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IRS TAX FRAUD WHISTLEBLOWER AWARDED $104 MILLION

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Philadelphia, PA September 12, 2012 – Whistleblower Attorneys for Bradley Birkenfeld, a jailed former Swiss banker, announced that the Internal Revenue Service (IRS) will award him a $104 Million as a tax whistleblower reward for detailed information he turned over to the U.S. government concerning the detailed inner workings of Swiss bank UBS’s secretive private wealth management division and illegal offshore banking scheme.

It is believed that this reward – the largest ever single reward paid to an IRS tax whistleblower – is the 4th reward paid to date since the IRS Whistleblower Program went into effect in 2006.The first IRS whistleblower award of $4.5 million was issued to an anonymous accountant in April 2011 after he exposed that his employer, a Fortune 500 financial services firm, was skimping on taxes.Since that time, the IRS has been under intense scrutiny due to the apparent lack of progress with respect to its handling of IRS whistleblower claims including scathing reports by the Government Accountability Office and the Treasury Inspector General for Tax Administration.

Senator Charles Grassley, the Iowa Republican who spearheaded the legislation that led to the creation of the IRS Whistleblower Office and who also has been vocal about his unhappiness with regard to the IRS’s slow approach to whistleblower tips, declared today, “This case provides evidence about how the whistle-blower program can be effective because the IRS is saying its work against this kind of tax fraud would not have been possible without the whistle-blower.”

The Birkenfeld case is an indication by the IRS that it takes whistleblower claims seriously while encouraging others to report fraudulent activity.Attorney Eric L. Young, of the nationally renowned Whistleblower Attorney Firm, Young Law Group, who represented the accountant who received the first ever IRS tax whistleblower award, congratulates Mr. Birkenfeld and his attorneys, “I know first-hand the challenges faced by people like Mr. Birkenfeld when stepping forward to report serious fraudulent activity.In this extreme case, Mr. Birkenfeld arguably paid the ultimate price – time in jail – after deciding to come forward.Blowing the whistle on corporate fraud and misconduct is not for the faint of heart and that is why the government pays rewards.It also underscores the importance of hiring experienced IRS whistleblower attorneys.My hat goes off to Mr. Birkenfeld and his attorneys who did a tremendous job in not only ensuring that UBS AG was held accountable for helping tax cheats, but in bringing attention to scope of efforts by wealthy U.S. citizens to evade taxes by way of off-shore bank accounts.”

Young Law Group (“YLG”) is a nationally renowned law firm specializing in the representation of whistleblowers and individuals in fraud and class action litigation. Our attorneys have litigated cases resulting in recoveries exceeding $2 Billion against corporate giants including Anheuser-Busch, Pfizer, Ikon, Cephalon, Johnson & Johnson, Fresenius, Merck, Aramark, and others.

To learn more about whistleblowing and how we can help protect your rights please complete our online form to the right or call us at 800-590-4116.

Update: Young Law Group is now operating as McEldrew Young Purtell Merritt. Links in the press release have been updated with our new website address.

Second SEC Whistleblower Denied Award in Latest $3 Million Payout

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The Securities and Exchange Commission today announced its third highest award under the Dodd-Frank whistleblower program, as $3 million reward to a corporate insider who helped the agency crack a complex fraudulent scheme.

The announcement is a fitting way to celebrate the 5th Anniversary of the creation of the SEC program on Tuesday. Over the past five years, it has helped the U.S. Government collect more than $100 million in enforcement actions against companies and individuals engaged in misconduct that violates the federal securities laws. The program has paid out more than $50 million in financial incentives since the Whistleblower Office was opened in 2011.

Although we may never know more about this case due to the confidentiality provisions involved, the award determination does include a footnote that a second claimant was denied an award for not providing original information as it is defined by the SEC Rules and the Dodd-Frank Act. I’ll have to go back and check, but this may be the first instance of a securities whistleblower denied an award while another received one.

Footnote 2 indicated that the second claimant did not provide information that led to successful enforcement. Based on the laws cited, I suspect that the tip (a) happened during the investigation and didn’t significantly contribute to its success and (b) didn’t lead the investigation to inquire about different conduct than it was already investigating.

Of course, there are a few other options but this is probably the most likely one. Since the award determination release notes the delay before the individual reported the fraud to the U.S. Government, it is also possible that the tip came first but wasn’t sufficiently specific or credible enough to move the SEC to action. Additionally, it could be that the tip involved a second area not covered by the investigation and the government simply decided not to pursue an action against the company for it.

Nevertheless, this award denial re-emphasizes the importance of being the first one to provide a tip to the SEC or CFTC.

If you have questions about the importance of being the first to file, contact one of our whistleblower attorneys. An attorney can be reached by our contact form or calling 1-800-590-4116.

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SEC Pays Whistleblower Reward to Another Compliance Officer

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The SEC whistleblower program has announced an award to a compliance officer of approximately $1.5 million resulting from an issue raising imminent risk of financial harm to investors or the company.

Compliance professionals face some special rules when reporting to the SEC. In order to become eligible for an award, they must wait 120 days after informing one of a list of employees of the company or if he or she is told about the issue where circumstances indicate that the company is already aware of the noncompliance. For example, the employee does not have to tell anyone if informed by one of the individuals about the issue or made aware in a meeting where one or more of the individuals are present. The 120 day waiting period simply begins at that point.

The waiting period provides a check against compliance professionals circumventing the internal investigation process and going straight to the SEC. It also encourages companies to act promptly on tips raised through the internal reporting process of the company.

However, this case involved an exception to the 120 day waiting period. The SEC found the compliance officer had a reasonable basis to believe disclosure was necessary to prevent imminent misconduct from leading to financial harm to investors or the company. So even though he or she did not wait, they were nevertheless eligible for the reward.

Another exception that permits compliance and internal audit personnel to become eligible for an award without the waiting period is when the entity is impeding an investigation by the securities regulator.

In August 2014, another compliance whistleblower received $300,000 for reporting an issue internally and later filing a tip with the SEC when the company did nothing to correct the problem or report it. This individual waited for the 120 days to elapse prior to reporting the wrongdoing.

For additional information about the SEC program and eligibility for awards, please contact Eric Young or one of our other whistleblower attorneys.

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First SEC Whistleblower Paid $50,000 For Exposing Securities Fraud

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On August 12, 2012, the Securities and Exchange Commission reported that it had recovered $150,000 thousand so far out of a Court order $1 million in sanctions against the perpetrators of securities fraud scheme.  The Securities and Exchange Commission awarded the whistleblower, who wishes to remain anonymous, $50,000 for his/her contribution in providing the U.S. Government with provided documents and other significant information that allowed the SEC to investigate, move quickly, and prevent the fraud from ensnaring other victims.  Any additional amount collected will increase the payments to the whistleblower.

SEC Chairman Mary L. Schapiro, stated that “[w]e’re seeing high-quality tips that are saving our investigators substantial time and resources” and that “[t]he whistleblower program is already becoming a success.”  Robert Khuzami, Director of the SEC’s Division of Enforcement stated that “[h]ad this whistleblower not helped to uncover the full dimensions of the scheme, it is very likely that many more investors would have been victimized.”  He also said that “[t]his whistleblower provided the exact kind of information and cooperation we were hoping the whistleblower program would attract.”  The SEC stated they get about 8 tips per day.

The Dodd-Frank Act allows the SEC to reward individuals who offer high-quality original information that leads to an SEC enforcement action in which more than $1 million in sanctions is ordered.  The whistleblower in this case was paid approximately 30% of the amount the government recovered.  The SEC issues rewards between 10% and 30% of the money collected.  “The law specifies that the SEC cannot disclose any information, including information the whistleblower provided to the SEC, which could reasonably be expected to directly or indirectly reveal a whistleblower’s identity.”

SOURCE: http://www.sec.gov/news/press/2012/2012-162.htm

For additional information about the SEC whistleblower program, please contact one of our SEC whistleblower lawyers.

CFTC Issues Fourth Whistleblower Bounty of $50,000

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The U.S. Commodity Futures Trading Commission has issued its third award in the last year and fourth overall to CFTC whistleblowers pursuant to the terms of the Dodd-Frank Act. The decision was approved last week and the press release issued by the commodities regulator today.

Tax Whistleblower Award of $11.6 Million Announced

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It has been some time since we have seen whistleblower attorneys make an announcement concerning an award by the Internal Revenue Service. However, we saw one today as a tax whistleblower received an award of $11.6 million dollars under the program.

The press release stated that the whistleblower wished to remain anonymous and that the individual was able to help the IRS recover tens of millions of dollars for the U.S. Treasury. The release identified the IRS as being interested in hearing information about corporate tax shelters and illegal offshore accounts.

The announcement is the first that has come since the new Director of the IRS Whistleblower Office, Lee Martin, took over. His predecessor, Stephen Whitlock, was the first director of the office and only recently moved to head the Office of Professional Responsibility.

The IRS whistleblower program, pursuant to section 7623(b), pays a mandatory reward of between 15 and 30 percent of the total proceeds collected by the IRS as a result of the information from an eligible person. Eric Young in our office represented the first individual to receive a reward under section 7623(b), which was put in place by Congress in 2006.

The IRS program has been criticized in the past few years by Senator Chuck Grassley and others for the limited number of awards that have been paid out based on information about tax evasion or noncompliance. However, the IRS has insisted over the past few years that there are more awards coming – it simply takes five to seven years to analyze, investigate, enforce and for appeal deadlines to pass.

If you have questions about this or another aspect of the IRS whistleblower program, feel free to contact one of our tax whistleblower attorneys via our contact form or by calling 1-800-590-4116.

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Tax Court Says IRS Whistleblowers Get Rewards on Criminal Fines

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Criminal fines and civil forfeitures are collected proceeds under Internal Revenue Code section 7623(b), the mandatory tax whistleblower program, according to a recent decision by the U.S. Tax Court. The opinion paved the way for an award of $17.8 million to a pair of whistleblowers.

SEC Whistleblower Office Awards $17 Million

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The SEC whistleblower program seems to be hitting its stride recently, with five whistleblowers awarded more than $26 million over the past month. The latest reward was $17 million, the second largest to date, for a detailed tip by a former company employee that substantially advanced a government investigation.

Record Award Predicted for SEC Whistleblowers from JPMorgan Fine

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A media outlet, Financial Planning, is predicting that a pair of SEC whistleblowers will share an award of approximately $70.6 million out of the $307 million in regulatory fines against JPMorgan in 2015. Another outlet, Advisor Hub, put the number at $61 million instead. Either award amount would be the largest in the history of the SEC whistleblower program to date.

Whistleblower Awaits Award in JPMorgan’s $614 Million Mortgage Fraud Settlement

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The U.S. District Court for the Southern District of New York (Manhattan) unsealed a whistleblower lawsuit against financial services firm JPMorgan this week. The qui tam lawsuit, originally filed in January 2013 by Keith Edwards of Louisiana, accused JPMorgan of violations of the False Claim Act for mortgage fraud. In the settlement, JPMorgan acknowledged its wrongdoing and agreed to pay $614 million to the federal government.

Since 2002, JPMorgan originated thousands of residential home loans insured and guaranteed by the Federal Housing Administration and Department of Veterans Affairs that were not actually eligible based on the underwriting requirements of the relevant agency. JPMorgan falsely certified to the agencies that the loans met the required underwriting standard. When the loans defaulted, the government lost millions. An internal audit by JPMorgan revealed more than 500 loans improperly submitted to the FHA and VA for insurance, but JPMorgan did not notify the government about its discovery.

The percentage of money the government will pay to Edwards as a whistleblower reward has not yet been set. The False Claims Act provides for an award to the whistleblower of between 15 and 30 percent of the amount recovered by the government. Because the Justice Department intervened in the case, the relator is entitled to 15 to 25 percent. Edwards was employed by JPMorgan in Louisiana at the banks government insuring unit when he discovered the fraud.

The lawsuit is one of eight civil fraud cases brought by the Office of the U.S. Attorney for the Southern District of New York regarding improper residential mortgage lending by the nation’s banks. Citigroup, Deutsche Bank and Flagstar Bancorp have already agreed to pay settlements for their misconduct.

2014 has already been a busy year for fraud settlements by our nation’s banks. JPMorgan agreed to pay $2 billion to settle charges related to its failure to report the Ponzi scheme conducted by Bernard L. Madoff to the government. Bank of America recently settled with a group of mortgage securities investors for $8.5 billion. And Morgan Stanley agreed to pay $1.25 billion to the Federal Housing Finance Agency for its sale of mortgage securities to Fannie Mae and Freddie Mac.

McEldrew Young Purtell Merritt is a nationwide leader in the False Claims Act and has successfully represented clients in some of the nation’s largest qui tam cases for over a decade.  For a free confidential consultation, please call Eric L. Young, Esquire at (800) 590-4116 or complete the online form here.

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