Sounding the Tax Alarm, to Little Applause

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Joseph Insinga, a former bank executive, is fighting the rejection of his whistle-blower claim, which he filed in 2007. Stephen Morton for The New York Times

Renzo Gadola, a Swiss banker, and his client, an American physician, agreed to meet in the restaurant in the lobby of the Mandarin Oriental hotel in Miami. They talked amiably about tennis, a sport that each enjoyed, until the conversation took a serious turn

The physician reiterated a request he had made for more than a year: to close two Swiss accounts, one that he had inherited, containing approximately $1 million. Once again, he said, Mr. Gadola, head of RG Investment Partners, advised him to keep the accounts secret, even though federal authorities were cracking down on undeclared foreign bank accounts like his. The physician, who was granted anonymity to describe his interactions with the banker, was prepared for this response.

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He was actually working with law enforcement. He wanted to come clean about the tax-evading accounts, and was frustrated with his Swiss bankers’ obstruction. So he had alerted a federal prosecutor that Mr. Gadola would be coming to the United States to meet with clients, and agreed to secretly videotape their meeting in Miami. He spent weeks with law enforcement officials, preparing. On Nov. 6, 2010, the day of the meeting with Mr. Gadola, he placed a leather-bound notebook outfitted with recording equipment on the table between them.

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John Koskinen, the new commissioner of the I.R.S., says he is a fan of the whistle-blower program. “It’s important for the system that taxpayers feel when they’re writing their checks that everybody is paying their fair share,” he said. Michael Reynolds/European Pressphoto Agency
Early the next morning, undercover agents from the Internal Revenue Service arrested Mr. Gadola when he answered his hotel room door. Mr. Gadola cooperated with the government, turning over the identities of United States clients and providing information about UBS, where he was once a financial adviser, and other Swiss banks that helped Americans evade taxes, court documents show.

The physician ultimately closed his Swiss accounts, paying the taxes and penalties owed.

He also filed a whistle-blower claim with the I.R.S.

A 2006 law permits whistle-blowers to file claims and share 15 percent to 30 percent of the back taxes and penalties recovered by the government in tax investigations. The law states that awards will be paid if the I.R.S. collects money “resulting from the information provided” by a claimant. It was passed to encourage tips to recover some of the estimated $450 billion in taxes that the I.R.S. says are evaded in any year.

Mr. Gadola’s information apparently reaped quite a haul. The prosecutor overseeing the case spoke at Mr. Gadola’s sentencing hearing on Nov. 18, 2011, and told the judge that the case spurred United States account holders to enter a voluntary tax amnesty program initiated that year. That program has generated more than $1 billion, according to the I.R.S. (Mr. Gadola pleaded guilty to conspiring to defraud the United States government of taxes and was given a modest sentence of five years’ probation and a $100 penalty. His lawyer said he would not comment for this article.)

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-Ralph

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