Bradley Birkenfeld Wants Senate Hearing on Failure of Justice Department to Crack Down On Corporate Crime

Bradley Birkenfeld blew the whistle on his employer — the Swiss bank UBS and on the largest tax fraud in U.S. history.

The upside result was that Birkenfeld secured the largest whistleblower award in U.S. history — $104 million.


The downside result was that the Justice Department hit Birkenfeld with a criminal prosecution and three years in jail.

Birkenfeld was the only UBS executive criminally prosecuted.

Familiar story.

Whistleblower goes to jail, bank and executives get off.

UBS was not criminally prosecuted.

Instead, the Justice Department draped UBS with a deferred prosecution agreement and ordered it to pay $780 million.

Now, Birkenfeld is out with a remarkable tell all book — Lucifer’s Banker: The Untold Story of How I Destroyed Swiss Bank Secrecy.

He’s doing interviews with journalists from around the world and negotiating television and movie deals. And he’s cooperating with law enforcement authorities in France, England, Germany, Greece and Canada.

But most importantly, Birkenfeld wants the U.S. Senate to hold hearings into why the Justice Department routinely fails to hold corporate criminals accountable for their crimes.

“The Senate needs to hold public hearings and call me to testify,” Birkenfeld told Corporate Crime Reporter in an interview last week. “The Department of Justice needs to be held accountable. Justice Department attorneys covered this up and then went into private practice to defend the people they should have prosecuted. The American people got screwed by the Department of Justice. It’s the largest crime in this country.”

When did you first go to your bosses at UBS to complain about what you were seeing?

“A colleague of mine brought me a three page memo that was embedded in our intranet. I said — I have never seen this document, I was never trained in it — where did you find this?”

Birkenfeld says the memo warned about things that you were not supposed to do — but they were the same things you were paid to do.

“And he showed it to me on my computer. You can only imagine. The intranet is such a massive computer system with compliance, account opening forms and products. I never saw it. I was never trained on it. And I was a director of the bank. I had a $10 million signature power as a director. And I went to my boss and said — what the hell is this? And he said — don’t make a big deal about it. We almost got into fisticuffs over it. I left my office furious. I gave a few copies to colleagues who were going to Dallas and Chicago and Los Angeles. They said — what the hell is this? And I said — good luck.”

“This was a three page document professed to contradict everything that we were doing. It was such an eye opener. Someone had to write it, someone had to get permission to post it on the intranet, we were never trained on it, and when we finally came across it by accident, I challenged it. And they tried to blow it off as no big deal. This memo was the reason I started my whistleblowing. It not only put me and my clients at risk — but the shareholders at risk.”

“I came forward and challenged it. I also went to the head of legal and compliance for three straight months and said — I need an answer.”

“I was the only one to come forward and challenge it. And to resign over it.”

“After I resigned, I stayed in Switzerland. I was doing private equity. But UBS refused to pay my bonus that they had agreed to. I sued the bank. I won. They paid me my bonus, which I was entitled to under contract. And then I took the UBS internal whistleblowing policies, which they wrote, and submitted the three page document and their whistleblowing policies to the chairman of the board, and every member of the board and said — now you are on the hook. That caused an absolute nuclear shitstorm. I don’t believe insurance would cover a board member for engaging in illegal acts. And it was all documented. They couldn’t deny it. I wanted to make sure everyone was on the hook.”

“They called an investigation. They met with me and my attorney. I then checked with my colleagues through the back door. And they never addressed any of the issues I raised with them. It was a cover up. Again. At that point, I took the documents I had and brought them to the U.S. Justice Department.”

Birkenfeld wanted the Justice Department to subpoena him before he turned over the information. The Justice Department refused. He now believes that he made a mistake in going to the Justice Department first. He should have filed his complaint first with the IRS whistleblower program.

“We would have gotten confidential informant status. We would have been protected. The IRS loves people like me who come forward with this documentation.”

“Under Swiss law, I would go to jail by exposing names. That’s why I wanted a subpoena from the Department of Justice. When they refused, I refused to deal with them. I went to the Senate and the Senate gave me a subpoena. That infuriated the Department of Justice. Why? Because they weren’t going to get the credit. And they still tried to claim credit for the UBS case. It’s laughable. “

“I went to the Senate and the IRS and the SEC. And I gave them all the information. And all of these people thanked me for coming forward. It was the Department of Justice that was hostile from day one.”

“The Department of Justice failed to fine the bank properly, failed to get all 19,000 accounts, let the kingpins get away.”

Why did you need the Department of Justice to subpoena you to protect yourself?

“I lived in Switzerland. Under Swiss law, if you give up the names of clients you go to jail. The Justice Department refused to subpoena me. So, I went to the Senate and the Senate got the names.”

How many names did you give them?

“Forty or fifty names. Here’s the problem. The Senate refuses to give me my own testimony.”

I’ve seen the number 19,000 names. What is that number?

“I gave the Senate that number. That’s the number of accounts. It was around 19,000 separate accounts in the U.S. desk in Geneva, Lugano and Zurich.”

Is that 19,000 U.S. citizens who have $1 million or more deposited in Switzerland?

“U.S. citizens, green card holders, residents for tax purposes in the United States.”

How many did the Justice Department go after?

“About 80.”

What is the 4,700 number?

“You have to ask Hillary Clinton. She negotiated this secret deal with the Swiss, which was exposed by Wikileaks. Why is it that the Secretary of State is getting involved in an international criminal investigation? Why wasn’t it the FBI and the Department of Justice?”

“Hillary had secret meetings with the Swiss finance minister. Senator Obama, who was a member of the committee holding the UBS hearing, never attended. At the same time, he was talking millions of dollars from UBS.”

And on the week that you were sentenced to prison, President Obama was playing golf with the head of UBS Americas.


“Why didn’t they get all the names? Why only 4,700, if that is the number? That’s a 75 percent failure rate. Why is Hillary Clinton involved at all in these negotiations?”

“Why negotiate anything? Force them to give you every name.”

“Why didn’t they fine the bank properly? If you read the deferred prosecution agreement with UBS, you will see that UBS made $200 million a year in profit from these accounts. They targeted UBS from 2000 to 2007 — that’s eight years. Quick math — that’s $1.6 billion. But they only fined them $580 million. Where is the other $1 billion?”

“You didn’t fine them properly. You didn’t get all the names. You let the kingpin plead the Fifth Amendment when he had a secret non prosecution agreement. The Senate does nothing.”

You write in your book that prior to Clinton’s deal with the Swiss, UBS had only seen fit to contribute $60,000 to the Clinton Foundation, “an amount that wouldn’t even cover the bank’s annual parking tickets.”

“Afterward the Clinton Foundation’s cash registers rang up $600,000 in UBS gifts. The bank also decided to partner with the Foundation on some inner-city development programs, issuing a $32 million loan at very reasonable rates. Oh, and suddenly UBS also thought that Bill Clinton would make a very fine paid speaker about global affairs, so they paid him $1.52 million for a series of fireside chats with the bank’s Wealth Management Chief Executive, Bob McCann. It was Bill Clinton’s biggest payday since leaving the office of the Presidency.”

“Hillary is negotiating the deal and her husband is lining his pockets off of speaking fees. This is outrageous. The American people should be furious.”

Do we know that the government actually got 4,700 names?

“We don’t. Don’t believe what the government tells you. Who picked the 4,700 names? And why? And why those 4,700.”

But you say that out of the 4,700, action was taken only against 80.

“Call it 100 for the sake of argument. They went after the boat builder, the dentist. Really? There were much bigger people to go after.”

The low lying people were criminally charged. Do we know that the 4,700 actually came in under the amnesty program and paid their taxes?

“We don’t. It’s Swiss bank secrecy American style. The names I gave to the Department of Justice weren’t eligible for the amnesty program. And not one of the names I turned over were indicted.”

How did it happen that you, the whistleblower, is the only banker to go to jail?

“Because I made the Department of Justice look like the fools they are. They hate whistleblowers. Whistleblowers expose them for their incompetence and corruption. Thankfully, I got an award, which I was entitled to under law. And the longest and largest running tax fraud is exposed by one guy. Where has the Department of Justice been for the last five decades?”

You plead guilty and were sentenced to forty months?

“They took my information and indicted me on the information I turned over to them. They didn’t come to me, I came to them. At sentencing, the Department said I withheld the name of Igor Olenicoff. I didn’t withhold it. They wouldn’t give me a subpoena. I gave it to the Senate and the Senate gave it to the IRS and the IRS gave it to the Department of Justice. And they indicted me on that.”

[For the complete q/a format Interview with Bradley Birkenfeld, see 30 Corporate Crime Reporter 42(11), Ocotober 31, 2016, print edition only.]

Copyright © Corporate Crime Reporter
In Print 48 Weeks A Year

Built on Notes Blog Core
Powered by WordPress