On July 3, Paul Hector called me up with some news.
“Brad, Bob Roach just reached out to us. He’d like you to come back down to Washington and help with the Committee’s investigation.”
“Always happy to help,” I said. “Got a date?”
“July 9th.”
“I’ll be there.”
It was a very good sign, or so I thought at the time. The Senate, unlike the DOJ, wasn’t pretending that I had no further value. They clearly saw me as the linchpin of their case, the guy who could help them nail the Swiss. Every evening when Doug came home we’d review the day’s developments, and he agreed that this bore good tidings.
But it didn’t play out the way I was hoping. I met with Roach and one of his investigators. They needed more help in excavating Martin Liechti’s role as a UBS kingpin; I was pleased to do the digging and it went well. I headed back home to wait for my invitation to Carl Levin’s hearings, but then Hector and Moran called and hit me with the bad news.
“You’re not going to appear at the hearings, Brad. They don’t want you to testify.”
“Why the fuck not?”
“We’re not sure, but they said ‘no.’ We think it’s Downing blocking you from testifying.”
“Those DOJ cowards are afraid of what I might say.”
“Probably so.” Hector and Moran sounded all beaten up. “We’re sorry.”
So Downing must have blocked my appearance at the Senate’s open hearings, no doubt claiming it would compromise the DOJ’s case. He was right; it would have, because if I’d appeared there would have been a public outcry against putting me in jail. The whole world would have known, in real time, exactly who had exposed all the Swiss Goldfingers, and also that I was about to be tarred and feathered for it. On the other hand, the Committee members were probably relieved. They had no way to control me or tailor my testimony. What if I’d held something back from them before? What if I suddenly turned to Senator John Kerry and said, “By the way, Senator, your bosom buddy so-and-so has an account in Geneva!” It was better for them to let me sit home and watch it all on TV.
Which I did. On July 17, I settled myself on Doug’s sofa, sat back, popped open a beer, and flicked on C-SPAN. The big show I’d scripted myself was about to make its “Broadway” debut. Senator Carl Levin, a Michigan Democrat, assumed his seat as Chairman of the Permanent Subcommittee on Investigations. As usual, he was dressed in a plain dark suit and red tie, with his gray hair in a sloppy comb-over and those half-lens reading glasses perched on the tip of his nose. Frankly, I liked the guy—for a senator, that is. He’s one of those old-fashioned lawmakers who’s always worked in Washington as if he believes he’s a servant to the people. To his left sat Norm Coleman, a Republican from Minnesota, much younger than Levin, clean-cut and baby-faced. The two opposing senators worked the stage like a smooth comedy duo without any laughs. Apparently I’d catalyzed a rare bipartisan, cooperative effort.
Levin opened up with a long, carefully prepared statement, which he read from his podium while also checking out his audience over the blades of those glasses, like Ebenezer Scrooge.
“Good morning, everybody. About fifty tax havens operate in the world today. Their twin hallmarks are secrecy and tax avoidance. Some tax havens are little-known places like Andorra and Vanuatu that few Americans have heard of. Others, like Switzerland and Liechtenstein, are notorious for operating behind a ring of secrecy. Billions and billions of dollars’ worth of US assets find their way into these secrecy tax havens, aided by banks, trust companies, accountants, lawyers, and others. Each year the US Treasury loses up to $100 billion in tax revenues from offshore tax abuses. Tax havens are engaged in economic warfare against the United States and against honest, hardworking American taxpayers.”
Levin then went on to say that during the course of the proceedings, the Committee would be exposing the dirty deeds of two banks, Liechtenstein’s LGT and Switzerland’s UBS AG. However, he stated that while UBS officials had agreed to give testimony, LGT had refused to cooperate. Apparently LGT also had a whistle-blower, who’d secretly shipped off 12,000 pages of evidence to the US government in February 2008, four months after I’d first given mine to the Committee. But that whistle-blower couldn’t be present, because he was now on Liechtenstein’s most-wanted criminal list, had gone into the US Witness Protection Program, and had a $10 million price on his head! Levin said he’d be making a brief appearance, but only via a recorded interview with Bob Roach, concealed in shadow. His life was in danger.
“Dumbasses,” I spat at the TV. “You could have had me right there in the flesh!”
“We have also managed,” Levin said, “to pierce some of the layers of Swiss secrecy that for too long have made Switzerland the place to bank for people with something to hide.”
“You pierced it? I flayed it open, and you guys just held out your cups!”
“In late 2007,” Levin continued, “the Subcommittee took the deposition of Bradley Birkenfeld, who worked for more than twelve years as a private banker in Switzerland, including four years at the Geneva office of UBS …”
Here we go. My time to finally shine.
“In 2008, Mr. Birkenfeld was charged and pled guilty to conspiring with a US citizen, Igor Olenicoff, to defraud the IRS of $7.2 million in taxes owed on $200 million of assets hidden in secret accounts in Switzerland and Liechtenstein …”
I nearly threw my beer at the screen. “That’s how you debut your star informant? What the fuck? How about ‘Mr. Birkenfeld bravely came forward of his own volition, taking extreme risks, and gave us the reams of evidence without which we’d never be having these proceedings’?” I was grinding my teeth as Levin went on.
“In connection with this prosecution, the United States also detained, as a material witness, a senior UBS private banking official from Switzerland, Martin Liechti, then traveling on business in Florida. These enforcement actions appear to represent the first time that the United States has criminally prosecuted a Swiss banker for helping a US taxpayer evade US taxes. And Mr. Liechti is here today. I want to express my appreciation to the Justice Department and to the US Attorney for the Southern District of Florida for making him available.”
Well, that made me feel a little bit better. Martin was going to be in the hot seat and I’d get to watch him squirm. Hearing him confess might almost make up for my public flogging.
Levin carried on with a long litany of all the wild and crazy schemes used by Swiss bankers to defraud the American government. It was clear to me that Bob Roach and his team had simply summarized all of my evidence into a courtroom-style drama that their boss could read out like a brilliant prosecutor. Then he wrapped up his opening statement with the news of another groundbreaking legislative bill that would subsequently solve all these problems, the “Stop Tax Haven Abuse Act.” It was cosponsored by Levin, Coleman, and Senator Barack Obama.
But Obama, who was allegedly very concerned about all those poor Americans being taken advantage of by sneering Swiss criminals, hadn’t shown up at the hearings. In fact, Senator Obama hadn’t attended a single meeting of the Committee, of which he was a member! He was on the stump all over the country, racing down the home stretch to become America’s first black president. Appearing on the Committee’s dais might also have proved a bit sticky, since one of Obama’s major supporters, and favorite golf partner, was Robert Wolf, Chairman of UBS Americas. In fact, the fifth-largest bundled money contributors to Obama’s presidential campaign were UBS Americas employees. At the time, no one knew very much about Barack Obama, except that he was young, hip, eloquent, and the Generation X Democrats’ greatest hope. When Senator Coleman took the mike and laid into Swiss tax abuse, he clearly didn’t know much about Obama’s buddies either.
“To be clear,” Coleman said, “our focus is on UBS’s operations out of Switzerland. UBS has a large number of personnel based here in the United States, and they, like us, must be surely appalled at what the Subcommittee ha
s uncovered.”
Appalled? They were aiding and abetting it, numb-nuts!
“But there is a fundamental question that must be asked of UBS,” Coleman posed. “And that is, when you are sending Swiss bankers, twenty UBS bankers taking over three hundred trips since 2003, somebody in America has to know what is going on … this kind of activity in this country cannot simply have occurred without folks here intentionally turning a blind eye.… I would sure like to find out what the folks in America knew about these transactions.”
“If you do try to really find out,” I scoffed, “you’ll lose that cushy job of yours. Look around that chamber. Half the politicians around you will be calling their accountants and attorneys at lunch today, screaming ‘get me amnesty’!”
Finally, it was time to talk to the witnesses, the first of whom made me sick to my stomach: Kevin O’Connor, Associate Attorney General, Department of Justice, a big guy with a bulldog face and close-cropped black hair. He was Kevin Downing’s boss, and no doubt the guy who’d been giving Downing his marching orders. Next to him sat Douglas Shulman, Commissioner of the IRS, a slim dude with a trembling demeanor who looked exactly like what he was, an accountant. Both of them were hunched forward and wound tight, as if unsure whether they might get a beating from Levin, who thanked them for coming, asked them to stand and raise their right hands, and swore them in.
Shulman presented his statement, which included all the magnificent techniques the IRS would be using to pursue American tax-evaders, including the Qualified Intermediary Agreement (which UBS had circumvented time and again), and the John Doe Summons (which so far UBS had thumbed its nose at). Then he mentioned folks like me and my ears pricked up.
“The final and very important tool that I will mention this morning is informants,” said Shulman. “Informants have been valuable sources of information for IRS civil and criminal investigations into offshore tax evasion. With the new whistle-blower standards that reward informants, we are hopeful that we will get additional input on potential violations.”
He was talking about me, and inviting anyone else like me who might be out there to come forward and, if their information was valuable, perhaps be handsomely rewarded by the IRS. The irony was that he was sitting next to one of the biggest haters of informants in Washington. Elbow to elbow, one wanted to give a whistle-blower a crown, and the other wanted to take his head off.
Washington, DC.
When Kevin O’Connor got his turn, I actually laughed out loud. I’d never seen him in person or heard him speak before, and for a guy who looked like Sean Hannity’s beefy big brother, he had a voice like a squeaky old lady. O’Connor told the chairman how wonderful his Committee was, and then listed all the fabulous investigative work being done by the DOJ’s Tax Division in conjunction with the IRS. Levin’s staffers put up a big chart listing all of UBS’s techniques for bringing in Net New Money and making sure no one found out who it belonged to. When he asked O’Connor if he’d ever seen these things before, O’Connor answered, “Yes, because Bradley Birkenfeld told us about them.”
Thanks, Dick Tracy. So why do you want me in prison?
Senator Coleman then uttered something dumbfounding. “We’ve got to put a stop to this!” It was as if, until that morning, he’d never heard a word about secret Swiss numbered accounts and had suddenly discovered that American citizens were actually using them!
Then all eyes turned to watch as Senator John Kerry walked into the chamber and took a seat on the dais. Kerry wasn’t a member of the Committee, so he thanked Levin for allowing him to “sit in,” and then he fawned for a while over their very important investigation into secret Swiss banking. I shook my head and hissed out loud, “Jesus Christ, if they only knew.”
Just four years before, I’d sat in John Kerry’s office, having a one-on-one with the senator just after he lost the 2004 presidential election to George Bush. He wanted to thank me for the massive fund-raising I’d done for his campaign. That’s right; I’d attended two of his fund-raisers, in his Nantucket and Georgetown homes, and then I’d rustled up half a million dollars for him in Switzerland and contributed money myself. The guy who’d brought me into the senator’s inner circle was Jack Manning (Exhibit 11), Kerry’s best friend and CEO of Boston Capital, a mega real estate firm and fifth-largest owner of apartments in the United States (147,000 apartments in forty-eight states). Manning, whose net worth is $1.8 billion (Forbes 400 list), is a huge Democrat fund-raiser and had been a regular guest at the Clinton White House. As a matter of fact, Manning had once made fund-raising history by hosting Bill Clinton and Al Gore at a $25,000-per-person event at his Boston mansion in 1998, together, on the same evening. At the time they were the sitting president and vice president, a huge “no fucking way” for the Secret Service. But Manning had pulled it off.
Now, four years later, I was nearly pissing myself as I watched Kerry opine in his sober tones about the damages done to the American taxpayer.
Kerry went on, in his self-aggrandizing way, to recall his time on the Senate Banking Committee, during which he’d led investigations into the notorious Bahamas bank BCCI, which was hiding money for Panamanian dictator Manuel Noriega and an up-and-coming jihadi named Osama bin Laden. “We also passed some amendments in the Banking Committee that came to be known as the Kerry Amendments, which required transparency in reporting …”
Ah, yes, the “Kerry Amendments.” He was there to talk about himself, and probably to make sure things didn’t get out of hand. Unbelievably, he then politely asked O’Connor and Shulman why the DOJ and the IRS hadn’t been doing a better job of catching these international banking thieves! Really?
Eventually Kerry ran out of gas. He’d swooped in, grabbed the limelight, acted like Batman saving the day, and then he was gone. Senator Levin then had his staff present the recorded interview with the LGT whistle-blower, now living in a witness protection program under an assumed name. The guy was in silhouette on a huge TV monitor, but he clearly had a completely bald head, Dumbo ears, was wearing glasses, and spoke with a very distinctive Liechtenstein Swiss-German accent. I smacked my forehead. “Jesus! If any of this guy’s new neighbors are watching this, they’ll know right away exactly who he is!” I was glad I hadn’t tried for any anonymous informant deal. I wouldn’t trust the Justice Department to protect my cat, if I had one.
Levin then trotted out a pair of indicted Americans who’d held secret accounts with LGT. Both men refused to answer any questions, claiming their Fifth Amendment constitutional rights. The Committee already knew they weren’t going to cooperate, so why drag them out in public? It was all for show. “See what badasses we are?”
Finally Senator Levin called Martin Liechti up to the witness table, along with his attorney. I felt this strange wave of relief flooding up through my chest. Here, at last, they were going to publicly rip one of my arrogant UBS managers into little tiny pieces, make him pay for running this international craps game and cleaning the table of US taxpayer money. Liechti looked a little pale in his plain gray suit, even though he’d been sitting around a five-star pool at the Ritz-Carlton Hotel in Miami. He stood up to be sworn in, sat down again, and …
Pled the Fifth!
“Mr. Chairman, on advice of my counsel, I assert my rights under the Fifth Amendment to the US Constitution, and I respectfully decline to answer your questions.”
What the fuck? Liechti wasn’t going to cooperate? He wasn’t going to talk? The DOJ had been detaining him for four months in a luxury suite, supposedly so they could squeeze the secrets out of him and deliver him like a birthday present to this noble body of lawmakers. And, just to make certain that he’d sing like a bird for Levin, as we learned years later, Liechti and the DOJ entered into a secret nonprosecution agreement (NPA) two weeks prior to the Congressional hearing (Document 4). The NPA required Liechti to cooperate and answer all questions put to him by the government as a condition to avoid prosecution. Simple, right?
Well, guess what
? Levin and the Committee didn’t know about that secret DOJ deal. Liechti sat there and arrogantly pled the Fifth, and Levin shrugged and dismissed him as an uncooperative witness!
Kevin O’Connor didn’t utter a single word of protest. Kevin Downing, who was sitting behind his boss, didn’t even flinch. They both knew they’d gotten Liechti’s sworn promise to talk, but when he refused, no one from the DOJ batted an eyelash!
I was stunned, and the rest of it was just a blur. UBS delivered a single witness, the bank’s brand new Chief Financial Officer, Mark Branson, who fell all over himself promising that the bank hadn’t realized what terrible deeds it was doing, and that going forward nothing like it would ever happen again, and that of course UBS would fully cooperate with the US Congress and the Justice Department (my ass). Fully cooperate? Really? Your top dog just refused to cooperate and pled the Fifth in an open Senate hearing, you lying weasel! Branson had obviously been chosen by the bank to appear because he’d spent his career in Japan, and could innocently claim that he hadn’t been part of these practices in Switzerland. He was also a Brit, so he didn’t have that evil Swiss-German accent. He was squeaky clean.
“I am here to make it absolutely clear that UBS regrets any compliance failures that may have occurred.” Yeah, it is called complying with the law!
May have occurred? Branson then admitted to every piece of damning evidence I’d provided, but claimed that UBS management hadn’t known about any of it, and was genuinely “appalled”! When asked to explain an Exhibit, which happened to be the UBS instruction manual on countersurveillance techniques I’d provided, he claimed (under oath) that the training was only concerned with maintaining the anonymity of account holders, in compliance with Swiss law. Senator Coleman asked him, “Since UBS has more than 30,000 UBS Americas employees, who in the United States branches was aware of the bank’s illegal practices here?”
“I have no knowledge that anyone in the United States was aware.”
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