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UBS whistleblower may be ineligible to receive reward because of Dodd-Frank

Former UBS banker Bradley Birkenfeld was granted a $104 million whistleblower award by the IRS, but Birkenfeld may be unable to receive the reward because Dodd-Frank prohibits awards to individuals convicted of securities enforcement violations.

Birkenfeld began cooperating with the IRS in 2007, providing information related to a UBS program that catered to U.S. taxpayers seeking to stash assets in Swiss bank accounts. This information led to UBS paying $780 million to settle criminal charges, the release of the names of Swiss accountholders and an IRS initiative program that has recovered more than $5 billion in penalties, taxes and interest, Forbes reports.

Birkenfeld was also convicted and sentenced to 40 months in prison for his role in the illicit activities.

Under the IRS whistleblower statute, Birkenfeld’s conviction does not disqualify him from receiving the award. The statute mandates that the IRS is only prohibited from issuing an award to an individual “who planned and initiated actions” leading to violation of federal internal revenue laws and “who is convicted of criminal conduct arising from” those activities, according to Forbes.

Dodd-Frank’s whistleblower provision, however, mandates that “no award…shall be made…to any whistleblower who is convicted of a criminal violation related to” a securities enforcement proceeding in which penalties are collected.

Differences in Dodd-Frank and IRS statute language could mean the difference between a reward and no reward at all, but the Securities and Exchange Commission could ultimately intervene in the discussion.

The SEC has faced pressure to encourage whistleblowing, and in implementing Dodd-Frank’s whistleblowing provisions, has provided for the reduction, rather than elimination, of rewards to individuals who were involved but not convicted, Forbes reports.

5 Responses to UBS whistleblower may be ineligible to receive reward because of Dodd-Frank

  1. Brian Penny says:

    The path of a whistleblower is a difficult one. I know this firsthand. For doing the right thing, I ended up losing my car, my home, and my friends. I was forced to sell nearly everything I own and move to the other side of the country, where I’m now broke and sleeping on the floor of a stranger’s apartment.

    You can read about my struggles as a whistleblower exposing the larges bank fraud in history here: http://thoughtforyourpenny.blogspot.com/2012/03/boy-who-cried-force-placed-insurance_02.html

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  3. ron says:

    Good he is a rat and lied to the people he said did not have to pay taxes.
    If you are a US citizen you have to pay taxes and he and they knew it

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