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From Convicted Felon to Government-Made Millionaire: The Man Who Ended the Tradition of Bank Secrecy and Got Rich in the Process

Meet Bradley Birkenfield. Mr. Birkenfield, a former Swiss banker, was released from federal prison three years ago after serving 2½ years for helping wealthy American clients hide millions of dollars from the U.S. government. Five weeks after his release from prison, Birkenfield was sitting on his couch wallowing in his misery, recognizing that he was unemployable as a private banker anywhere. But little did he know that his fate was about to change. As he was devouring his third pint of “Ben and Jerry’s” Boom Chocolatta, there was a knock on the door. It was his lawyer. And his lawyer came bearing gifts — a big gift — one that would choke a horse. It was a check for $ 104 million dollars from the U.S. Treasury made payable to Mr. Birkenfield.

Say what? Since when has the U.S. government begun rewarding ex-cons with an amount of cash so large that it could be used to buy and sell “Trump Towers” three times over? Why on God’s green earth would the U.S. government pay a convicted felon who has violated the laws of the United States — with impunity — more than $ 100 million dollars?

Ever heard of whistleblower rewards? It represented Birkenfeld’s cut as a whistleblower of the huge settlement that his former employer—the Swiss bank UBS—had paid to the United States for its role in helping Americans evade taxes. As CNBC aptly described it, Birkenfield’s signing of the check transformed him “from a convicted felon to a government-made multimillionaire” overnight. If this isn’t a “cinderella story,” then I don’t know what is.

But Birkenfield viewed it much differently. Standing on principal, Birkenfield said, “It was vindication. I am glowing. I love it.”

While most convicted felons who are released from prison are left in the unfortunate position of having to rebuild their lives with nothing more than the shirt on their backs, Birkenfeld is the exception. Some of his material possessions rival those of a self-proclaimed millionaire. For example, he has a new rental house on the beaches of New Hampshire, two Porsches, and a collection of “vintage hockey gear to display in his own Boston Bruins luxury box.” Oh yes, and lest I forget, he has plans to open up a sports museum in the not too distant future.

With $ 104 million dollars in the bank account and “toys” that might even make Donald Trump green with envy, one would think that everything in Mr. Birkenfield’s life is “hunky-dory.”

But nothing could be farther from the truth. Birkenfield is on a crusade to force the U.S. government to explain why it singled him out for prosecution with more gusto than Al Capone, while allowing virtually everyone else involved in the heist to get off “scot free” or with nothing more than a slap on the wrist.

Birkenfeld recently sat down with CNBC to tell his story. Wealthy, out of prison and soon to be removed from federal probation, he’s now free to tell his story — an epic one at that.

The shockwaves from Birkenfeld’s disclosures have been cataclysmic, reaching a ten on the Richter scale. Like the famous “All the world’s a stage …” quote from Shakespeare’s “As You Like It,” the tremors from these shockwaves could be felt throughout the world. The first bank who had the misfortune of feeling them was none other than UBS in 2009. Stuck between a rock and a hard place, UBS paid a whopping $780 million penalty and admitted it conspired to defraud the United States by impeding the IRS from obtaining information on American taxpayers hiding money in Switzerland. But this was only the beginning. The floodgates soon opened. Two years later, the U.S. had another bank to add to its trophy collection: Swiss banking giant Credit Suisse. In 2014, Credit Suisse pleaded guilty and agreed to pay $2.6 billion in penalties. American investigators soon followed the trail of hidden money like a bloodhound hot on the trail of a fox to banks in Israel, India and around the world.

Individual taxpayers with money parked in overseas bank accounts were not spared. Shocked by how rampant offshore tax evasion was, Congress took action. In 2010, it passed a law designed to force banks around the world to disclose accounts held by U.S. citizens and residents to the IRS. For the first time, such banks had to begin disclosing U.S. accountholder information to the U.S. government this year.

According to insiders, the U.S. government’s aggressive pursuit of taxpayers with unreported foreign accounts has made it harder to hide money in secret foreign bank accounts. In fact, we are inching close to a watershed moment in history where it may be virtually impossible to do so. And who do the experts give the credit to? None other than Birkenfeld.

“We’re on the verge of an environment where offshore bank secrecy is essentially dead,” said Scott Michel, an attorney with the law firm of Caplin & Drysdale in Washington, D.C. Mr. Michel’s firm has represented more than 1,000 American clients who have disclosed secret accounts to the government in the wake of Birkenfeld’s disclosures.

For those with unreported foreign bank accounts looking for a way to come into compliance with their U.S. tax obligations, all hope is not lost. The IRS offers a number of compliance programs designed to lure Americans to come out of the shadows and disclosure their secret offshore accounts. While the cost of admission to get into these programs is nothing to shake a stick at, some offer immunity from criminal prosecution, thus eliminating the risk that the taxpayer will have to endure an unpleasant stay at “Club Fed.” Some 50,000 Americans have taken advantage, replenishing U.S. Treasury coffers to the tune of $ 7 billion dollars.

Interestingly enough, Birkenfield doesn’t think that the U.S. government has gone far enough.

In his interview, Birkenfield asks the following questions: “Why did the Department of Justice not press the Swiss banks for the names of all of the Americans who had secret accounts there? Why did the IRS design a compliance program that allowed 50,000 Americans to admit they broke the law but remain safely anonymous, protected from embarrassment of admitting guilt?”

This has enraged Birkenfield as he believes that it shows the hypocrisy of the U.S. government. Why did the U.S. government single him out for prosecution while giving wealthy and powerful Americans with unreported Swiss bank accounts — such as CEOs, movie stars, and even American political figures — a “get out of jail free” card? As CNBC aptly put it, it’s a riddle wrapped in a mystery inside an enigma: “Out of the tens of thousands of Americans who hid money overseas, the government has only indicted or charged a relative handful. Only a few have gone to jail.” Can someone say “selective prosecution?”

If you’re expecting Birkenfield’s interview to be a “tell all,” just like Hillary Clinton’s memoirs, you’d be sadly mistaken. As CNBC reports, he is still holding information “close to the vest.” While he readily acknowledges providing the U.S. government with the names of 30 tax dodgers, that is as much as he is willing to disclose. Very simply, he will not list their names. However, he is quick to point out that only one has been charged and publicly named.

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