it to the IRS — you know, the classic secret Swiss bank account. It was a fraud, $20 billion fraud. He turned in all the information. The United States government has collected billions of dollars now from the taxpayers who were secretly withholding their income. They collected $780 million from UBS. He was the largest tax whistleblower in US history. Every American has saved money from what he turned in. But the government turned against him.
And by putting him in jail, it’s creating a chilling effect. Other bankers who have this type of information are afraid. Why would anyone blow the whistle on secret bank accounts if they’re the ones who would end up in prison? That’s why our campaign, that we’ve started today, for executive clemency. He is serving in prison more time than any other banker from UBS, more prison time than the ones who didn’t blow the whistle, the ones who managed the program. He is serving more time in jail than any of the 19,000 Americans who profited personally from these accounts. The government’s sending a terrible, terrible message: don’t blow the whistle; if you do, we’ll take the information you gave us, use it against you, and put you in jail. We have to turn that around. And the only way to do it right now is through clemency.
JUAN GONZALEZ: Stephen Kohn, I’d like to ask you about UBS Americas, which is the US subsidiary of UBS International. Specifically, the head of that bank, Mr. Wolf, here in the United States, Robert Wolf, he is a — President Obama named him to his economic recovery commission. He raised — he had the first major fundraiser for Barack Obama in New York, is a close confidante of the President and a frequent visitor, one of the most frequent visitors to the Obama administration in the White House. The White House told the Wall Street Journal several months ago that they believe that UBS Americas had nothing to do with the fraud that was being perpetrated by its parent company. But in the letters that you have sent to the Justice Department, you’ve raised questions about the veracity of what was the connection between UBS Americas and the UBS fraud that was being orchestrated out of Switzerland. Could you talk about that?
STEPHEN KOHN: Oh, absolutely. One of the key allegations and the documentation provided to the Justice Department by Mr. Birkenfeld was proof that UBS America was helping UBS in Switzerland. They claim there was a line between the two entities, that the secret Swiss accounts in Switzerland, run by UBS, were somehow not connected to its American operations.
What Mr. Birkenfeld has was information that the United States bank facilitated the work of the international bankers. They let the bankers come in and use their offices, use their express accounts, use their corporate discounts. They got tickets for major charity events, where very wealthy people would attend, and then UBS America would give these tickets to the international bankers to come and meet with wealthy people to set up illegal accounts. UBS America essentially facilitated and directly gave monetary support to the work of the international bankers. It was part of a conspiracy, in the sense that the two entities worked together.
Mr. Birkenfeld has significant information about that that he’s turned over. We’ve again put it all together in a formal letter to the Justice Department, demanding a full review and an investigation. But UBS America was part of this scandal, because they assisted the international bankers in moving wealth from America to Switzerland, putting it into secret Swiss accounts, and taking it off the tax rolls.
JUAN GONZALEZ: Robert Wolf was on the executive —-
STEPHEN KOHN: And the other thing -—
JUAN GONZALEZ: Let me ask you, Robert Wolf is on the executive board of UBS International. He served on that board with Raoul Weil, who was actually effectively the boss of Mr. Birkenfeld. Could you tell us who Raoul Weil is and where he is today?
STEPHEN KOHN: I’m not quite sure where he is today, but the top management — what made this scandal so significant is that the top management of UBS consciously created an entire program that eventually had about $20 billion of US assets in it. This was not a mistake. This was not a rogue operation. It was a formal division of the largest bank in the world, created to take wealth from the United States, put it into secret accounts, take it off the tax rolls, conduct illegal stock trades from these accounts, and then they hired bankers to facilitate the operation.
Mr. Birkenfeld is the hero here. He was the only banker to realize what was going on and to come to the government and say, “Look at this fraud.” And this is a fraud perpetuated by the top officials of UBS. And what was their — they went after UBS, somewhat, internationally, not in America, and then they went after the whistleblower. That wasn’t right.
JUAN GONZALEZ: Who is he?
STEPHEN KOHN: That has to be fixed.
JUAN GONZALEZ: And Raoul Weil, who is he?
STEPHEN KOHN: He was one of the top managers of UBS who had full knowledge of the secret programs.
AMY GOODMAN: Stephen Kohn, I remember the photograph in the papers last August, when President Obama went to Martha’s Vineyard. The first day, he teed off with Robert Wolf, and it happened to be just about the same time that Birkenfeld was handed this forty-month prison sentence after pleading guilty to assisting clients evading taxes. Talk about the deal that was made. Who gets exposed, and who doesn’t, of this list of thousands of clients who have these offshore accounts?
STEPHEN KOHN: Yeah, this was incredible. Nineteen thousand American millionaires and billionaires had these offshore accounts. You had to be very wealthy to set one of these up. The government created an amnesty program, so if you voluntarily turned yourself in, you escaped any prosecution and even public exposure. No one would even know who you were. On the other hand, to Mr. Birkenfeld, who didn’t even have an account, Mr. Birkenfeld, who turned it in, he was sentenced to prison and was not offered immunity. So that’s the dichotomy.
In terms of the other bankers who they caught, they were let go, with no jail time or maybe just detained for a week or two. In terms of people who owned these secret accounts but were caught, they were given probation. The billionaire, his largest client, with $200 million in illegal accounts: probation. Mr. Birkenfeld, who the government admits was the reason why all of these illegal shenanigans were uncovered, the government admits it was his information that recouped $780 million in fines, and the government admits that it was his allegations that have driven about $3 to $5 billion in payments of back taxes — yet he’s the one who they put into prison.
And the only way now to get him out of jail is through clemency. And that’s the only way to send a message now that somehow in the United States whistleblowers will be welcomed. If they — every day they keep Birkenfeld in prison sends a chilling effect to the numerous other bankers who have information. When the Senate investigated Birkenfeld’s allegations and conducted a full review of illegal offshore accounts, they estimated that there was $3 to $5 trillion of United States assets in offshore accounts. The UBS scheme that Birkenfeld turned in was $20 billion. The Senate estimated that there was a minimum of $100 billion lost per year by these illegal accounts. How will the American people ever discover who has these accounts? How will these accounts ever be closed down? How will the bankers ever be brought to justice? Through whistleblowers. But the first whistleblower in history to step forward and release this information is in jail. And all the other people who held the accounts or conducted the transactions are not in jail. This is not right. So the government — and it’s up to the President now — has to issue a clemency. He has to issue a strong statement encouraging the other international bankers to step forward.
The problem with these secret accounts is a lot worse than just US taxpayers losing money. These accounts are used by corrupt politicians to put their bribe money. They’re used by officials in developing countries to put illegally stolen development funds, money stolen from food programs, education programs. Who puts money into these illegal accounts? How are they misused? The scandal exposed by Mr. Birkenfeld — and keep in mind, he was the first major banker ever in world history to take information from these top-secret foreign accounts and give them to the government for prosecution. How was he treated? That’s the message.
This is a major news story in Switzerland. This is a major news story throughout the entire banking community. This is being watched. I was interviewed by Swiss TV yesterday. The people who manage the secret bank accounts are watching Birkenfeld with a magnifying glass. They want to know how has the United States treated him. And it’s simple.
AMY GOODMAN: We’ll leave it there, Stephen Kohn. We want to thank you for being with us, Bradley Birkenfeld’s attorney, executive director of the National Whistleblowers Center.