By Erica Reed
September 13th, 2012 7:36pm
Story updated below with a transcript from Mike Papantonio’s interview with attorney James Kauffman on the whistleblower settlement, and why it should scare Mitt Romney.
This week the Internal Revenue Service awarded Bradley Birkenfield $104 million; the largest whistleblower reward in history. Birkenfield earned the reward by providing information to the IRS that led to UBS AG’s offshore banking practices bust.
Birkenfield, a former Swiss banker, provided information of “exceptional depth and breadth” that led to the assessment of more than $5 billion in fines, back taxes, and penalty charges. Birkenfield served two and-a-half years in prison for a fraud conspiracy conviction related to the case. That charge landed the bank a $780 million fine as well as an agreement to surrender its list of clients that the IRS suspected of tax evasion. The list included thousands of tax-cheats who had been suspected of using offshore accounts to hide assets.
The Internal Revenue Service rewarded Birkenfield in connection with his participation through their Whistleblower program. The program, established by the Tax Relief and Health Care Act of 2006, may provide informants with between 15 and 30 percent of the total proceeds paid to the IRS that flow from the information provided. The program only provides the reward where the amount identified is greater than $2 million or where an individual taxpayer is identified and has at least $200,000 in gross income.
In an important step towards paving a bright path for those willing to tell the truth about corrupt financial practices, the IRS openly lauded the program, which made it possible. Michelle Eldridge, IRS Spokeswoman, was quoted as saying, “[t]he IRS believes that the whistleblower statute provides a valuable tool to combat tax non-compliance, and this award reflects our commitment to the law.”
“These types of whistleblower programs are vital to the country’s fight against tax evasion,” said James Kauffman, of the law firm Levin Papantonio Thomas Mitchell Rafferty & Proctor. “This is encouraging news for whistleblower patriots and the counsel who represent them.”
Erica Reed is an associate attorney at Levin, Papantonio, Thomas, Mitchell, Rafferty & Proctor, P.A. She is a member of the Business Torts Department of the firm. Her practice focuses primarily upon representing individuals and entities in the areas of securities litigation and arbitration, as well as complex business and antitrust litigation.
Mike Papantonio’s interview with attorney James Kauffman from the September 13th, 2012 episode of The Ed Schultz Show:
Mike Papantonio: Welcome back to the Ed Schultz show. I’m Mike Papantonio, sitting in for Ed Schultz. Earlier this week the IRS announced that they’d be paying $104 million reward to a former employee of the multi-national bank UBS, because the employee finally decided to blow the whistle on corrupt tax evasion schemes that are taking this country over piece by piece. It’s not just tax schemes, it’s hospitals, like you just heard, Bain controlled hospitals that are trying to figure out how to take more money from the Medicare system, how to drive up prices, how to make you as a taxpayer pay more, how to make your insurance program pay less.
James Kauffman is an attorney who specializes in securities and financial fraud litigation. This is a timely story because it’s what we’ve been talking about, isn’t it James? This IRS story now is released…
James: That’s right. This is a very timely story and the IRS normally does not release this type of information. The people who are whistleblowers and who report tax fraud to the IRS through its whistle-blower program do not…the IRS typically doesn’t release this type of information. Really they’re sending two messages, the first being; whistleblowers if you come forward we’re interested. We want to crack down on tax fraud. Number two; foreign companies, Wall Street, stop cheating on your taxes.
Mike: How else do you stop them? How else do you stop them, not just from taxes James? Government can’t stop them. You realize there’s been not one person from Wall Street that was involved in all of this thievery has gone to prison for this last thievery? Not one.
James Kauffman: That’s right.
Mike: Who stops them? Who stops the armaments industry when they make a product that ends up killing our soldiers and they know that it’s defective? Who stops them? People, how can America stop them?
James: That’s right. It is, the average Americans who are working at these companies who are asked to do something that they do not think is morally right, their conscious weighs on them. They come to somebody like myself, who represents whistle-blowers, and that is where this type of change comes from. It comes from the courage that these patriots have when they come forward and they’re going to report that military contractor who is putting soldier’s lives in danger. They’re going to report the Wall Street tycoon that’s cheating on the taxes and is helping Americans cheat on their taxes. That’s the type of people that really make the change in America on this type of fraud, absolutely.
Mike: Do you know who’s terrified right now?
James: Mitt Romney, probably.
Mike: Mitt’s terrified, Wall Street’s terrified, armament manufactures that game the system, they’re terrified, hospitals that game the system, they’re terrified because now Obama has even…he’s made it stronger. Obama’s had the same sense that Lincoln had. Look, you had President Lincoln that said, “We have to stop the thieves. They’re sending guns to our soldiers that blow up in their hands. They’re sending…”
James: Shoes without any soles was what the Union army was being sold in the civil war. That’s why he passed a lot of these false claims act, The False Claims Act, that cracked down on this type of fraud.
Mike: Then you had Obama who’s even more of a visionary. He says, “Look, we can make it better. We can reward people for going out and doing what we’re not equipped as the government to do by ourselves. There’s no way the IRS can keep up with all of the frauds. There’s no way the SEC can keep up with all the thugs on Wall Street. There’s no way the FDA can keep up with all the crime that takes place within the pharmaceutical industry.”
James: It puts money back in the government’s pocket. It puts money back in the coffers that should have been there in first place frankly if the…
Mike: Eight billion dollars.
James: Billion a year on tax fraud is what the Obama program is going to return overseas that people are hiding overseas which this UBS Bank was in trouble for, helping Americans hide money overseas. It’s going to be eight billion a year.
Mike: My God! No wonder they hate Obama so much. No wonder you have Wall Street sinking so much money into this buffoon Mitt Romney.
James: Let’s not forget Mitt Romney had accounts at UBS that he had to close.
Mike: Yeah, exactly.
James: He never accounted for and even in 2010 when we finally got his tax statements, there was three million dollars he was keeping at UBS in a foreign account. I have no idea why you would do that. I don’t know why he would do that. I do know…
Mike: I know why he would do it, but anyway…
James: The other thing too is he can… there’s a program, a tax amnesty program that Romney could have submitted to anonymously for whatever he had held overseas and we wouldn’t know.
Mike: We wouldn’t even know what it is. Well, what we do know is this, is Birkenfeld, he went to prison himself, this ex-banker, was paid $104 million for blowing the whistle and we know this, we know it led to collections of more than…
James: 780 million.
Mike: No, no, no, five billion dollars in back taxes.
James: That’s right. That’s right.
Mike: We know this, we know that in the process the names of more than almost 5,000 US taxpayers who held offshore UBS accounts, they were disclosed. You know what that does to a Mitt Romney. You know what that does to a Wall Streeter who wants to hide their money offshore. That’s what a creative president does. He says, “Look, I don’t have enough. You’ve taken all my staff. You’ve cut our departments down to nothing, okay. I’m going to make all of America a department.” That’s why we started…what is it…
James: It’s a bounty program. That’s exactly what it is.
Mike: What is it? www.iwanttoreportfraud.com
James: www.iwanttoreportfraud.com, that’s right.
Mike: www.iwanttoreportfraud.com is a site that we had to start because we were getting so many calls after we did this first segment. Most of them aren’t cases and that’s… but most of them are stories. What we’re doing is taking those and we’re… Ring of Fire is taking those and we’re doing stories from them. The stories are unbelievable, James. They’re unbelievable.
James: That’s right. That’s right.
Mike: Okay, where does this go? This guy has spent time in prison, they still paid him $104 million. To me it’s extraordinary that the IRS actually disclosed this information, isn’t it?
James: It is extraordinary. It’s an unprecedented measure. They normally would never do this. It is a clear message that the Obama administration is setting to the tax cheats. We can talk about tax rates all we want, but what people will always agree on is whatever the rate is, people should pay it is the thing. You should not…if it’s 10% or whatever it is that Mitt Romney paid, 13, whatever his percentage was, he should have paid that amount. End of story. There’s an argument about that in addition to it.
This is a message that the tax fraud cheats, they have to be cracked down on. It’s the big money. It’s not the average American. The average American doesn’t have offshore accounts. It’s affecting the top one percent or one percent here, but it’s eight billion dollars here.
Mike: The IRS doesn’t even look at some unless the question is more than two million dollars of unpaid taxes. You get the idea of they’re looking for people that they understand are just completely thwarting the system. James Kauffman, great story. UBS Whistle-blower Awarded $1.4 million.