Here in the United States we protect whistleblowers who expose fraud against the government and taxpayers. While the government won’t hesitate to prosecute whistleblowers who reveal government secrets, whistleblowers who help the government recover money from wrongdoers are protected by federal law. Not all countries react that way, however. A Swiss court has convicted tax whistleblower Herve Falciani even though he has never been arrested.
Sound impossible? Read on.
Earlier this spring I met Falciani via a video link. He was scheduled to come to Miami and meet with several whistleblower lawyers but was afraid to leave France. We had to settle for a video conference.
Falciani was staying in France to avoid arrest by Swiss authorities. Because he holds both French and Italian citizenship, he cannot be extradited from those countries. Despite Falciani remaining in France, a federal court in Switzerland convicted him late last year of industrial espionage.
His crime? Being a tax whistleblower.
Falciani once worked at HSBC Private Bank in Geneva. As an IT expert, he had wide access to HSBC’s customer accounts. In 2008, he took over 100,000 accounts and gave the information to the French government. Unlike typical hacker who sell stolen account information to fraudsters on the black market, Falciani’s buyer was the government.
In recent years there has been a huge push to combat tax evasion using foreign bank accounts. The United States leads that push and regularly prosecutes U.S. taxpayers with unreported offshore accounts. Having a Swiss account is legal. Not telling Uncle Sam about that account is a felony, however.
Like the U.S., other countries are also interested in their citizens who are using foreign accounts to evade taxes. France is one of those countries and quickly agreed to purchase Falciani’s account data. They later provided that data to other countries.
The information was never used for identity theft purposes or to steal from accounts. Rather the users of the information were government tax authorities. Still, the Swiss said the taking of the information was espionage.
Is Falciani a thief or whistleblower? That depends on who you ask. One thing is for certain, Falciani can’t set foot in Switzerland since he was convicted and sentenced to prison.
Why would a country convict someone who has not yet ben arrested? Probably to make a point and scare others from becoming whistleblowers.
An interesting side note to this story is HSBC. That bank has been in repeated trouble both in the United States and worldwide for helping people hide money. Unfortunately by convicting Falciani of stealing account information, one can argue that the Swiss government is supporting HSBC’s own criminal behavior.
Here in the United States, the IRS Whistleblower Program can pay bankers who have information about monies being hidden in foreign accounts. Several years ago, UBS whistleblower Bradley Birkenfeld was awarded $102 million for coming forward with information about hidden UBS accounts. (There is no known arrest warrant for him but like Falciani, he won’t set foot in Switzerland. With $102 million, he doesn’t have to ever go back!)
We are actively looking for bankers or those with information about unreported foreign bank accounts. As this case points out, there are some risks but the rewards are huge. Would Falciani or Birkenfeld do it again? Notwithstanding Switzerland’s extreme reactions, yes. Both would do it again.
IRS Whistleblower Program
The IRS Whistleblower Program can pay awards of up to 30% of whatever the government receives in tax, interest and penalties. Awards in the United States are confidential. One need not reveal their name unless they choose to do so. (Like every government program, there are some exceptions – generally awards are confidential, however.)
Need more information? Give us a call. All inquiries are protected by the attorney – client privilege and kept strictly confidential. For more information contact attorney Brian Mahany at or by telephone at (direct).
MahanyLaw – America’s Whistleblower Lawyers