Investing Outside of Wall Street – “Lucifer’s Banker” by Bradley C. Birkenfeld

“Lucifer’s Banker: The Untold Story of How I Destroyed Swiss Bank Secrecy,” published in November 2016, reads like a suspense novel.  Once I began reading it, I could not put it down.  English being my second language, for me to have finished reading the entire book in just a day and a half was a record breaker.

Ever since I read “Rich Dad Poor Dad” in 2000, I have become very much interested in the topic of money and investing.  Since then, I have read just about every book published by Robert Kiyosaki.  I also read “The Creature from Jekyll Island: A Second Look at the Federal Reserve” by G. Edward Griffin.  What eye-openers!  I consider these books, in addition to “Think and Grow Rich” by Napoleon Hill, bare-minimum essentials for anyone who wants to understand money and begin taking control of his/her financial future.

On May 6, 2017, during his weekly radio program, Kiyosaki originally aired the show, interviewing Birkenfeld, the author of “Lucifer’s Banker.”  Listening to the author, I was immediately drawn to “Lucifer’s Banker” as a related topic to “The Big Short” by Michael Lewis, about which I wrote in May 2016.  Today, many of us, hard-working Americans, remain (1) angry about what had happened to our retirement savings, (2) distrustful of banking and government institutions, and (3) apprehensive about our financial future.

“Lucifer’s Banker,” at its core, is a story about exposing the crime of tax evasion that went on for decades.  Before going to the next paragraph, I’d like to invite you to take a few minutes to understand the difference between tax avoidance and tax evasion – if you don’t already, that is.  In short:

  1. Tax avoidance is perfectly legal.
    • In fact, contrary to what most people think, it is encouraged by the IRS – to help grow the economy by encouraging businesses to take advantage of tax incentives so that they can, in turn, provide more jobs to people.
  2. Tax evasion, on the other hand, is illegal.

In the United States of America, public servants – elected officials – are supposed to serve us; not the other way around.  It is a sad state of affair that few, if any, politician behaves in this manner today.  Worse, many of us had misgivings about the Department of Justice, ever since President Obama appointed Eric Holder to its helm as the U.S. Attorney General.  For example, “Operation Fast and Furious” comes to mind.  Back then, most of us did not even know the story behind “Lucifer’s Banker” and about their involvement in helping the Swiss bank, which actively invited wealthy American clients to “evade” taxes.

To most Americans, the word “Justice” means protection of rights and punishment of wrongs.  I would like to think, therefore, that people who work in the Department of “Justice” know right from wrong.  And, in the minimum, we expect them to treat every law-abiding American citizen with dignity and respect.  After all, we are all supposed to be presumed innocent until proven otherwise.  In the case of the author, a whistle blower who brought his case to the Department of Justice (and not the other way around), he was presumed guilty until, finally, proven innocent – AFTER having spent three years in federal prison!?  I hope that, under the Trump Administration, the Department of Justice cleans up its internal mess that had been created under the former administration and begins to live up to the public’s expectation of what it should be.

Here are some of the most memorable findings from the book.  Somehow, we, the people, are enabling our elected officials to not only abuse their power but get away with it.

  • As if enabling its clients to evade paying taxes was not bad enough, Union Bank of Switzerland (UBS) gamed the American system by entering into a secret non-prosecution agreement prior to the Congressional hearing, which probed UBS’s illegal activities. How was it possible?  The author indicates, “…one of President Obama’s major supporters, and favorite golf partner, was Robert Wolf, Chairman of UBS Americas.  In fact, the fifth-largest bundled money contributors to Obama’s presidential campaign were UBS Americas employees.”  “One of Eric Holder’s biggest clients was UBS.”
  • “Hillary Clinton had already made damn sure that the Swiss wouldn’t really suffer. (Swiss Foreign Minister) Micheline Calmy-Rey had promised to pressure UBS into turning over a big chunk of those 19,000 names.  In turn, UBS at last came up with a list.”  “On April 30, 2009, in a district court in Florida, UBS finally responded to the ‘John Doe’ summons and turned over the names of 4,500 American secret account holders.  That’s 4,500 out of 19,000 American account holders; you do the math.  The list was cherry-picked; no one of any significance was on it…  No politicians, power players, campaign fund-raisers, defense contractors, or lobbyists…  Their names would remain anonymous, as long as they came in through the IRS voluntary disclosure program, repatriated their cash and securities, and agreed to pay penalties and fines to the IRS.”
  • Some of the bankers did indeed treat their clients’ money as if it were theirs to gamble.
  • Even Vatican hides its money in a Swiss bank.

I’d like to end this post with some of the quotes the author used to help set the tone at the beginning of some of the chapters:

  • “Banking establishments are more dangerous to our liberties than standing armies.”  Thomas Jefferson, American President
  • “The world is a dangerous place, not because of those who do evil, but because of those who look on and do nothing.” Albert Einstein, German Physicist
  • “You must be the change you wish to see in the world.” Mahatma Gandhi, Indian Leader

Happy investing!




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