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When the Whistles Don't Blow
By David Glenn Cox (author)
Every day we see the signs of massive systemic corruption in our society. It makes the day hard to take sometimes and makes it easy to see why millions focus on entertainment news or sports; it's just so much easier on the mind. Just take the blue bill and zone out, and damn it, sometimes I wish that I could.
As time goes by we see layer upon layer of laws restricting our rights while at the same time the courts, the last bastion of our freedom, peel away our constitutional protections until we are left with a justice system that will provide you only with as much justice as you can pay for. The Supreme Court today sided with former Enron CEO Jeffrey Skilling, leading to a possible invalidating of Skilling's 24-year prison sentence. Mark my words, Skilling will walk; he has a bank of high-powered attorneys working on the case round the clock. They've even argued that Skilling couldn't get a fair trial because the Houston newspaper wrote a disparaging editorial about him. From conviction to Supreme Court in three years; now, Buddy, that's service!
In Louisiana we see Judge Feldman, a Federalist Society judge who doesn't believe in legislating from the bench, overruling the President of the United States and the health and environmental concerns of the people. Judge Feldman's holdings in oil company stock give the perception of impropriety and that is enough. Seven of sixteen federal judges in Louisiana have recused themselves because of their relationship with the state's oil companies. It's a private club, judges that own oil companies and oil companies that own judges.
Harry Truman said, “Whenever you put a man on the Supreme Court he ceases to be your friend.” Dick Cheney never heard that and neither did Anton Scalia. The justice can still be your friend and you can still go hunting together but only after you leave office. On the foundation of a fair judiciary rests the base of representative government. Without it, all shifts and erodes, tilts and leans.
The rot is systemic and moves from root to branch. It's wise to always remember that when you blow the whistle on a nest of rats, you had best know who the rats really are.
In 2001 Bradley Birkenfeld went to work for UBS Bank in Geneva, Switzerland, and Birkenfeld is no angel by any stretch of the imagination. He is everything that you would expect a corporate international banker to be. The son of a neurosurgeon, Birkenfeld earned a master's degree in business administration and worked for State Street Bank in Boston before joining UBS. Birkenfeld knew the way the game was played and gladly played along.
He was working for the rich and powerful; he managed one account for a billionaire worth $200 million. He carried an encrypted laptop to prevent prying eyes and lied to customs officials about the reasons for his travels. He would call the trips entertainment when he was delivering checks from Europe to the Virgin Islands, Panama and Hong Kong or setting up sham corporations and tax shelters. He once delivered profits back to a customer by putting diamonds in a toothpaste tube.
He was living the good life as UBS sent their people hop scotching the globe to art shows and yachting regattas looking for the rich who were looking to dodge the tax man. It really didn't matter that he held no Securities and Exchange Commission license. Like a mobster worried about a traffic ticket, it was a matter too small to be concerned with.
In 2005 Birkenfeld claimed that he learned that UBS policies had violated an agreement with the IRS. I find that story a little hard to swallow, that a jet-setting international banker dealing with the super rich looks down at his dog one morning and says, “Oh garsh, Sandy, what have we gotten ourselves into?”
He resigned from UBS in October 2005 and provided written whistle blower complaints to the Head Counsel for UBS, and other UBS senior executives, regarding the illegal practices of U.S. international business. I'm sure that it read something like this: “After four and a half years of smuggling diamonds and delivering checks to overseas tax shelters, it has suddenly come to my attention that we might be violating the law here, mister. My master's degree in business administration tells me something just isn't right around here. So I quit, and not only do I quit, but I'm gonna tell on you, too. So just give me my bonus check and I'm out of here!”
Yes, Mister Birkenfeld and UBS finally reached an out of court settlement on his bonus check. UBS did their own investigation into Birkenfeld's accusations and decided that there was no evidence of wrongdoing. “What's that guy talking about?”
Being true to his word Birkenfeld showed up on the steps of the Justice Department, brown paper sack lunch under his arm, and told his dog Sandy, “Now you wait here for me while I go tell the truth.” Sandy said, “Arf!” which is pretty much all that Sandy ever says.
Sandy waited and waited for almost two years as Mr. Birkenfeld told everything that he knew about everybody that he knew. And every time Birkenfeld asked for immunity the government would answer, “Tell us more.” Mr. Birkenfeld wanted immunity from prosecution but he also wanted the whistle blower award of 15 to 30 percent of the taxes collected, and with the people Birkenfeld was singing about, that's a lot of cheese. So much in fact that some feared for his safety. In August 2007, Birkenfeld's attorney e-mailed prosecutors to say UBS suspected Birkenfeld was talking to investigators, putting him “truly at risk” because the case was “threatening some very powerful people.”
“They told me they wouldn’t prosecute me,” Birkenfeld said. “Kevin Downing (IRS lead prosecutor) told me that in the first meeting. They refused to give me a subpoena or immunity until they saw that I was the real deal, as they said. They kept changing the rules of the game and said ‘We won’t give you immunity.’”
You see, this is America; you start stepping on the toes of billionaires and you might get kicked in the head. Billionaires own all sorts of things like congressmen and senators. So as a prosecutor you have to go slow. This could be the biggest case of your career or it could be the last big case of your career.
The IRS wrote Birkenfeld's attorney on Sept. 6, 2007, to say Birkenfeld had “terminated his proffer with the Tax Division in regards to alleged criminal conduct” at UBS. They said they declined to grant immunity and could continue the proffer if Birkenfeld chose to do so. Or Birkenfeld could continue to talk but immunity was off the table, and Sandy said, “Arf.”
Birkenfeld was a man alone, a man with many enemies and few friends. All he wanted was to tell the truth, plus collect the estimated minimum $125 million reward for turning everyone in. The reward could go as high as $200 million or even more!
His next stop was the office of Senator Carl Levin of Michigan, head of the Senate Permanent Subcommittee on Investigations. From there the chips began to fall as the things that Birkenfeld was saying were true.
Birkenfeld's testimony was behind UBS deciding to pay the IRS $780 million and admitting that it was actively engaging in tax evasion. UBS also agreed to turn over information on two hundred and fifty other secret accounts. One hundred and fifty people are being investigated and sixteen were charged by prosecutors. Two UBS bankers and three others are accused of hiding assets overseas. All together more than $852 million has been collected by the IRS. Oh wait, did I say sixteen were charged?
That's incorrect, it was seventeen as prosecutors charged one Bradley Birkenfeld with fraud for not being truthful about his dealings with California billionaire real estate developer Igor Olenicoff. Olenicoff was given two years probation and had to pay $52 million in back taxes but Bradley Birkenfeld was given forty months in federal prison.
In fact, Bradley Birkenfeld is the only person to go to prison for these crimes. He is no angel or saint; he is a rat caught in a trap. He was placed in prison to discourage his attempts to claim the reward, but more than just money Bradley Birkenfeld was sent to jail as a warning to the other rats. The other potential whistle blowers, the people on the inside with the dirt on the ringleaders, the deep throats or the Joe Wilsons.
It would be hard to watch Birkenfeld walk away with $200 million but to see him sit in a jail cell is infinitely worse. He has asked Barack Obama for a pardon but that will happen when pigs fly. They say that crime doesn't pay, but you can't prove that by Birkenfeld. He was doing great until he started telling the truth.
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