U.S. Is Said to Consider Easing Informant’s Term

Bradley C. Birkendfeld is scheduled to start a 40-month prison sentence on Friday, January 6. He’s the banker who exposed UBS’ illegal activities and is now claiming a 30 percent whistleblower’s reward. In case you missed the story, here’s what 60 Minutes reported.

Where did I get $550 million?

The Financial Times estimates there’s $20 billion parked offshore illegally. With that number as a start, here’s my math. The variables are all guesstimates:

$20,000,000,000 times

7 percent in annual earnings times

5 years of tax fraud times

28 percent in taxes times

30 percent whistleblower’s reward minus

$38 million in professional fees equals

$550 million.

My numbers imply the IRS lost $1.96 billion to tax fraud. Staggering, right? Maybe, but I think $1.96 billion—and the $550 million reward—are plausible. Igor Olenicoff already paid the IRS over $50 million, and he’s just one guy. Birkenfeld claims his testimony exposed 19,000 criminals. If he’s right, $1.96 billion translates to $103,157 per cheater—peanuts compared to Olenicoff’s settlement.

Can somebody explain the logic for paying $550 million to a criminal?

Are we crazy? Birkenfeld spent a decade, according to 60 Minutes, helping his clients hide money from the IRS. Now, he stands to earn $550 million for “fessing up.” Excuse me? And I thought Goldman’s bankers needed a reality check.

Norb Vonnegut

About the author

Norb Vonnegut wrote 178 articles on this blog.

Do you ever feel the financial news makes no sense? Do stories leave you with more questions than answers? I created Acrimoney to discuss Wall Street’s behavior behind the headlines. As a veteran of a wealth management business that exceeded $1 billion in assets, I offer insight into the people and the “doings” that affect your money. I’ll start the discussion. But I hope you’ll jump in and say what you think.

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