The whistleblower in a breakthrough tax fraud case against Swiss bank UBS AG has won a record-setting 104 million dollars reward from the US Internal Revenue Service, a handsome payout that could entice more informants to come forward.
Bradley Birkenfeld, who once confessed to smuggling diamonds in a toothpaste tube, was not present at the news conference on Tuesday where his award was announced by his lawyers.
He was released from prison just last month and is living in New Hampshire under home confinement at a friend's estate where he is gardening and assisting with other jobs involving manual labour on the property, the lawyers said.
Based on netting roughly 44 million dollars after paying federal taxes and legal fees, which tax lawyers not involved in the case called a reasonable estimate, Birkenfeld realized about 46.000 dollars for each day he spent in prison.
In a case that shook Swiss banking to its core, UBS in 2009 entered into a deferred prosecution agreement and paid 780 million dollars in fines, penalties, interest and restitution to settle charges that it helped thousands of wealthy Americans hide billions of dollars in secret Swiss accounts.
US authorities are still investigating other Swiss banks.
Birkenfeld knew the inner workings of UBS and spilled many secrets about his former employer's dealings with US clients. But he was jailed after the government said that he withheld other information and he spent 30 months in prison.
He is scheduled to be freed from home confinement in late November and he is continuing to help government tax authorities with their investigations, said his lawyers, Stephen Kohn and Dean Zerbe, who would not discuss their cut of the award.
The sum paid by the IRS to Birkenfeld is the largest whistleblower reward issued to a single individual, Kohn said.
In October 2010, a GlaxoSmithKline Plc quality manager won 96 million dollars for exposing manufacturing defects at a plant in Puerto Rico. The drug company paid 750 million dollars to settle the charges.
Bryan Skarlatos, a tax lawyer with law firm Kostelanetz & Fink LLP, said the IRS whistleblower program is likely to become a bigger deal now, ”people will come out of the woodwork”.