Bradley Charles Birkenfeld (born February 26, 1965) is an American private banker,
convicted felon
A felony is traditionally considered a crime of high seriousness, whereas a misdemeanor is regarded as less serious. The term "felony" originated from English common law (from the French medieval word "félonie") to describe an offense that resu ...
, and
whistleblower
A whistleblower (also written as whistle-blower or whistle blower) is a person, often an employee, who reveals information about activity within a private or public organization that is deemed illegal, immoral, illicit, unsafe or fraudulent. Whi ...
. During the mid- to late-2000s, he made a series of disclosures about
UBS Group AG
UBS Group AG is a multinational Investment banking, investment bank and financial services company founded and based in Switzerland. Co-headquartered in the cities of Zürich and Basel, it maintains a presence in all major financial centres ...
clients, in violation of
Swiss banking secrecy laws, to the U.S. government alleging possible
tax evasion
Tax evasion is an illegal attempt to defeat the imposition of taxes by individuals, corporations, trusts, and others. Tax evasion often entails the deliberate misrepresentation of the taxpayer's affairs to the tax authorities to reduce the taxp ...
.
Known as the 2007 "
Birkenfeld Disclosure", the
U.S. Department of Justice
The United States Department of Justice (DOJ), also known as the Justice Department, is a federal executive department of the United States government tasked with the enforcement of federal law and administration of justice in the United State ...
(DOJ) announced it had reached a
deferred prosecution agreement A deferred prosecution agreement (DPA), which is very similar to a non-prosecution agreement (NPA), is a voluntary alternative to adjudication in which a prosecutor agrees to grant amnesty in exchange for the defendant agreeing to fulfill certain ...
with UBS that resulted in a
US$
The United States dollar (symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...
780 million fine and the release of previously privileged information on American tax evaders.
In the United States, he was convicted by the DOJ for a single charge of
fraud conspiracy and served 40 months in a
federal penitentiary
The Federal Bureau of Prisons classifies prisons into seven categories:
* United States penitentiaries
* Federal correctional institutions
* Private correctional institutions
* Federal prison camps
* Administrative facilities
* Federal correctio ...
from 2010 to 2012 with a fine of $30,000. After he applied for
whistleblower status and protection, the
Internal Revenue Service
The Internal Revenue Service (IRS) is the revenue service for the United States federal government, which is responsible for collecting U.S. federal taxes and administering the Internal Revenue Code, the main body of the federal statutory ta ...
(IRS) awarded him a settlement of $104 million through their
Whistleblower Office.
Early life and education
Birkenfeld was born on February 26, 1965, in
Brookline, Massachusetts
Brookline is a town in Norfolk County, Massachusetts, Norfolk County, Massachusetts, in the United States, and part of the Greater Boston, Boston metropolitan area. Brookline borders six of Boston's neighborhoods: Brighton, Boston, Brighton, A ...
, a suburb of Boston.
His father was a neurosurgeon. Birkenfeld attended
Thayer Academy
Thayer Academy (TA) is a private, co-educational, college-preparatory day school located in Braintree, Massachusetts, United States. The academy, conceived in 1871 at the bequest of General Sylvanus Thayer, known as the father of the United Sta ...
, a prep school, and graduated from
Norwich University
Norwich University – The Military College of Vermont is a private senior military college in Northfield, Vermont. It is the oldest private and senior military college in the United States and offers bachelor's and master's degrees on-campus ...
in Vermont in 1988.
Birkenfeld is Jewish, his paternal grandfather, Max, emigrated to the United States from Romania in 1922. He obtained a master's degree at the American Graduate School of Business in
La Tour-de-Peilz
La Tour-de-Peilz () is a municipality in Riviera-Pays-d'Enhaut District in the canton of Vaud in Switzerland. The city is located on Lake Geneva between Montreux and Vevey (their agglomeration counting some 80,000 inhabitants).
History
In the ...
, Switzerland.
Banking career
Birkenfeld began his career in banking in the
currency trading
The foreign exchange market (Forex, FX, or currency market) is a global decentralized or over-the-counter (OTC) market for the trading of currencies. This market determines foreign exchange rates for every currency. It includes all aspec ...
department of
State Street Bank & Trust in Boston. Birkenfeld claims that he first blew the whistle on illegal activities while at State Street, approaching the
Federal Bureau of Investigation
The Federal Bureau of Investigation (FBI) is the domestic intelligence and security service of the United States and its principal federal law enforcement agency. Operating under the jurisdiction of the United States Department of Justice, ...
(FBI) in 1994. The information did not lead to any indictments.
He says that he turned down an offer to join the FBI after the incident, but that claim has been disputed.
In 1996, he was hired as a
private banker at
Credit Suisse
Credit Suisse Group AG is a global investment bank and financial services firm founded and based in Switzerland. Headquartered in Zürich, it maintains offices in all major financial centers around the world and is one of the nine global " ...
before moving on to
Barclay's Bank
Barclays () is a British multinational universal bank, headquartered in London, England. Barclays operates as two divisions, Barclays UK and Barclays International, supported by a service company, Barclays Execution Services.
Barclays traces ...
in 1998.
In October 2001, Birkenfeld began working at
UBS
UBS Group AG is a multinational Investment banking, investment bank and financial services company founded and based in Switzerland. Co-headquartered in the cities of Zürich and Basel, it maintains a presence in all major financial centres ...
in
Geneva, Switzerland
Geneva ( ; french: Genève ) frp, Genèva ; german: link=no, Genf ; it, Ginevra ; rm, Genevra is the List of cities in Switzerland, second-most populous city in Switzerland (after Zürich) and the most populous city of Romandy, the French-speaki ...
, again as a private banker offering
wealth management
Wealth management (WM) or wealth management advisory (WMA) is an investment advisory service that provides financial management and wealth advisory services to a wide array of clients ranging from affluent to high-net-worth (HNW) and ultra-high- ...
services.
His principal job responsibility was to solicit wealthy Americans to move their assets to the bank, enabling them to hide their funds due to Switzerland's strict banking secrecy laws and thus avoid paying U.S. taxes.
According to Birkenfeld, UBS sponsored events like art shows and yacht races in the United States to attract wealthy people as potential clients.
Birkenfeld disclosure: 2005–2011
In United States
After learning about
UBS Switzerland AG dealings in the U.S., Birkenfeld resigned on October 5, 2005 and became a partner at Union Charter Ltd., where he specialized in wealth management.
In 2007, he disclosed to the U.S.
Department of Justice
A justice ministry, ministry of justice, or department of justice is a ministry or other government agency in charge of the administration of justice. The ministry or department is often headed by a minister of justice (minister for justice in a v ...
(DOJ) what he knew about UBS's illegal practices attempting to take advantage the
Tax Relief and Health Care Act of 2006
The Tax Relief and Health Care Act of 2006 (, ), includes a package of tax extenders, provisions affecting health savings accounts and other provisions in the United States.
Tax provisions
Extenders
The Act retroactively extended for two yea ...
, a law that could pay him up to 30% of any tax revenue recouped by the IRS.
However, because he did not provide full and complete information to U.S. authorities, Birkenfeld was arrested in Boston on 7 May 2008 when he deplaned from Switzerland arraigned at the U.S. District Court, Southern District of Florida on 13 May.
Birkenfeld resigned his position with Union Charter on 3 June 2008 after agreeing to plead guilty to not disclosing accurate information. As a private banker, Birkenfeld advised California real estate developer
Igor Olenicoff
Igor Olenicoff (born 1942) is an American billionaire and real estate developer. In 2007, he was convicted of tax evasion stemming from his use of off-shore companies and Swiss banks to hide his financial assets.
Early life and education
Olenic ...
, to evade U.S. taxes worth approximately
US$
The United States dollar (symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...
200 million.
Olenicoff subsequently pleaded guilty to
tax evasion
Tax evasion is an illegal attempt to defeat the imposition of taxes by individuals, corporations, trusts, and others. Tax evasion often entails the deliberate misrepresentation of the taxpayer's affairs to the tax authorities to reduce the taxp ...
and paid a $52 million fine, but avoided a jail sentence.
U.S. District Judge
William Zloch charged him with a single count of
conspiracy to defraud the United States
Conspiracy against the United States, or conspiracy to defraud the United States,§ 92318 U.S.C. § 371—Conspiracy to Defraud the United States U.S. Department of Justice's ''United States Attorneys' Manual''. is a federal offense in the United ...
and sentenced Birkenfeld to 40 months in prison and a $30,000 fine. Birkenfeld served his time at the
Schuylkill County Federal Correctional Institution from January 2010 to August 2012.
In 2012, as a consequence of his whistleblower status, the U.S.
Internal Revenue Service
The Internal Revenue Service (IRS) is the revenue service for the United States federal government, which is responsible for collecting U.S. federal taxes and administering the Internal Revenue Code, the main body of the federal statutory ta ...
(IRS) awarded him $104 million, 26% of the total $400 million in taxes returned.
In Switzerland
Birkenfeld is viewed as a criminal and a "
traitor
Treason is the crime of attacking a state authority to which one owes allegiance. This typically includes acts such as participating in a war against one's native country, attempting to overthrow its government, spying on its military, its diplo ...
" by some members of the Swiss public and
banking community as he broke the country's
banking secrecy
Banking secrecy, alternately known as financial privacy, banking discretion, or bank safety,Guex (2000), p. 240 is a conditional agreement between a bank and its clients that all foregoing activities remain secure, confidential, and private. Mos ...
laws.
Although he left Switzerland before he disclosed banking client information, had he remained a resident, he would have been prosecuted by
Zürich
Zürich () is the list of cities in Switzerland, largest city in Switzerland and the capital of the canton of Zürich. It is located in north-central Switzerland, at the northwestern tip of Lake Zürich. As of January 2020, the municipality has 43 ...
authorities for three and a half years in prison and commensurate fines.
When asked if he would ever return to Switzerland, Birkenfeld stated: "I don't believe I will." UBS announced that it would cease providing cross-border private banking services to U.S.-domiciled clients through its non-U.S. regulated units as of July 2008.
After Birkenfeld's award, the Swiss newspaper ''
Blick
''Blick'' is a Swiss German-language daily newspaper, and online news website covering current affairs, entertainment, sports and lifestyle.
History and profile
''Blick'' was established in 1959. The newspaper was the first Swiss tabloid publi ...
'' claimed, “Birkenfeld was a blessing for the Swiss financial industry,” in that his revelations helped accelerate the industry's transition away from its reliance on
“dirty” money by dooming the bank secrecy laws that enabled tax evasion.
Birkenfeld has compared the Swiss banking industry with
gangsters
A gangster is a criminal who is a member of a gang. Most gangs are considered to be part of organized crime. Gangsters are also called mobsters, a term derived from ''mob'' and the suffix '' -ster''. Gangs provide a level of organization and r ...
. "In essence, bank secrecy is analogous to criminal racketeering — and the Swiss government, along with every Swiss private banker, is a co-conspirator."
Post-banking life: 2015–present
Brad Birkenfeld's three-year period of
parole
Parole (also known as provisional release or supervised release) is a form of early release of a prison inmate where the prisoner agrees to abide by certain behavioral conditions, including checking-in with their designated parole officers, or ...
ran through November 2015; a year previous Birkenfeld's attorney petitioned the U.S. District Court to allow Birkenfeld to travel abroad.
While on parole, Birkenfeld engaged with a variety of charitable efforts: he allowed disadvantaged children to use his luxury suite at
Boston Bruins
The Boston Bruins are a professional ice hockey team based in Boston. The Bruins compete in the National Hockey League (NHL) as a member of the Atlantic Division in the Eastern Conference. The team has been in existence since 1924, making t ...
hockey games and donated six electric bicycles to the
Boston Police Department
The Boston Police Department (BPD), dating back to 1854, holds the primary responsibility for law enforcement and investigation within the city of Boston, Massachusetts. It is the oldest municipal police department in the United States. The ...
after the
Boston Marathon bombing
The Boston Marathon bombing was a domestic terrorist attack that took place during the annual Boston Marathon on April 15, 2013. Two terrorists, brothers Dzhokhar Tsarnaev and Tamerlan Tsarnaev, planted two homemade pressure cooker bombs, w ...
s.
In January 2015, Birkenfeld was
subpoena
A subpoena (; also subpœna, supenna or subpena) or witness summons is a writ issued by a government agency, most often a court, to compel testimony by a witness or production of evidence under a penalty for failure. There are two common types of ...
ed by a French magistrate investigating the abetting of
tax evasion
Tax evasion is an illegal attempt to defeat the imposition of taxes by individuals, corporations, trusts, and others. Tax evasion often entails the deliberate misrepresentation of the taxpayer's affairs to the tax authorities to reduce the taxp ...
and
tax fraud
Tax evasion is an illegal attempt to defeat the imposition of taxes by individuals, corporations, trusts, and others. Tax evasion often entails the deliberate misrepresentation of the taxpayer's affairs to the tax authorities to reduce the taxp ...
by French citizens at UBS.
In February 2015, he was allowed to travel to France from 27 February to 1 March 2015 to appear before the French court.
The French court is investigating allegations that UBS marketed Swiss
numbered bank account Numbered bank accounts are bank accounts wherein the identity of the holder is replaced with a multi-digit number known only to the client and selected private bankers. Although these accounts do add another layer of banking secrecy, they are not c ...
s to French citizens to allow them to hide their assets.
See also
*
Tax evasion in the United States
Under the federal law of the United States of America, tax evasion or tax fraud, is the purposeful illegal attempt of a taxpayer to evade assessment or payment of a tax imposed by Federal law. Conviction of tax evasion may result in fines and impr ...
*
Banking in Switzerland
Banking in Switzerland dates to the early eighteenth century through Switzerland's merchant trade and has, over the centuries, grown into a complex, regulated, and international industry. Banking is seen as emblematic of Switzerland, along wit ...
References
{{DEFAULTSORT:Birkenfeld, Brad
Living people
American whistleblowers
1965 births
Tax evasion in the United States
UBS people
Norwich University alumni
American people of Romanian-Jewish descent
People from Brookline, Massachusetts