By Patrick Temple-West and Lynnley Browning
September 13, 2012, 12:13 am TWN
The whistleblower in a breakthrough tax fraud case against Swiss bank UBS AG has won a record-setting US$104 million reward from the U.S. 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 labor on the property, the lawyers said.
Based on netting roughly US$44 million after paying federal taxes and legal fees, which tax lawyers not involved in the case called a reasonable estimate, Birkenfeld realized about US$46,000 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 US$780 million in fines, penalties, interest and restitution to settle charges that it helped thousands of wealthy Americans hide billions of dollars in secret Swiss accounts.
U.S. 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 U.S. 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.