IRS Whistleblower Receives $15.1 Million Award for Exposing Sophisticated Tax Evasion Scheme

Nov 29, 2023 | Business

Whistleblowers Disclosure Led to Recovery of Over $71 Million

Washington, D.C. – WEBWIRE –

Whistleblower attorneys Stephen M. Kohn and Dean Zerbe are pleased to announce today that a joint client who wishes to remain anonymous received an IRS whistleblower award of $15.1 million. The whistleblower provided the IRS with information that led to an enforcement action against 109 high-wealth individuals who had engaged in a sophisticated illegal tax evasion scheme — resulting in over $71 million dollars being returned to the U.S. Treasury.

Todays award serves to reinforce that the IRS Whistleblower Program is critical in going after wealthy individuals who are evading tax. The IRS would have struggled significantly in bringing an enforcement action against these tax cheats but for the good work of the whistleblower, said Zerbe of the law firm of Zerbe, Miller, Fingeret, Frank & Jadav.

We and the whistleblower very much want to thank the Director of the IRS Whistleblower Office, Mr. John Hinman for his leadership as well as Ms. Dawn Applebaum, Ms. Rebecca Paley and their entire Whistleblower Office Staff for their diligent and dedicated professionalism in making this award happen, continued Zerbe. We also greatly appreciate IRS Commissioner Werfels strong support of the whistleblower program. Finally, Steve and I are honored to represent the whistleblower whose commitment to justice and exposing tax evasion made this all happen.

This award underscores how vital it is for the government to reward tax whistleblowers if the IRS is going to have success in going after wealthy tax cheats, said Kohn of Kohn, Kohn and Colapinto. As Ive seen in my work representing whistleblowers you have to reward whistleblowers if you want good, knowledgeable information about violations of the law, and especially in the case of tax. Those engaged in tax evasion are purposefully seeking to hide their activities. The best way to expose and uncover tax evasion is by encouraging whistleblowers to come forward.

Kohn and Zerbe both members of the Tax Whistleblower Attorney Group have successfully jointly represented a number of tax whistleblowers who have received hundreds of millions of dollars in awards including Brad Birkenfeld, the UBS whistleblower who received an award of $104 million from the IRS in 2012. In addition, they successfully represented the whistleblower in the landmark Tax Court case of Whistleblower 21276-13W v. IRS (147 TC 121-2016) which resulted in a major win for tax whistleblowers with the expansion of the definition of collected proceeds to include criminal fines and civil forfeitures for whistleblower awards.

As Congress looks to do more to go after wealthy tax cheats, a top priority must be to pass the bicameral and bipartisan IRS Whistleblower Program Improvement Act of 2023 sponsored by Chairman Wyden (D-OR) and Senator Grassley (R-IA) in the Senate and Congressman Thompson (D-CA) and Kelly (R-PA) in the House. The bill has important reforms such as strengthening the rights of whistleblowers in Tax Court as well as encouraging the IRS to make timely awards that will go far in making a good program even better, added Kohn.

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Geoff Schweller
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Kohn, Kohn & Colapinto LLP
geoff.schweller@kkc.com

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Whistleblower Wins Jury Verdict Against BofI Federal Bank

May 25, 2022 | Business

 An internal auditor fired by BofI Federal Bank (now Axos Bank) after his whistleblowing on what he believed were unlawful activities at the Bank has won his federal lawsuit in San Diego, California. Charles Matthew (“Matt”) Erhart filed a complaint in October 2015 in U.S. District Court for the Southern District of California against BofI Federal Bank, alleging that he was retaliated against and terminated after he reported wrongdoing at the bank to management and to federal regulators. He prevailed on his claims for violations of the Sarbanes-Oxley Act of 2002, California Labor Code § 1102.5, wrongful termination in violation of public policy, as well as on his claim for defamation.

The jury found that Mr. Erhart reasonably believed the following conduct by Bofl was a violation of state, local or federal law or regulation:

· provision of a misleading response to an SEC subpoena

· the existence of a host of loans to criminals and/or politically exposed individuals

· failure to disclose to regulators accounts with no Tax Identification Numbers

· failure to disclose subpoenas to regulators in response to a request from regulators

· recorded telephone calls

· high levels of deposit concentration risk

· failure to disclose to regulators a high risk customer report regarding Global Cash Card

· failure to disclose the existence of an audit under the Flood Disaster Protection Act

· CEO Greg Garrabrants’ depositing of third-party checks into his personal account

· untimely 401(k) payments to employee accounts

The complaint in this case alleges: After the head of internal audit resigned, bank management prepared to terminate Mr. Erhart on the same day as learning of his whistleblowing. After Mr. Erhart called off sick and the Bank discovered he had gone to regulators, the bank threatened to send San Diego police after Mr. Erhart, made a series of defamatory statements about him, and terminated him.

The jury found for Mr. Erhart on all his causes of action, and found that the bank acted with malice, fraud, or oppression, entitling Mr. Erhart to seek punitive damages. The jury was not able to reach unanimity on the award of punitive damages, and the retrial of that phase will begin on August 23, 2022. The jury also found for Mr. Erhart on all six of the bank’s counterclaims.

Mr. Erhart is represented by Carol Gillam and Sara Heum of The Gillam Law Firm in Los Angeles. His attorneys made the following statement:

“We feel vindicated by this trial victory. After a hard-fought battle for seven years, our client can finally start to get some closure. The fight is not over, as we will be returning to try the punitive damages phase of the trial before a new jury, and the bank will doubtless be filing post-trial motions and an appeal afterward. But at least the world got to hear about what the bank did to Mr. Erhart and see that he was a righteous whistleblower. The jury found that the bank acted with malice, fraud, or oppression toward him. Their retaliation continued when they countersued him. We defeated each one of the bank’s retaliatory counterclaims against him. No whistleblower should ever have to go through what the bank put Mr. Erhart through all these years. Mr. Erhart is an American hero. We depend on employees like Mr. Erhart to expose corporate malfeasance. We hope this verdict sends a resounding message to corporations to take whistleblowers seriously.”

Media Contact:

Carol Gillam

The Gillam Law Firm

Los Angeles, CA

Tel: (310) 203-9977

Email: carol@gillamlaw.com

admin@gillamlaw.com

The Gillam Law Firm

Carol Gillam

1-310-203-9977

www.gillamlaw.com

admin@gillamlaw.com

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SEC Whistleblower Program Surpasses $1 Billion in Whistleblower Awards –

Sep 16, 2021 | Business

Today, the U.S. Securities and Exchange Commission (SEC) issued two whistleblower awards totaling $114 million. With the awards, the agency has now awarded over $1 billion to whistleblowers through its whistleblower program.

“Today is a great day for whistleblowers,” said whistleblower attorney Stephen M. Kohn, founding partner of Kohn, Kohn & Colapinto and Chairman of the Board of the National Whistleblower Center. “The Dodd-Frank Act whistleblower law is sending a message to Wall Street crooks: if you commit fraud you will be caught.”

”Today’s announcement underscores the important role that whistleblowers play in helping the SEC detect, investigate, and prosecute potential violations of the securities laws,“ said SEC Chair Gary Gensler. ”The assistance that whistleblowers provide is crucial to the SEC’s ability to enforce the rules of the road for our capital markets”

The two awards were for $110 million and $4 million respectively. The whistleblower who received the $110 million awarded provided the SEC with significant independent analysis of public information which greatly aided in the SEC’s investigation. The award consists of a $40 million award for an SEC enforcement action as well as approximately $70 million in related action awards.

The second whistleblower, who received the $4 million award, provided the SEC with original information that contributed to the success of the SEC enforcement action but not the related actions carried out by another agency. The information disclosed by this whistleblower was provided to the SEC late in the investigative process and was also much more limited compared to the first whistleblower’s disclosure.

Through the SEC Whistleblower Program, qualified whistleblowers, individuals who voluntarily provide the SEC original information that leads to a successful enforcement action, are entitled to a monetary award of 10-30% of funds recovered in the action. Since issuing its first award in 2012, the SEC has awarded $1,074,010,519 to 207 individuals.

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Kohn, Kohn & Colapinto
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Whistleblower Attorneys Applaud New Bill to Strengthen IRS Whistleblower Program

Jun 16, 2021 | Business

Today, Sens. Chuck Grassley (R-Iowa) and Ron Wyden (D-Ore.) introduced the IRS Whistleblower Program Improvement Act. This legislation will strengthen the Internal Revenue Service’s (IRS) successful Whistleblower Awards Program. The IRS Whistleblower Program has enabled the agency to collect over $6 billion from wealthy individuals and businesses caught dodging taxes.

“The tax whistleblower law has recovered billions of dollars to the US treasury. Tens of thousands of illegal offshore accounts have been shut down by whistleblower disclosures. It’s time for the Department of Treasury to properly implement the IRS whistleblower law. This bill will achieve that goal,” said whistleblower attorney Stephen M. Kohn. Kohn, who also serves as the Chairman of the Board of Directors of the National Whistleblower Center, praised the bi-partisan nature of the amendments: “Senators Charles Grassley and Ron Wyden exemplify the bipartisanship needed to hold tax cheats accountable.”

“These proposed amendments to the IRS whistleblower program are good news for tax whistleblowers, great news for honest American taxpayers and bad news for tax cheats,” said Dean Zerbe, Senior Analyst at National Whistleblower Center and tax whistleblower attorney at the law firm of Zerbe, Miller, Fingeret, Frank & Jadav. Strengthening the IRS whistleblower program must be part of any serious effort to deal with the tax gap. The IRS whistleblower program has brought in billions of dollars in revenue – far more than was expected when enacted in 2006 when the whistleblower law was passed. However, with these proposed improvements will bring in billions more,” Zerbe added.

The legislation is fully supported by the National Whistleblower Center.

“NWC fully supports the introduction of the IRS Whistleblower Program Improvement Act. By adopting these important reforms to the successful IRS whistleblower awards program, Congress will provide a much improved avenue for whistleblowers who wish to come forward to report evidence of tax fraud. This is a huge step for whistleblowers and NWC thanks Senator Grassley for his continued efforts to protect whistleblowers,” National Whistleblower Center Executive Director Siri Nelson said.

The IRS Whistleblower Program Improvement Act includes seven measures to bolster the successful program, ensure fairness and protect the whistleblowers who come forward. These measures include:

  1. Provide for De Novo Review.
  2. Exempt WB Awards from Budget Sequester.
  3. Presumption of Anonymity in Tax Court.
  4. Interest on Whistleblower Awards.
  5. Retention of Collected Proceeds to Fund Program Costs.
  6. Correction Regarding Deduction for Attorney’s Fees.
  7. Improved Annual Report.

Full legislative text of the IRS Whistleblower Improvement Act can be found HERE. A summary of the bill can be found HERE.

Read: Grassley, Wyden Introduce Bill To Strengthen Successful IRS Whistleblower Programs

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Ben Kostyack
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Kohn, Kohn & Colapinto
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