IRS windfall another whistleblower win for law firm

By Paul Farhi/The Washington Post

WASHINGTON — Stephen Kohn had 104 million reasons to be happy on Tuesday. But America’s taxpayers should be happy, too, he said.

Kohn, 56, is one of the Washington attorneys who represents whistleblower Bradley Birkenfeld, the former bank executive who helped American authorities expose tax evasion facilitated by UBS AG, the Swiss banking giant.

On Tuesday, Birkenfeld got his reward from the Internal Revenue Service: $104 million, the most ever granted to an individual in a whistleblower case. Kohn and his firm worked on a contingency basis, entitling them to a cut of Birkenfeld’s award. Kohn won’t discuss the fee, but he described it as “not a standard contingency fee.”

Still, Tuesday figured to be a pretty good payday for Kohn, Kohn & Colapinto, a seven-lawyer firm housed in a Georgetown townhouse.

The award was for Birkenfeld’s role in the investigation that led to a 2009 settlement between the United States and UBS, which agreed to pay $780 million in fines and to turn over the names of thousands of Americans suspected of using Swiss bank accounts to evade taxes.

Kohn spent three years negotiating on Birkenfeld’s behalf with the IRS. The agency paid out the money under a formula established by 2006 law that rewards whistleblowers who turn in high-dollar tax cheats.

Good for Birkenfeld. Good for Kohn and his firm. But also very good for the nation, Kohn said.

“This sends 104 million messages to banks around the world that help Americans evade the IRS,” he said in an interview. “It sends 104 million messages to employees of those banks who are thinking of coming forward, and it sends 104 million messages to Americans who have those accounts. It says they will get caught.”

Such rewards, he said, could lead to the repatriation, and taxation, of billions of dollars of American assets now stashed in offshore accounts.

“If you’re running a bank in the Cayman Islands,” he said, “do you want American clients now?”

The award was the latest in a long string of high-profile whistleblower cases for Kohn, a longtime specialist in the relatively arcane field.

KKC’s last headline-grabbing victory was in behalf of Bunnatine “Bunny” Greenhouse, the former Pentagon contracting official who was demoted after calling out a no-bid contract for oil-field reconstruction in Iraq. The $7 billion contract was awarded by the Army to Kellogg, Brown and Root, a subsidiary of Halliburton, the firm then-Vice President Dick Cheney had formerly headed. Greenhouse sued the government, charging retaliation. A federal District Court in Washington agreed with her last year, ruling that the government owed Greenhouse nearly $1 million in lost wages and legal fees.

Kohn also represented Frederic Whitehurst, the FBI scientist who was suspended after raising allegations about evidence mishandling in the agency’s lab. He won a $1.16 million settlement, plus legal fees, in 1998.

Kohn’s most famous client was Linda Tripp, the Defense Department staffer who was instrumental in exposing President Bill Clinton’s affair with White House intern Monica Lewinsky. Tripp sued the federal government for violating her privacy by releasing her personnel records to the media, including the revelation that Tripp had been arrested for shoplifting as a teenager. Tripp contended the leak was retaliation for her role in exposing Clinton and Lewinsky. She received a $595,000 settlement in 2003.

The irony in that case was that Tripp had been indicted in Maryland for violating Lewinsky’s privacy by illegally taping their private phone conversations. The charges were dropped in 2000.

Birkenfeld has been under a legal cloud of his own. He is under home confinement in New Hampshire after serving 31 months in prison for withholding information about a former UBS client who pleaded guilty in a 2007 tax case. He did not attend a news conference in Washington on Tuesday to announce that he’d won the multimillion-dollar reward.

As for Kohn’s firm’s latest win, the lawyer had no immediate plans for a victory party. Too busy. “I’d like to take a bike ride,” he said, “but my desk is full.”