Whistleblower Bradley Birkenfeld (l) and attorney Brian Mahany (Credit: Mahany Law)
This post has all the makings of a television special on E! or MTV. Given the political overtones and alleged involvement of Hillary Clinton, maybe the FOX News network too.
This story involves TV star Kevin Costner, Russian oligarch Igor Olenicoff, cosmetic billionaires Leonard and Estée Lauder, Abdul Aziz Abbas (a shady character with direct ties to Saddam Hussein), Hillary Clinton and porn stars. If you want to know how they are all connected, keep reading. This jaw dropping story of wealth and privilege will leave you astounded.
Our story begins with my friend Bradley Birkenfeld. In the history of whistleblowers, no one has earned more than Bradley. In 2012 he received an IRS whistleblower reward of $104 million.
Why so much? Because the IRS whistleblower program lets the government pay whistleblower rewards of up to 30% of whatever the agency collects from tax cheats. In Bradley’s case, that was $780 million from Swiss bank UBS.
Birkenfeld says that UBS was helping rich Americans evade taxes and hide accounts. Federal law doesn’t prevent Americans from having offshore accounts but they must be reported to the IRS and they can’t be used to evade taxes. For many Americans, however, numbered Swiss accounts were used to hide money from the tax man, creditors and even divorcing spouses.
Part of the settlement with UBS was the payment of the $780 million but there was more. UBS agreed to disclose the names of American clients to the IRS. Not only did the IRS want to punish the bank for helping Americans evade taxes, it wanted to make sure that the secret account holders were properly reporting their accounts and paying taxes. Many were not.
Birkenfeld says that UBS only disclosed 4,700 names of secret accounts holders with ties to the United States. He claims, however, that there 19,000 such accounts. In his words, “UBS provided names and account information for only 4,700 of the 19,000 wealthiest Americans complicit in tax fraud through secret undeclared numbered accounts. Many important and well-known UBS clients were knowingly omitted by UBS from the list provided to the IRS, including [Kevin Costner and Leonard Lauder].
Why not everyone? Great question. Birkenfeld says “Evidence supports the inference that the leniency of the United States towards UBS was exchanged for political or financial favors, including an email published by Wikileaks in which former Secretary of State Hillary R. Clinton states that a ‘political’ solution must be engineered for UBS’ decades-long massive tax fraud.”
And how does Bradley Birkenfeld know this? He was a former director of UBS and involved in overseeing the offshore accounts.
Bradley served 31 months for his involvement in the scheme. It is not uncommon for some of the best whistleblowers to also be involved in the underlying misconduct. For many folks, it is better to come clean than spend a life looking over one’s shoulder.
Long out of jail, Bradley Birkenfeld wrote a bestselling book in 2016 called Lucifer’ Banker. Bradley wasn’t afraid to name names but his publisher needed to be careful. And that brings us to Kevin Costner and Leonard Lauder.
Birkenfeld says his original manuscript named Leonard Lauder LAUDER and his mother, Josephine Esther “Estée” Lauder, the founder and namesake of the Estée” Lauder cosmetic.
Specifically, he says the manuscript said, “At least two of [Hillary Clinton’s billionaire friends], Jack Manning and Leonard Lauder, had undeclared secret numbered accounts at UBS in Geneva and had been contributing money to her political campaigns for years.”
He also claimed his manuscript identified Kevin Costner as having an account at UBS.
In September 2016 on the eve of publication, Birkenfeld’s publisher received threats from Leonard Lauder and Kevin Costner. According to him, both threatened legal action against “unless references to them as owners of secret, offshore, undeclared, numbered accounts at UBS, Switzerland in Lucifer’s Banker were censored.”
Costner alleged claimed that he “never had an account with UBS” and in fact, never had “any offshore bank account.” Lauder allegedly didn’t deny the accounts but claimed they were legal, properly reported and that all taxes were properly reported.
Birkenfeld’s publisher took out references to both men.
In May 2019 Birkenfeld sued both Lauder and Kevin Costner. He basically claims they are liars,
“Defendants LAUDERS’ and COSTNER’S false insinuations, averments or denials and legal threats to Plaintiff [Bradley Birkenfeld] and Plaintiff’s publisher coerced the deletion of references to them in the original manuscript of Lucifer’s Banker as owners of secret, offshore, undeclared, numbered bank accounts in Switzerland with UBS, an offshore bank mecca for billionaires with locations in Zurich, Geneva, and Lugano, Switzerland.”
The last minute decision to drop references to Lauder and Costner in the book required thousands of copies to be destroyed and cost Birkenfeld additional legal fees.
In July, Leonard Lauder asked the court to dismiss the lawsuit. He says,
In 2016, Plaintiff Bradley Birkenfeld, a former UBS banker and convicted felon who served time in prison for conspiracy to defraud the United States, sought to defame renowned businessman and philanthropist Leonard Lauder in an about-to-be-published book, Lucifer’s Banker, by stating falsely that Lauder used a Swiss bank account to avoid paying U.S. taxes. The perverse premise of this lawsuit is that Lauder should be liable to Birkenfeld as a result of the “injury” he sustained arising from diminished sales of the book (and associated expenses) allegedly occasioned by Birkenfeld’s inability to peddle such falsehoods publicly. In support of this premise, as well as to disseminate the very defamatory statements concerning Lauder that Plaintiff’s publisher wisely removed from the book, Plaintiff asserts three facially deficient causes of action. This frivolous case—an abuse of the judicial system—should quickly be nipped in the bud.
Nowhere does Lauder directly address whether he had offshore accounts and whether they were legit. Instead he says that Birkenfelld would have no way of knowing whether any taxes were paid on offshore accounts.
It will be interesting to see how Birkenfeld responds.
As to Kevin Costner, he submitted a two page affidavit. Once again, nothing in the affidavit says whether or not he had offshore accounts and whether taxes were paid on any income from any such accounts. A copy of Costner’s affidavit can be found here.
Costner’s lawyers say, however, that Costner has no offshore account. In their words,
In an apparent gambit to raise his own profile and continue to seek his “fifteen minutes of fame,” Birkenfeld has repeatedly spread outrageous malicious lies claiming that Defendant Kevin M. Costner supposedly hid millions of dollars in a secret UBS Swiss bank account to evade US taxes. Birkenfeld has done so despite the fact that Mr. Costner never had any UBS Swiss account or any offshore accounts whatsoever.
What the lawyers and Costner don’t say, however, is whether Costner had interest in any offshore accounts. The IRS reporting rules look not only to the name on the account but also who may be considered a beneficial owner or who has signature authority.
This might sound like splitting hairs but Birkenfeld is extremely savvy and smart. And he remains clear in saying that both Lauder and Costner had offshore accounts at UBS.
What will happen remains to be seen. We expect a ruling later this year. The court could dismiss Birkenfeld’s claims, toss it for procedural reasons (which usually means it can be refiled) or simply say it can proceed.
This is one case we will follow closely. (Mahany Law, 8/3/2019) (Archive) h/t @seacaptim