The Justice Department tends to tout its successful prosecutions of tax fraud cases right before April 15 each year, according to a new study set to be published in the Virginia Tax Review.

For the study, Joshua D. Blank of New York University School of Law and Daniel Z. Levin of Rutgers Business School analyzed 782 news releases issued by the Department of Justice Tax Division from 2003 through 2009, in which the DOJ announced a civil or criminal tax enforcement action against a taxpayer.

The study, first reported by The New York Times’ Economix blog, found that DOJ disproportionately issued tax enforcement news releases during the weeks immediately prior to Tax Day — the April 15 deadline day for the filing of most individual tax returns — compared to the rest of the year. According to the authors, the spike is likely by design:

By presenting individual taxpayers with vivid examples in which the I.R.S. has detected tax fraud — whether it involves a popular celebrity’s phony business deductions, a high-profile banker’s offshore bank account or a local tire salesman’s underreporting of gross  income — the government may provide an individual taxpayer with available images that showcase the I.R.S.’s detection capabilities. Because the government consistently provides more of these images to individual taxpayers during the weeks leading up to Tax Day than it does during other times of the year, individual taxpayers may draw upon these available images as they teeter on the decision to claim questionable tax positions on their annual individual tax returns.

Read the full article here.

Despite a high-profile public relations blitz to argue for his freedom, the American banker-turned-informant who tipped prosecutors to alleged widespread tax evasion among clients of Swiss banking giant UBS AG must report to prison on Friday.

Bradley Birkenfeld, who faces a sentence of three years and four months after pleading guilty to a fraud conspiracy charge, had asked U.S. District Judge William Zloch to postpone his surrender date and to hold a hearing to consider a lower sentence. In an order Monday, Zloch refused both requests, The Associated Press reported.

The judge’s order came on the same day the New York Times reported that the Justice Department was considering asking the judge to reduce Birkenfeld’s sentence.

On “60 Minutes” Sunday, Birkenfeld said he didn’t think it is fair that he is the only person in the alleged tax evasion scheme to be sent to prison. ”I gave them the biggest tax fraud case in the world. I exposed 19,000 international criminals. And I’m going to jail for that?” Birkenfeld asked.

But Birkenfeld didn’t tell the government about tax evasion by his biggest client, California real estate developer Igor Olenicoff, who eventually paid $52 million in fines and back taxes. Olenicoff, however, didn’t serve any prision time.

Associate Attorney General Tom Perrelli on 60 Minutes Sunday said of Birkenfeld: “If he had come in with everything he knew, including his own conduct, we think there’s a very good chance he wouldn’t have been prosecuted at all.”

Birkenfeld’s lawyer, Stephen Kohn, said on the same program that “putting Bradley Birkenfeld in jail will be one of the biggest mistakes the United States can make, and it will hurt every taxpayer because you will lose access to other Bradley Birkenfeld’s who will bring to our treasury billions and billions of dollars both immediately and in the future.”

Birkenfeld is seeking a multi-million dollar award for his assistance in the UBS case. Under a 2006 law meant to encourage tax informants to come forward, whistleblowers can reap rewards of 15 to 30 percent of the taxes, fines, penalties and interest ultimately collected by the IRS.

The reward, Kohn said, was a necessary incentive. ”How are you going to get other international bankers, particpants, to come forawrd and tell us about these schemes?” he said.

Prosecutors credited Birkenfeld, who was based in Switzerland, with pointing investigators to thousands of suspected American tax evaders who allegedly concealed assets in UBS’s Swiss bank accounts. More than 14,700 offshore tax evaders have come forward under an I.R.S. amnesty program, and the names and account details of about 4,450 UBS clients were turned over to U.S. authorities under a settlement with the bank.

Below are video clips of Birkenfeld and Perrelli on 60 Minutes:

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A former UBS employee who blew the whistle on the Swiss banking giant is seeking a multi-billion dollar reward, and legal experts say odds are good he’ll collect, The New York Times reports.

Bradley Birkenfeld was sentenced to 40 months in prison for helping wealthy Americans dodge their taxes. Whistleblower advocates say the sentence was disproportionate given his assistance — he shared tax evasion secrets of UBS and its rich American clients — and worry that it could have a chilling effect on others considering coming forward.

A coalition of groups, including the National Whistleblowers Center, wrote Attorney General Eric Holder last week, asking him to push for a lesser sentence.

Regardless of the duration of his sentence, the ex-banker could exit prison a rich man.

More than 14,700 offshore tax evaders have come forward under an I.R.S. amnesty program, and the names and account details of about 4,450 UBS clients are being turned over to U.S. authorities under a settlement with the bank.

Birkenfeld’s lawyer, Stephen Kohn, said his client is entitled to a portion of the billions of dollars the federal government stands to recover. Under a 2006 law meant to encourage tax informants to come forward, whistle blowers can reap rewards of 15 to 30 percent of the taxes, fines, penalties and interest ultimately collected by the I.R.S.

Kohn, executive director of the NWC, told the Times he was seeking “at least several billion dollars.”

Erika Kelton, a partner at Phillips & Cohen, a law firm that specializes in large whistle-blower claims, said Birkenfeld has a serious claim.

“It was very credible, very useful information from inside UBS that he provided. The law is pretty clean on this,” she told the Times.

Birkenfeld pleaded guilty in June 2008 to conspiring to defraud the United States government. He admitted to, among other things, helping to smuggle diamonds in a tube of toothpaste.

Justice Department prosecutors have said they doubt whether the fraud scheme would have been uncovered without Birkenfeld’s help, but they consider him more of an informant than a formal whistle-blower because he provided few details on actual clients, according to the Times.

Birkenfeld could begin his prison term as soon as January.

After nearly 30 years, the Department of Justice has finally nabbed one of its most-wanted. Famed film director Roman Polanski (Chinatown, Rosemary’s Baby, The Pianist) has being fleeing U.S. authorities since his arrest for unlawful sex with a 13-year-old in 1978. He was taken into custody in Zurich Sunday morning and faces extradition to Los Angeles.

Not surprisingly, the L.A. Times has the best coverage, including his life in photos (nice one with Sharon Tate circa late 1969). He was arrested as he arrived in the Swiss city to accept an award at the Zurich Film Festival.

Polanski’s attorneys are reportedly shocked, shocked.

“We absolutely were not expecting such an arrest, in so far as he regularly goes to Switzerland, and he’s done so for several years,” lawyer Herve Temime told Le Figaro, adding that Polanski “even owns a chalet situated in the Gstaad,” a Swiss ski village.

His extradition could take months. U.S. authorities have 60 days to file formal papers requesting his extradition. Polanski can ask the Swiss Federal Penal Court of Justice to reject those papers, and, if he is denied, appeal to a higher court, the Federal Court of Justice.

Back at Main Justice, Attorney General Eric Holder Jr. has pledged to revitalize the civil rights division with a renewed focus on minority-discrimination cases, the Washington Post reported Sunday.

Under the Bush administration the civil rights division was “destroyed,” John Payton, president of the NAACP Legal Defense Fund, told the Post. Instead of the traditional civil rights focus, the Bushies expanded the agenda to include complaints of religious discrimination and human trafficking, they also hired lawyers who shared their conservative ideology – some with little to no civil rights experience – for career jobs.

It’s all about Obama’s legacy. Holder has pledged to make the division “’his crown jewel’ by returning its focus to protecting minorities against discrimination,” the Post reports. “What becomes of these cases, and others like them, will help determine the meaning of justice in the Obama administration.”

Rebuilding the civil rights division seems like a cakewalk compared to the legal gauntlet Obama is running when it comes to closing Gitmo.

One of Obama’s biggest obstacles to closing Gitmo by January is determining where to send about 100 Yemenis, the largest single group of prisoners by nationality, Bloomberg reports.

The U.S. wants many of them to go to a rehabilitation program in Saudi Arabia, but the Saudis are refusing to take them and Yemen’s president wants them sent back home. The U.S. wants to avoid that for security reasons.

The Justice Department on Saturday announced that they had agreed to send one former Gitmo detainee back to Yemen and two others to the government of Ireland. The move will leave about 240 detainees remaining at the prison, which the administration conceded this week it may not be able to close by January.

The New York Times weighs in with profiles of the two latest terrorism suspects, one, a Jordanian teenager who allegedly plotted to blow up a Dallas skyscraper, and the other, a U.S. citizen who was targeting a federal building in Springfield, Ill.

Are these two just nice young men or U.S.-hating, cold-blooded terrorists? Friends say each were each extremely helpful to them. A pal of Michael Finton, the suspect in the Illinois plot, even called him a “role model.” But others say Finton, who went by the nickname Talib Islam (student of Islam), “didn’t like America very much” and “thought we needed more rules, so that people would behave.”

Authorities started watching Finton’s every move after a search of his car turned up a letter about his dreams of being a martyr and a document about waiting for a “return letter” from John Walker Lindh.

Friends painted an even more complex portrait of Hosam Maher Husein Smadi. He drove a single mother to the grocery store, lent her money when she didn’t have enough to feed her two children – even gave her a cell phone when hers broke and got her a job as a cashier and drove her to work.

But the criminal complaint reveals a dark side. An agent posing as a senior member of an al Qaeda sleeper cell befriended Smadi, and he responded to the call. He pledged allegiance to Osama bin Laden, saying “I love him as I love my father,” expressed anger over the invasion of Gaza by the Israelis and vowed he was “ready for the jihadi life.”

According to Politico, Republican Rep. Aaron Schock’s district office in Springfield was on of the targets of Finton’s planned terrorist attack.

The evidence against Finton and Smadi seems pretty solid (Finton was caught in a sting operation while driving a van he thought was loaded with explosives to the Paul Findley Federal Building. He even allegedly parked the car and made phone calls he believed would trigger a blast killing or injuring people inside the building!)

But a new study says federal agencies are only prosecuting about one out of four terrorism suspects and suggests federal agencies can’t even agree on who is a terrorist, according to the Associated Press.

People charged with terrorism often go free because the evidence wasn’t strong enough to bring them to trial, says the study by the Transactional Records Access Clearinghouse, a data research group at Syracuse University, the AP reports.

“According to the data, U.S. attorneys reported that the cases brought to them by investigators were often based on weak or insufficient admissible evidence, lacked criminal intent or did not constitute a federal offense.”

Of course, the Justice Department disagrees with TRAC’s analysis and conclusions. A spokesman said the report omits some statistics and uses data that differs from the agency’s information.

Numerous organizations across the federal government – the FBI, IRS, Secret Service, Bureau of Alcohol, Tobacco, Firearms and Explosives – just to name a few – enforce the laws associated with terrorism while federal prosecutors determine which cases will be brought to court.

All have different ways of identifying terror-related crimes – and TRAC found that about one-third of the defendants charged with a terrorism offense were not categorized as having a connection to terrorism. The findings led TRAC to conclude that the government must do a better job defining and focusing its terrorism enforcement.

The New York Times also ran a piece about the plummeting Supreme Court docket. In the early 1980s, SCOTUS decided more than 150 cases a year. These days it decides half that many.

What gives? Is SCOTUS getting lazy? The Supreme Court advocacy clinic at Yale Law School held a conference to explore the mystery of the shrinking docket.

“Participants blamed the newer justices, others their clerks. Some blamed Congress for not cranking out enough confusing legislation. And some blamed the Justice Department, which is filing fewer appeals,” the Times reported.

A Kansas man is accused of sending an envelope containing white powder and a threatening note to a prosecutor who’d helped put him in prison.

John Phillip Barker was charged Friday with mailing what he claimed was anthrax to Assistant U.S. Attorney David C. Smith at the U.S. Attorney’s Office in Kansas City, Kan. Barker is serving a prison sentence for mailing a similar letter to the Internal Revenue Service. Smith prosecuted Barker in the 2008 IRS case, according to court records.

Part of the evidence against Barker: He allegedly can’t spell. The note to Smith referred to the white substance as “antrax.” That spelling “was consistent with the spelling of ‘antrax’ that was employed by defendant Barker in the last case where he mailed threats to the IRS,” the complaint says.

The note to Smith read, ”YOU HAVE BEEN EXPOSED TO ANTRAX DIE.” Read the criminal complaint here and the affidavit in support of the complaint here.

The FBI wasted time and money determining that the powder was harmless, the complaint says. A Kansas U.S. Attorney’s Office spokesperson declined to comment.

The Justice Department probably won’t get all of the 52,000 names of rich Americans suspected of using UBS bank accounts to evade the Internal Revenue Service. But Swiss and U.S. negotiators said that the disclosure of at least 4,450 names is all but certain. Read The Washington Post report from this morning here.

UBS and DOJ lawyers cut an out-of-court deal last week on a civil lawsuit seeking the names after spending hours in a D.C. building without air conditioning. The final negotiations came after months of heated back and forth on the lawsuit that was turned into a diplomatic issue by the Swiss government.

Swiss government officials previously said they would forbid UBS from complying with any U.S. court order to reveal names. Officials in the Alpine tax haven have not explicitly agreed to disclose any names, but Swiss and U.S. negotiators have agreed that at least 4,450 names will inevitably be turned over to the IRS, The Post reported.

“We will be receiving an unprecedented amount of information,” said IRS Commissioner Doug Shulman, according to The Post.

Read the DOJ news release here, the U.S.-Swiss declarations here and the bank agreement and consent here.

UBS AG and the Justice Department have reached an out of court agreement on a contentious civil lawsuit that seeks to force the Swiss bank to divulge the names of rich Americans suspected of tax evasion, The Associated Press reported this morning.

No details of the agreement were announced during a telephone conference that included U.S. District Judge Alan S. Gold, DOJ Tax Division attorney Stuart Gibson and UBS attorney Eugene Stearns, according to The AP. The lawyers only told Gold that they concluded negotiations, the news wire service reported.

The Justice Department demanded that UBS to turn over 52,000 names of account holders suspected of using Swiss accounts to evade Internal Revenue Service.  The Swiss government turned the matter into a diplomatic issue, saying it would forbid UBS from complying with any U.S. court order to reveal the names. We previously reported that the latest  settlement talks focused on some 7,000 accounts tied to offshore companies and trusts.

The Justice Department will launch a center  that will bring together more than a dozen government groups to fight international crime, Attorney General Eric Holder said today in Rome at the G8 Justice and Home Affairs Ministerial.

The International Organized Crime Intelligence and Operations Center will enable these agencies to meet together and more effectively coordinate international criminal prosecutions, according to a DOJ statement.

“The globalization of criminal networks and advances in technology have made international criminal organizations a significant threat to the safety and security of our nation,” Holder said in the statement.  “But we are answering that threat by developing a 21st century organized crime program that will be nimble and sophisticated enough to combat the danger posed by these criminals for years to come.  [The center] gives us the capacity to collect, synthesize and disseminate information and intelligence from multiple sources to enable federal law enforcement to prioritize and target the individuals and organizations that pose the greatest international organized crime threat to the United States.”

The center will bring together:  the FBI; U.S. Immigration and Customs Enforcement; the Drug Enforcement Administration; Internal Revenue Service; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Secret Service; U.S. Postal Inspection Service; Department of State, Bureau of Diplomatic Security; Department of Labor, Office of the Inspector General; the Justice Department, Criminal Division;  the U.S. Attorneys’ Offices and the Treasury Department, Office of Terrorism and Financial Intelligence.

At the G8 meeting, Holder also highlighted the necessity for collaboration between U.S. and foreign law enforcement, according to the Justice Department.

“He noted that the creation of (the center) demonstrates the United States’ commitment to addressing international organized crime issues and will make the United States a more effective partner for joint investigations and prosecutions,” the DOJ statement said in the statement.

The Justice Department says that convicted lobbyist Jack Abramoff should not be allowed to use his tax refund of over $500,000 to pay back his lawyers, accountants and others because he has yet to pay restitution for the millions of dollars he defrauded from Indian tribes he represented, reports The Washington Post.

In prison since 2006, Abramoff received a $520,189 refund from the Internal Revenue Service on May 4.  Once the Justice Department was notified of the refund, it asked a federal judge yesterday to stop Abramoff from spending the money and account for the money he has already spent.

Under the restitution order by U.S. District Judge Ellen S. Huvelle, Abramoff and his former associate Michael Scanlon still owe more than $23 million to the Indian tribes.  While he’s not expected to make payments while in prison, “Abramoff was required by statute to apply the value of that refund to his restitution obligation, notwithstanding that the money was received while he was in prison and before the payment schedule had taken effect,” the Justice Department filing said.

But more than half the money is already gone, according to the article:

Among those paid out of the tax refund were Abramoff’s lawyers, including Lowell’s firm McDermott, Will & Emery LLP , which received $75,000. Another firm, Zuckerman Spaeder LLP, received $25,000 from the tax refund, the government said in its filing tonight.

Others paid were: $104,000 to Abramoff’s accountants, Mendelson & Mendelson; $87,500 to repay loans from Abramoff’s father; $50,000 to pay back state taxes in Maryland; $47,000 toward a Bank of America credit card balance; $22,000 for property taxes; $5,000 to repay a personal loan; $5,000 toward tuition expenses at Hebrew Academy; and $1,500 to repay a loan from the Franco Foundation.

The government pointedly noted a large portion of the refund “was spent before informing the government of its receipt.”