
I Won $104M for Blowing the Whistle But Was the Only One Who Went to Jail - monsieurpng
https://melmagazine.com/i-won-104-million-for-blowing-the-whistle-on-my-company-but-somehow-i-was-the-only-one-who-went-to-7ed8a808d50c
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bradleybuda
A little more detail from a neutral source on why Birkenfeld was jailed:
[http://content.time.com/time/business/article/0,8599,1928897...](http://content.time.com/time/business/article/0,8599,1928897,00.html)

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CalChris
One difference between the two stories is that the Time article says he went
to the Feds _because_ of the problem with his bonus. That doesn't make sense
because he had already spirited out the UBS documents which he wouldn't have
had access to after resigning. He also didn't know at the time that he would
eventually get a whistblower bonus. So the separation bonus was real money.

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tptacek
This almost makes some kind of sense. The "whistleblower award" he got was the
percentage of recovery the IRS pays as a bounty for intelligence on tax
avoidance schemes; it's a portion of the money he actually helped recover for
the government. There is a rational case to make for someone being both fully
culpable for wrongdoing while still remaining entitled to bounties they've
satisfied.

For another complicated IRS recovery bounty case, see the story about
Vanguard's "internal whistleblower" who is making the case to the IRS that
their cost-saving structure is an unfair advantage, and that they owe taxes on
those savings to the government. If that "whistleblower" prevails, he'll have
harmed the retirement savings of tens of millions of Americans, all of whom
benefit from Vanguard's novel structure. But there you go!

As for this guy's superiors not being prosecuted, yeah, that sucks. The
prosecutors can only make the cases they can make; this guy confessed.

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st3v3r
"There is a rational case to make for someone being both fully culpable for
wrongdoing while still remaining entitled to bounties they've satisfied."

Not really. Throwing them in jail sends the message that whistleblowing is
looked down upon, and thus fewer people will do it. If the whistleblower
doesn't have immunity from prosecution, the only way for them really to blow
the whistle is to confess to a crime.

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gozur88
The mistake he made was implicating himself in a crime without getting the
deal first. He should have gone in and said "I can testify to criminal
behavior, but only if you'll give me immunity." That's probably what his
bosses did.

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tptacek
It should be either-or. Either you take the time and the money, or you get off
with a warning and don't make a dime from the IRS.

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st3v3r
Why? Without that money, what's the incentive to blow the whistle? Not to
mention that most whistleblowers are blacklisted, so they have a difficult
time finding work after doing so. If they don't get that money, they'll likely
end up under a bridge somewhere.

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guelo
It's worth noting that both Kathryn Keneally, the assistant attorney general
mentioned in this article, and Kevin Downing, the lead prosecutor that got him
jailed, both now work for private law firms helping large corporations shelter
their taxes.

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winstonsmith
It's the elephant in the room, textbook revolving door regulatory capture.

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DannyBee
So, let's ignore the SEC here for a second (which truly is a mess):

These folks are tax lawyers. They obey every ethical restriction placed on
them by the state bars.

If they quit the federal government, where exactly are they to go to have a
job?

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winstonsmith
The narrowness of career paths for highly specialized attorneys combined with
the possibility of entering an altogether different remuneration universe at
the law firms the DOJ is _theoretically_ adversarial to is what makes the
revolving door spin, and the spinning of the door is what turns "adversarial"
into " _theoretically_ adversarial". That is the problem. I didn't say there
was an easy solution.

The generalization of this principal to other government institutions
(agencies, departments, offices including even the presidency) is one of the
great problems of governance of our time. You can take the remuneration
discrepancy as the "0=1" conclusion of a _reductio ad absurdum_ argument
against unfettered capitalism or as an argument that resistance is futile.

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DannyBee
"That is the problem. I didn't say there was an easy solution."

I do not believe there is _any_ solution, actually, other than paying them
enough to not want to go into private law firms :)

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intrasight
Whistle blowing is a total crap shoot. We'd have much more of it if that
wasn't the case.

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Terr_
_If_ the data you provide is so damning you don't even need to prove that
you're a reliable source, then you could submit it anonymously, as an
encrypted block along with a public key to decrypt it.

Then, if things look favorable, you can step forward and prove your identity
by supplying the matching private-key.

I expect the problem is that first "if" \-- authorities may want to be super-
sure of the origin of the information before they proceed with it.

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rjbwork
Sorry, an encrypted block? A public key? Like, for my desk drawer? A private
key? But i alreaady gave the public key out how can it be private too?

See where i'm going with this? You've put a massive technical stumbling block
on non-technical folks in order to expose wrong-doing.

~~~
Terr_
Only if they do it _from scratch_. However, most of the possible encryption
options and complicated parts of PKI aren't needed or relevant for this use-
case.

It's arguably even simpler than a zip-file utility when it comes to workflows.

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chc
It sounds like he didn't actually go to jail for the crime he blew the whistle
on, per se, but for continuing to cover up part of the crime afterward by
refusing to produce information they knew he had. Maybe all the folks who got
non-prosecution agreements actually cooperated with investigators.

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hacknat
Maybe. Stories like this are what make me sick when I think about our Justice
department. That, and Aaron Swartz...and a slew of other things I guess.

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tptacek
It's "Swartz". Aaron Swartz. Not "Schwartz".

~~~
cdelsolar
That's what he said

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tptacek
No, it isn't. (I'm not hitting refresh on these things waiting for the
corrections).

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Green-Man
" _I’ve tried to invest the reward money wisely. I collect Formula One
memorabilia and antique hockey gear and sweaters from the NHL’s Original Six
teams._ "

I'm not sure if I understand the term "wisely" correctly.

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ipsin
I was so confused by the chronology, particularly with respect to smuggling
diamonds in a toothpaste tube[1], which I'd read about previously.

What I can't figure out is if that evidence was actually retained and entered
as evidence at trial, or if the image in the article I linked was a
reconstruction.

[1]
[http://upstart.bizjournals.com/views/columns/2008/09/17/UBS-...](http://upstart.bizjournals.com/views/columns/2008/09/17/UBS-
Diamond-Smuggling-Scandal.html?page=all)

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JakeAl
His book: [http://lucifersbanker.com/](http://lucifersbanker.com/)

As secretary of state, in an unusual move Hillary Clinton intervened with UBS
to help it out with the IRS and DOJ. He seems to imply that Hillary brokered
the treaty to release the 52,000 names -- a deal which they backed out of
citing Swiss law after only providing 4,500 names -- because of the global
corporate elites tied to our government, politicians from all over the globe
and CIA who would be implicated. He notes that the CIA funneled the money from
Iran-Contra through a Swiss bank account, and the plane used to deliver the
400 million in unmarked cash to Iran came from Geneva. He also thinks it was
the CIA that leaked the Panama Papers, selectively exposing names.

After Hillary's deal, the Swiss bank paid Bill Clinton $1.5 million for
speaking gigs. Total donations by UBS to the Clinton Foundation grew from less
than $60,000 through 2008 to a cumulative total of about $600,000 by the end
of 2014, according the foundation and the bank.

There is no evidence of any link between Hillary's involvement in the case and
the bank’s donations to the Bill, Hillary and Chelsea Clinton Foundation, or
its hiring of Mr. Clinton. But her involvement with UBS is a prime example of
how the Clintons' private and political activities overlap.

It should also be noted that in 2011 the Clinton Foundation announced a
partnership with UBS on the CEO-UBS Small Business Advisory Program which
connects "small businesses" with \- One-on-one pro-bono strategic financial
and business counseling \- Access to the entire suite of UBS's resources,
including senior leaders within the firm's marketing, human resources,
operations and Investment Banking divisions \- Opportunities to network with
industry influencers and major decision makers in both the private and public
sectors.

The ten small businesses enrolled in the program had average annual revenues
of $8.44 million in 2010 and together employed a total of 400 people at the
end of 2010. The entrepreneurs and their companies who participated are: Julie
Azuma, Different Roads to Learning, Inc.; Dinesh and Josh Boaz, Direct Agents,
Inc.; K.Y. Chow, GM Printing; Richelieu Dennis, Sundial Creations; Kenny Lao,
Rickshaw Dumpling Bar; Tamara Mangum-Thomas, Sharpened Image, Inc.; Mike
DiMarino, Linda Tool; Marjorie Perry, MZM Construction & Management Company,
Inc.; Jeffrey Smalls, Smalls Electrical Construction, Inc.; and Larry Velez,
Sinu.

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wrs
Just to clarify a minor point -- the person he says threw her Blackberry
across the room in frustration over his award is described by the NYT article
as being frustrated because it was _larger than her department 's entire
budget_, not necessarily because he got an award at all.

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eppsilon
And she threw it "across the table", not across the room as he stated.

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victorhooi
Aha, but does he need to pay taxes on that $104 million? =)

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samfisher83
Yes he does.

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ensiferum
And this is just the tip of the ice berg. Think about all the scheming, scams,
power mongering, corruption and outright crime that goes on in the banking
business. Self regulation my ass. They're gambling on the whole planet
basically. And ofc nothing will ever chance, because the banks own the
goverments. A single "occupy wall street" protester will certainly get more
time in the jail for minor offence than a bank exec would ever get for his
crimes.

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themodder666
Fuck this guy. No, seriously, fuck this guy. Why in the hell would anybody
who's not an asshole decide to aid and abet the state in its coercive
expropriation of money? I find this guy repulsive.

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developer2
Huh? He's the _only_ person out of dozens/hundreds/thousands of employees who
pursued. Everyone else is happy to have a comfy job that pays their bills,
while burying their heads in the sand and praying that nobody shuts them down
so they can keep their cushy salaries performing illegal work.

"Fuck this guy". No, fuck almost _everyone else_ who works for these kinds of
companies, pretending like they're not the scum of society.

Word to the wise: if you work for this kind of company, and do not have the
gumption to stand and fight, get the hell out and run for the hills. You might
just wind up being the scapegoat; better to get out and let the other willing
participants take the fall.

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themodder666
'Illegal' does not mean immoral. I would dodge taxes if I could, as I don't
much appreciate people robbing me.

