Chapter 7 Part 2: Tarantula - Trapped in the Web

Birkenfeld is ready to blow the whistle. But first he needs lawyers. And that turns out to be way harder than he expected.

Every Big Law Firm Is Already Taken

He starts calling top DC law firms. Williams & Connolly. Hogan Lovells. Arnold & Porter. Covington & Burling. One by one, same answer: “Sorry, UBS has us on retainer. Conflict of interest.”

Even Eric Holder’s firm, Covington & Burling, was locked down. UBS had basically bought up every major law firm in Washington as insurance. Throw enough money around, and nobody can sue you because all the lawyers already work for you. It is an evil kind of genius.

Bob Bennett to the Rescue (Sort Of)

Birkenfeld remembered he had the personal number of Bob Bennett, a legendary litigator at Skadden Arps. The guy who defended Bill Clinton during the Monica Lewinsky mess. Birkenfeld called him up. But same story – Skadden Arps was also retained by UBS.

Bennett could not take the case. But he did something useful. He pulled out a card from his Rolodex and pointed Birkenfeld to a small boutique firm: Hector & Moran. Two former Department of Justice prosecutors. Clean of any UBS conflicts.

Spilling the Beans

Spring 2006. Birkenfeld flew to Washington and spent two full days laying out everything. Client names that made the lawyers’ eyes pop: Igor Olenicoff, Kevin Costner, the Lauder family, a guy connected to Saddam Hussein, one of Osama bin Laden’s brothers. Around 19,000 American accounts hiding money at UBS across Switzerland.

He told them how UBS trained bankers to lie, cheat, and smuggle. How the entire system was designed to help rich Americans dodge taxes. He brought documents to prove it.

The lawyers’ plan: take it to the Department of Justice.

The DOJ Does Not Care

Here is where things go sideways. The DOJ prosecutor who picked up the case was Kevin Downing, a guy already in a bad mood. He was losing an appeal on the massive KPMG tax fraud case. And guess who was defending KPMG? Skadden Arps. The same firm that sent Birkenfeld to these lawyers. Bad timing all around.

Downing looked at the initial brief and basically laughed. Not enough evidence. Birkenfeld sent more. Still not enough. He flew back to Washington with a massive pile of redacted documents. Downing took the stack and said, “Don’t call us. We’ll call you.”

Months dragged on. No subpoena. No immunity. No deal. Downing’s final answer: “We’re not issuing anything for an anonymous snitch. I want to meet this guy face-to-face.”

The Decision That Changes Everything

Birkenfeld thought about it for a month. He knew once he walked into the DOJ in person, there was no going back. He could have just stayed in Geneva, kept making money, and forgotten the whole thing. But that is not how he is built.

“I’m coming in,” he told his lawyers. “Get out your flak jackets.”

The Insurance Policy – Codename Tarantula

Before surrendering himself to the Feds, Birkenfeld came up with a backup plan. If his story was already public, it would be much harder for the government to bury him in some witness protection program.

He walked through a rainstorm in Geneva to a bank of pay phones. Called the Financial Times. Got investigative journalist Haig Simonian on the line.

“You are going to know me only as Tarantula,” he said. “And I’ve got a story that will blow you away and end Swiss banking secrecy forever.”

Twenty minutes of rapid fire. Simonian’s keyboard hammering like a machine gun. The biggest scoop of his career, delivered from a pay phone in the rain by a man with no name.

The spider had spun its web. Now everyone was about to get caught in it.

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Part of the Lucifer’s Banker Uncensored series