Wednesday, October 26, 2016

ANDREW KREIG: Whistleblower Memoir Denounces UBS Bank, U.S. Justice Department Corruption

Judicial branch of government has now been completely compromised and corrupted by the Executive  

By Andrew Kreig

Famed bank whistleblower Bradley Birkenfeld launched his tell-all memoir Lucifer’s Bankerlast week at the National Press Club with a harsh indictment of the nearby headquarters of the U.S. Justice Department.

Bradley Birkenfeld, described earlier this year by CNBC as "the most significant financial whistleblower of all time," attacked law enforcers as being cowardly, self-seeking and deceitful in monitoring crime by top financial institutions that help the wealthy commit massive frauds on taxes.

The schemes hide money, sometimes ill-gotten, and thus may hurt the criminals' spouses, business colleagues, fellow citizens, and governments.

Birkenfeld, 51, helped American authorities recover an estimated $15 billion in back taxes, interest and penalties from wealthy tax cheats who worked with his former employer, UBS, the world's largest bank. UBS is at the center of Switzerland's notoriously secretive system that helped the wealthy duck debtors and facilitate crime that includes drug and arms trafficking.

"The great irony," Birkenfeld told about 80 guests at the press club Oct. 18 "is that the only banker imprisoned for the financial scandals was me, the whistleblower."

"The problem," he continued in an interview the next day with RT, "is the U.S. Department of Justice is corrupt."

His Lucifer’s Banker memoir, subtitled The Untold Story of How I Destroyed Swiss Bank Secrecy, is an engaging, important and otherwise compelling overview of his unique, courageous role in exposing and reforming Switzerland's system of secret banking for the world's mega-rich.

His story also shows how he endured a 40-month prison sentence. After serving 31 months (with time off for good behavior), he is now free to tell the tale, bolstered by $104 million (before taxes) that he and his lawyers managed to obtain as reward money despite the best efforts of Justice Department tormentors to hinder the full force of his disclosures.

Particularly important is that authorities -- and not just the Justice Department but also Secretary of State Hillary Clinton and her colleagues -- sought to protect in his view many of the rich and powerful tax cheats who could have been exposed.

Update: JIP's editor discussed this column on Oct. 25 during an hour-long edition of The Phil Mikan Show simulcast on WLIS-AM and WMRD-AM in Connecticut, and streaming worldwide. A major point was that the topic was not simply important but interesting -- and that true reform will never occur until the public becomes engaged in how seemingly far-away issues directly affect personal quality of life, such as when criminals hide assets from employees, business colleagues or spouses, or when narcotics traffickers destroying communities hide their money overseas.

Birkenfeld says he outlined to authorities precisely how they could have obtained the names and other records of all 19,000 of the UBS customers availing themselves of secret accounts. Also, he told prosecutors how they could capture all UBS bankers entering the United States on phony customs declarations, thereby enabling prosecutors to squeeze the bankers to cooperate in criminal cases against the tax cheats and foster reform through such additional avenues as Senate oversight hearings.

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But, he argues, U.S. authorities obtained only 4,700 names that UBS cherry-picked in mysterious ways. He believes the bank and compliant authorities protected the vast bulk of the most politically influential tax cheats. That deprived taxpayers, he argues, of even greater reimbursement than the $12 billion (plus interest and penalties) that IRS recouped.

More generally, he portrays a corrupt and incompetent oversight landscape that is marred also by often-timid and misguided defense counsel typically available whistleblowers, even though he could afford top lawyers and researched extensively those available.

Despite roadblocks, his saga proceeds in a buoyant manner in describing how he overcame the obstacles for the most part, aided by his final team of lawyers from the National Whistleblower Center. He provides kudos to the Internal Revenue Service, which he calls the most effective, non-political and otherwise admirable of the oversight bodies he encountered.

Praise for the IRS is not the only unconventional aspect of this memoir. So is his admiration for the rigorous training he received at Vermont's Norwich University, the nation's oldest private military academy. Also, he is proud of his luxurious and libidinous lifestyle as a high-paid banker. In a convoluted but ultimately convincing way, such diverse experiences led him to the monumental risks and results of his whistle blowing.

Former IRS chief Lois Lerner - praiseworthy?

Today's column draws from his case, his powerful memoir and his appearance last week in the nation's capital. Our conclusion? His harsh words against the Justice Department and the overall structure it exemplifies appear to be justified, although we recognize that many thousands of employees labor also each day to live up to the DOJ's aspirational goals of delivering justice.

In concluding this, we draw upon years of reporting here documenting other injustices by top federal authorities involving both their whitewashes that protect the powerful and their remarkably harsh treatment to political targets, including whistleblowers.

Readers are familiar with the threats to democracy inflicted by the Justice Department on many political prisoners and/or whistleblowers.

Thomas Drake: photo by Noel St. John
As a few examples reported here through the years: Privacy advocates, whistleblowers and political targets Edward Snowden, Joseph Nacchio, Thomas Drake, Jesselyn Raddack and John Kiriakou; and the still-imprisoned former Alabama Gov. Don Siegelman and the DOJ political targets (such as Richard Scrushy, Tamarah Grimes, Gary White, and Dana Jill Simpson) who courageously supported one of the Deep South's most prominent Democrats during his 2006 Justice Department frame-up despite pressures from the department to adjust their testimony or otherwise drop their protests against one of the nation's most enduring human rights disgraces.

Among others we've covered have been President John F. Kennedy's former Secret Service guard Abraham Bolden, a black officer who tried to warn the Warren Commission about racial hatred against JFK within the protective service but instead found himself imprisoned on trumped up DOJ charges; and many more DOJ victims. That's one of the department's most enduring and important shames.

Several of these victims and civic heroes were honored guests at Birkenfeld's book launch last week. What follows is our take on the Bradley Birkenfeld story and its continuing importance to you.


Lucifer's Banker and relevant commentary constitute a vital additional to conventional wisdom about the reforms to Swiss banking that Birkenfeld's initiative generated. Most important are the difficulties even such a well-funded and well-prepared whistleblower faced in trying to achieve reform when Washington authorities, with some exceptions such as U.S. Sen. Chuck Grassley (R-Iowa), generally oppose whistleblowers as much as they can without alerting the public to the deep corruption afflicting the country.

The author's Wikipedia entry, a compilation of clips from varied sources, is one starting place for his background. An additional (and not dissimilar) perspective comes from his memoir'spromo:

As a private banker working for the largest bank in the world, UBS, Bradley Birkenfeld was an expert in Switzerland's shell-game of offshore companies and secret numbered accounts. He wined and dined ultrawealthy clients whose millions of dollars were hidden away from business partners, spouses, and tax authorities. As his client list grew, Birkenfeld lived a life of money, fast cars, and beautiful women, but when he discovered that UBS was planning to betray him, he blew the whistle to the U.S. Government.

The Department of Justice scorned Birkenfeld's unprecedented whistle-blowing and attempted to silence him with a conspiracy charge. Yet Birkenfeld would not be intimidated. He took his secrets to the U.S. Senate, the Securities and Exchange Commission, and the Internal Revenue Service, where he prevailed.

His bombshell revelations helped the U.S. Treasury recover over $15 billion (and counting) in back taxes, fines, and penalties from American tax cheats. But Birkenfeld was shocked to discover that at the same time he was cooperating with the U.S. Government, the Department of Justice was still doggedly pursuing him. He was arrested and served thirty months in federal prison. When he emerged, the Internal Revenue Service gave him a whistle-blower award for $104 million, the largest such reward in history.

A page-turning real-life thriller, Lucifer's Banker is a fascinating behind-the-scenes look at the secret Swiss high-net worth banking industry and a harrowing account of our government's justice system. Readers will follow Birkenfeld and share his outrage with the incompetence and possible corruption at the Department of Justice, and they will cheer him on as he ''hammers'' one of the most well-known and powerful banks in the world.


The promo lives up to the reality in this instance.

This book is timely during this campaign season, particularly in illustrating how many leaders of both parties and even career appointees defer to the ultra-wealthy and their organizations, such as UBS.

Birkenfeld describes how his success in private banking enabled him to obtain a unique UBS compensation package for those at his level, which included an 18 percent share of his 150 clients' new spending at the bank.

Obama has sentenced whistleblowers to 25 times the jail time of All prior U.S. Presidents COMBINED

As a result, he could afford to hire Washington's best lawyers when he decided to report his superiors in 2005. He discovered via an unannounced memo buried deep in the UBS intranet system that his higher-ups were planning to scapegoat lower-level personnel if foreign authorities, such as those in the United States, ever discovered that a major component of the bank's operations was sales of financial tools to clients who wanted to violate their national law.

But he learned that all the major law firms in Washington, DC were unavailable to him because UBS kept them on retainer, creating a conflict. So, he went to a well-regarded boutique led by former Justice Department prosecutors.

And, like many such litigants, he learned that their expertise pointed him to a guilty plea with few protections in the face of the DOJ's overwhelming financial and logistical advantages against anyone it chooses to target for any reason. Those factors are illustrated also by Harvey Silverglate's iconic 2009 book Three Felonies A Day: How the Feds Target the Innocent, soon to be republished in an updated edition.

He saw also that even the best lawyers he could find at the beginning of quest lacked the clout and survival instincts to help him navigate what should have been, at least according to civics and legal studies, a relatively straightforward proposition: the whistleblower gets immunity or at least leniency in return for massive documentation of serious, widespread crimes that authorities could never learn about otherwise.

Instead of receiving the kind of deal provided to many others, he portrays a Justice Department beholden to bankers and their top clients, first under disgraced Bush Attorney General Alberto Gonzales and then under the Obama successor Eric Holder.

Gonzales with war criminal master George W. Bush

Birkenfeld's assessment of Holder is much like our own as reported in Media Helped Eric Holder Polish His Image. That 2015 column summarized this way Holder's six years in office after representing UBS and other banks at the elite law firm Covington & Burling:

"Attorney Gen. Eric Holder polished his legacy Feb. 17 with a National Press Club speech that illustrated the sharp limits of political accountability and media curiosity in the nation’s capital."

Although Birkenfeld's memoir characterizes much of the Justice Department's serious misconduct as occurring during the Bush administration (which ended in late January 2009), he characterizes Clinton's discussions with her Swiss counterpart during the scandal in 2009 as "Mafia-style antics" that coincided with an increase of UBS donations to the Clinton Foundation from $60,000 to $600,000.

Meanwhile, President Obama, a close friend of Holder, went golfing for five hours on Martha's Vineyard with UBS America CEO Robert Wolf, whose company paid a $780 million to obtain deferred prosecution. In an interview with ProPublica reporter Sharona Coutts and National Whistleblowers Center Executive Director Stephen Kohn, Democracy Now! reported that golf date as follows: As Obama Golfs with UBS CEO Days After Firm Avoids Criminal Prosecution, UBS Whistleblower Given 40-Month Jail Term.


In Lucifer's Banker, Birkenfeld describes that settlement as a mere cost of doing business compared to the billions of dollars in fees the bank obtained from helping Americans illegally hide their money.

The UBS CEO Wolf had been one of Obama's major early Wall Street backers. The media have for the most part whitewashed Obama's powerful backers on Wall Street and in the intelligence community in order to overemphasize his brief stints as a community organizer and adjunct law professor. That's a story previously reported here, and of continuing significance.

Wolf with Obama

Also a story for another day are the varied sources of the untaxed and largely unaccountable wealth of Switzerland's 130 private banks, including UBS. These are reliably reported in some instances to include drug and arms trafficking in ways that authorities could relatively easily track with the confidential information Birkenfeld provided if DOJ higher-ups had so desired.

He reports that his Justice Department personnel became appalled, hostile and almost visibly frightened when he reported that one UBS client with $420 million in six UBS accounts was Abdulazziz Abbas, an international oil and arms dealer with strong business ties to Saddam Hussein.

The author recalls, "I had no trouble spilling these particularly filthy beans. After all, this was the post-9/11 world, and this guy Abbas had terrorism written all over him." The former banker, now working part time as a private consultant and philanthropist, adds that his mental process was, "Sorry my Swiss friends but terrorism trumps Swiss banking secrecy."

But he encountered further problems at the Justice Department during his interview when he, as he recalls, he continued his description of the trafficker this way:

"Oh, there's one other thing you should know."

"What's that?"

"I understand Abbas is good friends with Rudy Giuliani."

Former New York City Mayor Giuliani had been the third-ranking DOJ executive earlier in his career and was at the time leading in polls for the GOP nomination in the 2008 presidential campaign.

Rudy "9/11" Giuliani

"We're not interested in non-Americans!" the DOJ's top man said, Birkenfeld recalls.

"I kept trying to interject but he kept repeating this mantra, almost in a panic." 


There's always at least two sides of a story.

The government's views are summarized in prosecution memos, such as this: Former UBS Banker Sentenced to 40 Months for Aiding Billionaire American Evade Taxes, and elsewhere below in excerpts from relevant litigation.

The DOJ materials conveyed the department's hostile posture towards Birkenfeld by, for example, omitting for the most part his early initiative and the authorities' treatment of the wealthy bank customers he identified. None of the clients or higher-ups went to prison, it bears repeating, even though it was the clients who actively undertook the tax cheating and it was UBS top executives who orchestrated creation and sales of tools for tax cheats. Just last week, the IRS issued a news release, Offshore Voluntary Compliance Efforts Top $10 Billion, that boasted of its successes since 2009 in recovering money offshore but omitted any hint of how much the program owed to Birkenfeld.

The government's successes were also memorialized in extensive news coverage of Switzerland's reform of banking laws under U.S. government pressure. A sample of that coverage is included in the appendix below.

More generally, this editor can confirm that the vast majority of thousands of DOJ and other federal employees are simply trying to do their jobs day-in, day-out in a responsible manner and without any complicity in the kinds of intrigues described at length in Lucifer's Banker or in this column.

Such intrigues are the exception but can be important enough to report at length, particularly when scant accountability exists for demonstrated misconduct or what might be described as obstruction of justice if undertaken by a private citizen. This assessment is based on, among other things, my five years covering the Justice Department full time as a newspaper reporter plus a year as law clerk to a Boston federal judge and 25 years as an attorney in Washington, DC.

Historian John H. Davis recounted in his 1989 book Mafia Kingfish: Carlos Marcello and the Assassination of John F. Kennedy a particularly dramatic example of the twin sides of the Justice Department.

Nearly three decades ago, two heroic FBI special agents, Larry Montague and Michael Wacks, risked their lives for many months, sometimes on a daily basis along with swindler-turned-informant Joe Hauser, to worm their way into the confidence of the ruthless Louisiana and Texas mob boss Marcello. Using hidden tape recorders, the agents pretended to be career criminals. They pulled it off with Hauser's help, and recorded the mob boss and his henchmen on multiple occasions confiding their murderous deeds through the decades.

Even one pat-down or other slip-up revealing the electronic gear during their visits to secluded mob hideaways would have meant certain and immediate death, as would any discrepancies in their "criminal" cover stories eliciting trust from one of the most canny mob bosses in American history.

Carlos Marcello

Instead, Marcello and top cohorts were convicted of racketeering at trial.

After nearly seven years, however, Marcello, who had bribed and threatened officials high and low for many decades, received a surprise release via the courts in 1989, and was able to spend his remaining four years at home before his death in 1993.

Since Marcello (shown above in a file photo) is a major suspect in the deaths of both President John F. Kennedy and the Rev. Martin Luther King, Jr., among many other murders and whitewashes, few tales so neatly encapsulate both the heroism some DOJ personnel and the questionable performance by others in the legal system.


Lucifer's Banker describes the important ways that Birkenfeld's tormentors at the Justice Department smeared and imprisoned him in a political prosecution after he and his legal team alerted them in 2005 to then-unknown crimes by UBS top management and its U.S. clients. Among the grievous problems he describes:

  • The Department's go-slow posture against major wrongdoers;

  • Refusal to grant the immunity he felt he needed to provide all the documents he had bravely secured in violation of Swiss law;

  • Indictment and imprisonment of him when it failed to imprison any of the banking higher-ups or their clients who had actually implemented the tax avoidance;

  • Repeated smears of Birkenfeld as motivated by reward money when congress had not even passed the legislation creating an IRS reward system he approached the DOJ;

  • Repeated claim of credit for the investigation when it would not have started or finished without his massive documentation, conveyed in significant part to the Senate under its grant of immunity that DOJ declined to recognise.

After many similar rebuffs and a frightening black ops operation against Birkenfeld worth reading in full, he concluded, "When your own government betrays you it's a mule kick in the guts."

Birkenfeld is more positive about Senate investigators. He recalls that they listened carefully, held hearings, and undertook reform action for the future while hiding Birkenfeld's role in many ways. They prevented their star witness from testifying publicly on the precise crimes and criminals. This enabled senators and the DOJ to gain more of the public credit for exposing the crimes. It also enabled higher-ups at UBS to avoid tough questioning that would have enlightened the public but heightened pressure on VIP bankers and clients who fund both parties.

Birkenfeld's summary of the Senate actions:

The politicians had gotten out front of this, causing an enormous embarrassment for the DOJ; they could no longer suppress my evidence or the brewing scandal. However, no open accusations of corruption or obstruction of justice flew between Senate Democrats and Republicans, because both sides knew they had dirty fish in the fire.

The happy ending (at least for him and readers so inclined to look for bright spots) is that his disclosures created such a scandal as to prompt major reforms in Switzerland's banking system. Along the way, he found highly capable and trusted counsel at the National Whistleblower Center (one of his many law firms) and would do it all again, except to approach the "Justice" Department first instead of other agencies.

But much work remains. This month he sent a copy of his book to President Obama with a request for action, copied to the Justice Department and all 535 members of the U.S. House and Senate. His letter, copied here, outlines the ongoing cover-up of vital information, including 75 percent of the 19,000 names of UBS secret account holders, and calls for public disclosure and more aggressive enforcement that can help the rest of the nation's citizens.

Bottom line: Read this book, especially during election season. It will help you understand that both the private sector and government abound with puppet masters and puppets, and little will change until the public demands the truth and accountability.

Andrew Kreig

Andrew Kreig, Esq.
Andrew Kreig is Justice Integrity Project Executive Director and co-founder with over two decades experience as an attorney and non-profit executive in Washington, DC.

An author and longtime investigative reporter, his primary focus since 2008 has been exploring allegations of official corruption and other misconduct in federal agencies. He has been a consultant and volunteer leader in advising several non-profit groups fostering cutting-edge applications within the communications industries.
As president and CEO of the Wireless Communications Association International (WCAI) from 1996 until 2008, Kreig led its worldwide advocacy that helped create the broadband wireless industry. Previously, he was WCAI vice president and general counsel, an associate at Latham & Watkins, law clerk to a federal judge, author of the book Spiked about the newspaper business and a longtime reporter for the Hartford Courant.

Listed in Who’s Who in America and Who’s Who in the World from the mid-1990s and currently, he holds law degrees from the University of Chicago School of Law and from Yale Law School. Reared in New York City, his undergraduate degree in history is from Cornell University, where he was a student newspaper editor, rowing team member, and Golden Gloves boxer.



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