By Lawyer Michael Minns
Last year we feasted and celebrated on the courage and entrepreneurial genius of the creator and founder of Apple, Steve Jobs. My partner Ashley switched us to the more expensive brand last year because of the huge capital outlays for fixing our other computers and all of the hook up problems. We were spending $500 to $1000 a month fixing and buying new computers. The Apples all over the office and phone systems and iPads cost an initial outlay of $12,000. Without a dollar of repairs in the last year we have now gotten essentially free computers – Plus no down time. Jobs risked everything over and over again, and he was one of the geniuses who make “Made in America” (even if it is primarily made today in China) still mean something. Jobs is dead. He was last year’s American Hero. We also had navy seals kill bin Laden last year. One of them has a book out.
This year? The press, the government, the IRS, all have a new American Hero – Bradley Birkenfeld. He just got out of prison. And he just got $100 million dollars for snitching on his clients. No medals yet. No worldwide accolades yet. His PR machine and lawyers and probably lobbyists just want his felony taken off his record, and a few ticker-tape parades, so there will be more heroes just like ole Bradley. Bradley made his first $100 million bucks in three years. Actually, the IRS has paid him $104 million for snitching. His rise to fame and fortune is faster than Jobs, faster than Gates, faster than Buffet. He hasn’t invented anything or cured cancer. He hasn’t rid our country of the public’s enemy number one on a dangerous mission. His heroics?
He left Swiss Bank UBS under a cloud and then he turned them in for what he did for them. That’s hard to follow, because it sounds funny. So let’s break it down. It will still sound funny, but it will be easy to follow.
Birkenfeld worked for a big bank. He was paid, if we believe his story, to lie to customers, lie to the US government, and help convert honest taxpayers into dishonest taxpayers. He got paid commissions for getting US citizens to put their money into the Swiss Bank UBS. Just like presidential candidate Romney, except that no one has come out and said that Romney was trying to break the law, or in fact broke the law… and by the way… I don’t believe Romney was breaking the law or trying to break the law. I could be wrong; but I have no evidence to believe he is a crook and as an American, I presume he is innocent.
Then Birkenfeld snitched on all the people he converted to Swiss UBS customers, and he gave confidential Swiss files to the US government, and he essentially confessed that he was a criminal, and he asked for money for turning in the bad people he had talked into being bad people.
So he was charged with a crime based on his confession. He got a deal. The government agreed not to charge him with ten or perhaps 4,000 crimes if he would agree to accept the consequences of one crime. He would, instead of facing a hundred years or more in prison, face five. Birkenfeld had lots of lawyers in the room when he made that deal. The government said he ought to be locked up for 30 months, out of a possible 60… but the Judge disagreed and sentenced him to 40. And to prison he went… complaining every bit of the way, knowing now he had 40 months exposure and not 400 or more… and he could break his word. He could start saying he wasn’t really a bad person…only his clients were bad. In August he got out, and this month he got $100 million dollars for snitching out his clients. For the last year or so there have been thousands of American customers, just like the Republican candidate, who have Swiss bank accounts. The difference is that their bankers, lawyers, and CPA’s have not yet snitched them out and called them crooks. And that fellow citizens is the only thing separating any American taxpayer from criminal charges. The moment your lawyer, CPA, banker, partner, spouse, decides to snitch you out… you are in trouble. Innocent or guilty? That really isn’t an important question. In the last 12 months I represented three Steve Jobs type entrepreneurs who spent fortunes on legal fees and accounting fees only to “not” be certain whose side their professionals were on. Two faced prison, one just bankruptcy. All three were previously told to give up by three-piece-suit, thick carpet lawyers, and other experts. All three said “no.” All three won. I shudder to think how many give in. How many Steve Jobs are in jail today because of Birkenfelders… snitches? How many are there due to bad advice from those who work for them?
The Nazis trained kids to be snitches. The Russians and the Chinese teach their “advocates”, their lawyers, to bow down to the state. Are we upping them all? Are we becoming a system where our advocates are our snitches? Where snitches, essentially backstabbers, are our heroes? “Et tu Brute”, Julius Caesar said to his former best friend who stabbed him in the back. And of course there is the famous story about Judas selling out for a few coins. Shall we make Brutus and Judas our heroes?
The Snitch historically has been the low life criminal who turns on other criminals so that he can get a few bucks or so he can get his sentence of jail time reduced. The Snitch is the team player who throws the game for the other side. As Americans we despise Snitches. As a defense lawyer, if I were to offer someone money to testify, they would bury me and my client under the court house steps before they took my license away and put us both in prison. Defense lawyers can only be unethical and obstructing justice by bribing witnesses with money; it doesn’t even get to the point where we are allowed to offer freedom as a reward. And we shouldn’t be able to. By the same token though, am I alone in being concerned that government can buy witnesses with huge sums of money and freedom? Is the Snitch the new hero of the American Constitution? Of course not.
Let’s say that some of the 4000 UBS clients were trying to break the law, just like the drug lords the bankers haven’t turned on, or the Nazi’s who still have money in Switzerland, or the dictators. Ok. Out of 4000 offshore business people, perhaps some of them are trying to break the law.
But let’s be clear about this. Money is transferred offshore, Billions and Billions, every day every second of every day… and it is for the commerce of legal trade. When you travel to Europe or Scandinavia or anywhere else your money is transferred into their currencies. When you buy an automobile, even if it is “made in the US” parts of it are made offshore and your money goes in part, offshore. When you go to wall mart you are shopping in the streets of Shanghai. Many business people have use of foreign accounts and don’t even know it, through correspondent banks. If you use VISA or Mastercard or American Express in Mexico or Canada your funds are moving through foreign banks. These customers of Birkenfeld mostly had lawyers and CPAs advising them that they were following the law, or else they wouldn’t have done it. Why take the chance? Many are being charged with not filing their F-Bar forms. In 2005 government estimates that less than 20% of the people who were legally required to file the F-Bar did so. Most lawyers and CPAs didn’t even know what the F-Bar was.
The form must be filed by the controlling party of a foreign bank account, whatever that is. You file it if you marked on your schedule B that you have such access. What if you had the access and didn’t have to file a schedule B? That’s for another day. Now here’s the wonderful thing for ole Birkenfeld. If he tells the government that all 4000 people were supposed to file the F-Bar and they didn’t, it’s their word against his… and maybe he gets a fee for turning them in. And maybe they all pay the penalties and hope they don’t get indicted. They really shouldn’t call it the F-Bar. They should call it the FU-Bar. It would be easier to understand. No one would forget it. Did you file your FU form? The amount of filers would jump from 20% to 90% and we would have a fair estimate of how many were actually trying to break the law.
Did you know that if you inherit $10,000 in a foreign account, Mexico, Canada, Europe, God forbid Birkenfeld’s old boss the Swiss UBS, and you don’t promptly file the FU form you could be indicted? Did you know that even if you aren’t indicted you still could owe more than the entire $10,000 in penalties? What if twenty years passed and you just found out about your inheritances? What if you were on the deposit form because your old loving Uncle put you there… he was worried you wouldn’t get the money?
I am in favor of Bradley Birkenfeld doing a little time. After all, he broke US laws, he broke Swiss laws, and he broke all laws of decency involving his poor clients. And he came into the government office without a glaring light in his eyes, without a threat, without a gun to his head, and he confessed under oath that he was a crook, and he wanted a bunch of money for admitting that he was a crook. If anyone belongs in prison, if anyone ever volunteered to go there, it’s Bradley. So count me out of the legions of tear shedding, talking heads, about how unfair it is that Bradley did some time. Bradley the Snitch is also a jerk. This Jerk does not deserve our pity, our worship or our money. He didn’t want to go to prison, he wanted money, hero worship and exoneration. He got two of the four and wants the rest.
You don’t have to invent anything anymore to succeed in America. You don’t have to cure polio or kill bin Laden to be a hero. All you have to do is be a jerk.