The whistleblower in a breakthrough tax fraud case against Swiss bank UBS AG has won a record-setting $104 million reward from the U.S. Internal Revenue Service, a handsome payout that could entice more informants to come forward.
Bradley Birkenfeld, who once confessed to smuggling diamonds in a toothpaste tube, was not present at the news conference on Tuesday where his award was announced by his lawyers.
He was released from prison just last month and is living in New Hampshire under home confinement at a friend's estate where he is gardening and assisting with other jobs involving manual labor on the property, the lawyers said.
Based on netting roughly $44 million after paying federal taxes and legal fees, which tax lawyers not involved in the case called a reasonable estimate, Birkenfeld realized about $46,000 for each day he spent in prison.
In a case that shook Swiss banking to its core, UBS in 2009 entered into a deferred prosecution agreement and paid $780 million in fines, penalties, interest and restitution to settle charges that it helped thousands of wealthy Americans hide billions of dollars in secret Swiss accounts....
The IRS whistleblower program gathers information from people who want to alert the tax-collecting agency to misconduct. Last year, the program collected only $48 million in tax revenues, down from $464 million in fiscal 2010. New whistleblower cases were down as well.
Those results drew criticism earlier this year from Republican Senator Charles Grassley, who wrote legislation overhauling the program in 2006. But Grassley said on Tuesday the Birkenfeld case showed the whistleblower program can work.
Wisenberg said friends of big business in Congress might argue that it was an outrage for someone involved to get so large an award.
"But if ever there was anyone who deserved a big reward it was this guy," he said. "He's done something no one's ever done before, essentially brought the Swiss banks to their knees."