Lucifer's Banker

by Bradley C. Birkenfeld

  But the judge wasn’t buying it.

  “Government,” she said to Downing’s flunky. “From what I can see here, Mr. Birkenfeld has no prior arrests.”

  “Your Honor,” the DOJ prosecutor sputtered, “he’s a major player in a federal tax fraud case. We’d like him held until his arraignment.”

  “Taxes.” The judge hissed the word as if she’d been audited once or twice herself. “You’ve already got his passport, so he’s not going anywhere. And you don’t even have an arraignment date set.”

  “Well, Your Honor …”

  “You want me to jail him indefinitely?”

  “We’re looking at only about a month.”

  “Nonsense!” The judge jabbed a finger at me. “Mr. Birkenfeld, you’re released on your own recognizance. Show up again whenever and wherever you’re told.”

  “Yes, ma’am,” I said.

  “But, Your Honor,” the DOJ goon tried one more time.

  “Next case!”

  And that was that. I recovered my luggage, which I knew had been thoroughly searched. But there was nothing in there to find, other than a few of my favorite cigars and Swiss chocolates. I assumed that Downing’s flunkies had also made copies of every piece of paper and all the computer discs in my briefcase, although that didn’t matter since I was going to turn over everything anyway. My brother Doug drove me back to his condo in Weymouth.

  Doug was already furious with the DOJ, but now my arrest had him mumbling curses and stomping around the condo. He’d been speculating, as I had, that sooner or later Downing would throw the book at me; but the DOJ’s flagrant abuse of power compounded by their blatant humiliation tactics made his blood boil. Yet I wasn’t humiliated; I was just getting started. I told Doug that I’d planned to meet again with the SEC and the Senate, but now my plans had changed. Downing was pressuring Hector and Moran to deliver me back to the DOJ for a “full debriefing.” Maybe he thought the shock of my arrest would have me curled up in a corner, crying. I called my lawyers and told them to set it up. It was time for a face-off.

  A few days later I flew down to Washington and strode back into that fine, venerable old building, the one with the expensive drapes covering up exposed sculpture nipples. Rick Moran tagged along, but his head was hung low like a kid whose father keeps telling him, “Don’t do it that way,” and he’d done it that way anyway. Downing held court in his pristine conference room, with Karen Kelly sitting there like his yappy little Chihuahua, along with an Assistant US Attorney named Jeff Neiman. This guy looked like he’d barely graduated from law school, had gelled black hair and a fresh golf tan, and worked out of the US Attorney’s Office, Southern District of Florida. He stood barely over five feet tall and had a disturbingly distracting lisp. His pants were about two inches short, exposing a pair of mismatched socks. It made me think of that character in the classic movie My Cousin Vinny, the trial lawyer with the terrible stutter. I didn’t figure out what Neiman was doing there until later.

  Downing was clearly pissed that I’d appeared before a New England judge who didn’t go his way. He’d wanted me locked up so he could sweat me for as long as he pleased, Iranian-style. And here I was, walking around like a free man. He practically pounded the table.

  “All right, Birkenfeld. Now we want the names! All the names.”

  “I gave them all to the Senate, and the IRS as well,” I said with a shrug. “If you’d given me a subpoena when we asked for it, you could have had them last year.”

  Jeff Neiman’s eyes flickered at Downing. He was probably thinking: Why didn’t you just give him a subpoena? But he didn’t say a word, so right away I knew who was higher up on the totem pole. Downing.

  “Well, wise guy,” Downing snapped. “We want them now.”

  But it was simply a childish game and I knew it. The DOJ already had all my evidence because the Senate had shared it with every relevant agency. This was about Downing trying to intimidate me by having me arrested and indicted, as if that was the straw that would finally break my back. None of his behavior made sense for a logical, mature criminal justice professional. I was already a whistle-blower, a walk-in, a volunteer, in effect having confessed to my full participation in the illegal activities I’d brought to light. So what more could he possibly come up with? He simply wanted the drama, a show for his acolytes. So I played along, took out a copy of the long, detailed list of Swiss bankers and clients that I’d given to Bob Roach and the Senate Select Committee, and slid it across the table.

  “There you go,” I said. “The rest of the government already has this, so I guess you can too.”

  He snatched it away, puffed up, and flicked the papers with a finger as if he’d just broken John Gotti. Meanwhile, I took out my wallet and pulled out my yellow Get Out of Jail Free card, the one I’d taken from my flat in Geneva (Exhibit 16). I slid it across the table. Downing, Kelly, and Neiman bent forward and stared at the card.

  “So?” I said. “Will this work now?”

  All three of them sat there, stunned. If they thought they were going to break me, I’d just shattered their fantasies.

  “And by the way,” I said, “I have prearranged meetings with the SEC and the Senate, and I intend to honor those commitments.”

  I thought Downing was going to have a stroke. He banged his chair back, stood up, and yelled, shooting a finger at my face.

  “You will not meet with, or talk to, anyone from the Senate or the SEC! Is that clear, Birkenfeld?”

  My lawyers later advised Carl Levin (senator) and Robert Khuzami (SEC) in writing that with those words, Kevin Downing might have committed not just one, but two federal felonies, pointing them to 18 U.S. Code § 1505 which makes it a federal crime to impede, intimidate, or obstruct any witness before a Congressional committee or investigative agency, such as the SEC. Just as Judge Kaplan had said about Downing and the DOJ team in the notorious KPMG case, the very same people who were duty bound to protect the constitutional rights of the American people were instead violating them. Downing was shaping up to be a recidivist.

  I just cocked my head at him and smiled. And then I looked over at Jeff Neiman. The baby DA just sat there, immobile and expressionless as a library lion. He’d just witnessed a DOJ prosecutor trying to intimidate a government witness from cooperating with sister federal agencies. In my view, Downing’s actions were clearly over the line, but Neiman didn’t utter a word. My lawyers subsequently reported this outrage to the DOJ. As far as I know, however, Downing was never disciplined for it. Apparently the KPMG case had taught Kevin Downing nothing about browbeating witnesses, and the rest of his crew were too cowed to open their mouths.

  I gathered up my papers and started to leave.

  “We’ll see you at your arraignment,” Downing snapped. “Don’t even think about not showing up.”

  “We’ll be there,” said Rick. I think those were the first words my lawyer uttered that day, and the last. Words of surrender. We parted ways outside. I had nothing kind to say to him.

  On June 19, 2008, I stepped off the plane in Fort Lauderdale and got hit with another blast of heat, appearing before Federal Magistrate Barry S. Seltzer, Southern District of Florida. Beside me in the steamy courtroom stood Rick Moran, and across the aisle were scowling Downing and his coat-holder, Jeff Neiman. As Seltzer strode out from his chambers to the bench, I knew I’d made the correct decision about entering my plea: Guilty as charged. He was white, medium height, middle-aged, and swaggered in his black robes like he was a Supreme Court kingpin. In fact, magistrates are at the bottom of the federal court food chain, like baby judges, and I sensed a Napoleon complex. I’d also read some of Seltzer’s “reviews.” Apparently he didn’t like bankers, as he falsely tried to compare me to Marc Rich2 in his courtroom—no shortage of civil servant jackasses here. So pleading not guilty would have been like red-flagging a bull.

  You might be wondering why I entered my confessional plea, instead of trying to argue my innocence. Well, I wasn’t rem
otely innocent in the eyes of the law, or my own. I’d already submitted tons of evidence attesting to my participation in the whole Swiss scheme, so I knew that fighting the indictment was just going to stoke Downing’s and Seltzer’s hatred. If I forced this thing to go to trial, Downing would summon his minions and whip their flanks until they convinced a jury that I was another Charles Manson. I wasn’t about to give him that license.

  I was already focusing down the road on the next stage in the process, my sentencing hearing. It would be at that point that my lawyers could mount a solid case for leniency. After all, Igor Olenicoff had already returned to his real estate empire in California and was joyfully making back the millions he’d had to pay out in fines. He was free as a bird, so why shouldn’t I be? The government wouldn’t really let Igor ride off into the sunset while locking me up in a federal penitentiary, would they? Soon enough, I reasoned, all of my Swiss bosses would be rounded up and would start talking like scared teenagers busted for pushing weed. When the government finally realized how important my testimony would be at the trials of the Swiss, and that I was not just a whistle-blower but was facilitating the return of hundreds of millions to the American taxpayer, they’d throw in the towel and withdraw the charges. Right?

  Kevin Downing sneered throughout the plea hearing, pretty much claiming that I’d committed every imaginable sin short of armed robbery and child abuse. Since I’d already preemptively agreed to a guilty plea, the government had prepared its case document: United States of America vs. Bradley Birkenfeld. The “Statement of Facts” at the top of the first page said that all parties agreed that “had this case proceeded to trial, the United States would have proven the following facts beyond a reasonable doubt, and that the following facts are true and correct and are sufficient to support a plea of guilty.”

  In other words: “This is what the defendant told us he did, but we’re going to make it look like we uncovered it all by ourselves.”

  What followed were six single-spaced pages, including every detail of all my nefarious activities, the Olenicoff gambit, and all the dirty doings of UBS, which was referred to only as “the bank.” But everything on that charge sheet was all the information, verbatim, that I’d laid out in detailed testimony to the Senate, IRS, SEC, and ultimately to the DOJ. Are you getting this? I’d walked in and handed them the keys to the evil kingdom, and now they wanted me hanged for coming up with the keys!

  Most of it was focused on Olenicoff. He’d already been convicted, and since I was his confessed facilitator—slam dunk for the DOJ. We’ve already bagged the big dog, and now we’ve got his pimp. The last line said “The tax loss associated with the conspiracy involving the evasion of income taxes of the approximate $200 million Igor Olenicoff concealed offshore is $7,261,387 million, exclusive of penalties and interest.” The clear implication was that I was responsible for that taxpayer loss. But believe me, if I’d been able to take out a checkbook and write them a check on the spot, Downing would have torn it up. He didn’t want the truth or compensation; he wanted me punished.

  Magistrate Seltzer asked a few perfunctory questions, seemingly just to hear himself talk.

  “So, Mr. Birkenfeld. You have a residence in Switzerland. Where?”

  “In Zermatt, Your Honor.”

  “I’ve been there,” he said, as if trying to impress us all with his worldliness. “The town with no cars.”

  Rick Moran made an attempt to interject something positive.

  “Your Honor, Mr. Birkenfeld came in on his own volition.”

  Seltzer looked at him. “Yes, of course. And I’d like to see his bank account records.”

  “Well,” Moran said, “I’m afraid the Swiss refuse to release those records.”

  “Ahh,” Seltzer sneered. “Just like Marc Rich.”

  Now there’s an objective comparison, I thought. Why not Manuel Noriega or Saddam Hussein?

  Seltzer then instructed us to formalize the plea. On the last page were spaces for all our signatures: Downing’s, Neiman’s, Moran’s, and mine. We passed it around and signed off. Downing scrawled his name with a flourish. I penned mine like the victim of a bad divorce.

  Seltzer hardly looked at me as he pushed my papers aside and prepared for his next big case. The courtroom echoed with the sounds of his clerk slamming a date and time stamp on the government’s victory. Then Seltzer laced his chubby fingers together and stared me down.

  “Guilty plea entered,” he growled. “Mr. Birkenfeld, I’m setting your bail at $100,000. Pay it in Boston and appear at Probation. You’ll be wearing an ankle monitor. Date of sentencing to be determined.” He banged his gavel.

  I left and headed back north.

  I sat there on the flight to Boston thinking about bail, brooding over the indignity of it. The money wasn’t a huge issue, but I’d decided to use a bail bondsman. I knew I wasn’t going to be skipping bail or trying to hide somewhere, and I hate losing interest on my own savings. The ankle monitor was going to bug me more, the feeling of being inexorably linked, night and day, to Kevin Downing, as if he’d be sneering over my shoulder. He already had my passport, so where did he think I was going to flee to? Hole in the Wall, Wyoming, like Butch Cassidy?

  He’ll probably have it packed with C-4, I thought, so if he thinks I’m going to bolt he can use a remote detonator and blow my leg off.

  All through the flight I kept on trying to figure out Downing’s psychotic obsession with me, but as we neared Boston I stopped gazing out the window and looked around the cabin. There were a number of well-dressed women on the plane, with fresh tans and full shopping bags.

  That suddenly made me think about all the wives of the thousands of Americans holding secret Swiss accounts, and how most of them probably had no idea what their husbands had been doing during all those “business trips” to Zurich and Geneva. I wondered how many of those women had discovered their husbands’ philanderings, full-time girlfriends, gambling habits, and stripper addictions, and had filed for divorces and agreed to settlements, having no idea they were ignorant of the many hidden millions that should have been theirs. I was pretty sure that, along with American taxpayers, hundreds of such women had also been screwed by the Swiss, and not in a good way. I was thinking that their divorce lawyers should revisit their settlements, because most of them were surely fraudulent.

  As the heat of July settled its steamy skin over Washington, Senator Carl Levin’s Permanent Subcommittee on Investigations was in high gear, preparing for their first open hearings on Tax Haven Banks and US Tax Compliance. For many years, in the back halls of Congress, its members had been grumbling about the abuse of American tax regulations by foreign banks, but they hadn’t been able to prove it. They were powerful men and women, yet much like a heavy artillery battery with nothing but empty cannons, they’d been impotent. Then I’d showed up with crates of ammunition, and now they were loading up, slamming the breaches, ready to yank the firing cords.

  If there’s one thing that members of Congress love more than their overblown salaries, endless vacations, free healthcare, and bloated staffs, it’s press coverage. As the Committee prepared for its onstage-live debut, they were getting plenty of it. In May, Haig Simonian had published an article in the Financial Times about UBS executives imposing an official travel ban and telling their staffs to avoid the United States, because Capitol Hill was finally righteously pissed. Right after that, The New York Times had started to dig, with a major piece about wealthy Americans falling under scrutiny as the Department of Justice, IRS, and Senate Select Committee pointed their fingers at UBS.

  With my guilty plea down in Florida, Haig then splashed my story all over the financial pages. Just ten days later, the DOJ filed a “John Doe” summons with a federal court, demanding that UBS reveal the names of 19,000 anonymous Americans holding undeclared accounts. Every single material fact contained in that summons had been voluntarily supplied by me to the DOJ, SEC, Senate, and IRS—19,000 names, more than 52,000 accounts, and
$20 billion in assets. The DOJ had simply cut, pasted, and taken all the credit. It should have been called the “Bradley Birkenfeld” summons!

  UBS, of course, refused the demand, claiming its hands were tied due to Swiss banking secrecy laws. That snubbing really enraged our American lawmakers. Simonian warned in another Financial Times article that the Swiss would soon be facing a withering American broadside, and right after that the cannons boomed. The US government petitioned a federal court to force UBS to release all the names, and the judge said “Hell yes” and issued his order. The New York Times was now running stories nearly every day. The fire was burning under my ex-bosses’ asses, who realized if they didn’t somehow comply from their hideout in Switzerland, hundreds of UBS Americas branches might be waking up to federal agents armed with warrants and padlocks.

  During that time between my plea down in Florida and the hearings coming up in mid-July, I was in Boston, following the firestorm with a degree of glee. Doug would head off to work at his practice and I’d ensconce myself in “the bunker,” a bedroom piled with carefully ordered legal files, stacks of the latest newspapers and magazines, a computer, and my constantly buzzing cell phone. Mostly I talked to my lawyers, even though my faith in them had waned. Plenty of reporters were trying to reach me, but I wisely lay low on that. I knew myself too well, that I’d likely say what was on my mind, especially regarding the DOJ. That wouldn’t help me much at my sentencing hearing, a date for which hadn’t been set. I like wearing shorts in the summer, so that black ankle monitor hung from my foot like an oversized G-Shock watch. Try taking a shower with one of those on your leg. It was a constant reminder that we’re all slaves to the government, but most of us don’t have to wear our shackles in public.