Would You Spend 40 Months in Prison for $550 Million?

U.S. Is Said to Consider Easing Informant’s Term

Bradley C. Birkendfeld is scheduled to start a 40-month prison sentence on Friday, January 6. He’s the banker who exposed UBS’ illegal activities and is now claiming a 30 percent whistleblower’s reward. In case you missed the story, here’s what 60 Minutes reported.

Where did I get $550 million?

The Financial Times estimates there’s $20 billion parked offshore illegally. With that number as a start, here’s my math. The variables are all guesstimates:

$20,000,000,000 times

7 percent in annual earnings times

5 years of tax fraud times

28 percent in taxes times

30 percent whistleblower’s reward minus

$38 million in professional fees equals

$550 million.

My numbers imply the IRS lost $1.96 billion to tax fraud. Staggering, right? Maybe, but I think $1.96 billion-and the $550 million reward-are plausible. Igor Olenicoff already paid the IRS over $50 million, and he’s just one guy. Birkenfeld claims his testimony exposed 19,000 criminals. If he’s right, $1.96 billion translates to $103,157 per cheater-peanuts compared to Olenicoff’s settlement.

Can somebody explain the logic for paying $550 million to a criminal?

Are we crazy? Birkenfeld spent a decade, according to 60 Minutes, helping his clients hide money from the IRS. I understand giving a whistleblowing reward to an employee who risked their livelihoods or was wrongfully fired for their act (click here for more information). However, this is completely different. He stands to earn an estimated $550 million for “fessing up.” Excuse me? And I thought Goldman’s bankers needed a reality check. Then again, if he didn’t expose the bank’s illegal practices then it could have meant trouble down the road for all its customers. Better late than never I suppose.

Norb Vonnegut