Kohn, Kohn & Colapinto

Kohn, Kohn & Colapinto, a Washington, D.C. law firm specializing in employment law, represents whistleblowers in the United States. Washingtonian Magazine, in its December 2004 issue, named the firm the top whistleblower within the Beltway. The three partners are brothers Stephen M. Kohn and Michael D. Kohn, and David K. Colapinto.

The firm's most famous clients are Linda Tripp, the former White House and U.S. Department of Defense employee who blew the whistle on President Bill Clinton's affair with Monica Lewinsky, and Bradley Birkenfeld, the private banker who blew the whistle on UBS AG's aiding and abetting of tax fraud by the Swiss bank's American clientele.

Federal Bureau of Investigation cases

The law firm founded by the Kohn brothers in 1988 first focused on defending nuclear power industry whistleblowers, who were retaliated against by their employers for revealing nuclear safety problems. This led to other areas of whistleblowing litigation, most prominently in the firm's defense of federal employees. KKC defended African American FBI agents charging racial discrimination within the bureau . The firm also defended Dr. Frederic Whitehurst, a forensics expert who blew the whistle on the lax standards at the Federal Bureau of Investigation (FBI) Laboratory and subsequently suffered retaliation by the agency. Involvement in the FBI Lab case involved KKC in the O.J. Simpson murder case, as the forensic standards used by the prosecutors, and the forensic work itself such as DNA analysis, were called into question by Whitehurst's revelations against the FBI Lab, which had become the national authority in the field of forensics investigations.

Linda Tripp Privacy Act case

Kohn, Kohn & Colapinto gained nationwide attention representing whistleblower Linda Tripp regarding her revelations of Monica Lewinsky's involvement in the sex scandal that brought about the impeachment of President Bill Clinton. The revelations that Lewinsky and Clinton had lied in their legal filings in the sexual harassment case brought against the sitting president by Paula Jones, and that Lewinsky had tried to suborn perjury from Tripp, who knew about her affair with Clinton, was one of the main factors influencing the articles of impeachment voted by the House of Representatives.

Kohn, Kohn & Colapinto handled Tripp's lawsuit against the Justice Department and the Department of Defense under the Privacy Act of 1974. Tripp had sued the government for violating her rights under the Privacy Act alleging that the Clinton Administration leaked confidential details of her employment record to the press. The government eventually settled with Tripp, including agreeing to a one-time payment of more than $595,000, a retroactive promotion, and retroactive pay at the highest salary for 1998, 1999 and 2000. She also received a pension and was cleared to work for the federal government again. Her rights to remain part of a class action lawsuit against the government were also preserved.

Qui tam actions

The firm also handles suits filed under the qui tam provisions of the False Claims Act.^[1] These provisions allow persons and entities with knowledge of fraud committed against the federal government to sue the perpetrator on behalf of the United States, either with the government joining the action or, if the government declines, as a private plaintiff on their own. Qui tam has its roots in the Abraham Lincoln administration, as Lincoln was concerned with fraud by government contractors during the Civil War.

Murphy tax case

One of the firm's clients was defeated after a preliminary victory in the tax refund case of Murphy v. IRS,^[2] in which the Court of Appeals for the District of Columbia originally held 26 U.S.C. § 104(a)(2) unconstitutional to the extent the statute purports to tax emotional distress awards unrelated to lost wages. On December 22, 2006, the Court vacated its own judgment in that case.

According to the Web site Tax Analysts, Murphy v. IRS "is not only one of the most significant tax decisions in decades, it is one of the most important constitutional cases in decades as well". The now-voided ruling had shaken up the tax community as it is rare for a federal court to hold that a tax law is unconstitutional.

The case was argued for the appellants by Colapinto, who was assisted on the briefs by S. Kohn.

On July 3, 2007, the Court ruled against Ms. Murphy. The court held (1) that the taxpayer's compensation was received on account of a non-physical injury or sickness; (2) that gross income under section 61 of the Internal Revenue Code^[3] does include compensatory damages for non-physical injuries, even if the award is not an "accession to wealth," (3) that the income tax imposed on an award for non-physical injuries is an indirect tax, regardless of whether the recovery is restoration of "human capital," and therefore the tax does not violate the constitutional requirement of Article I, section 9, that capitations or other direct taxes must be laid among the states only in proportion to the population; (4) that the income tax imposed on an award for non-physical injuries does not violate the constitutional requirement of Article I, section 8, that all duties, imposts and excises be uniform throughout the United States; (5) that under the doctrine of sovereign immunity, the Internal Revenue Service may not be sued in its own name.^[4] The Court stated: "[a]lthough the 'Congress cannot make a thing income which is not so in fact,' [ . . . ] it can label a thing income and tax it, so long as it acts within its constitutional authority, which includes not only the Sixteenth Amendment but also Article I, Sections 8 and 9." ^[5] The court ruled that the personal injury award Ms. Murphy received was "within the reach of the congressional power to tax under Article I, Section 8 of the Constitution"—even if the award was "not income within the meaning of the Sixteenth Amendment".^[6] Ms. Murphy's tax refund claim was denied.

An appeal subsequently filed for a rehearing en banc was denied on September 14, 2007. The decision was upheld when the U.S. Supreme Court denied review on April 21, 2008.^[7]

Bristol-Myers-Squibb Qui Tam Case

Kohn Kohn & Colapinto is one of seven law firms that successfully brought qui tam actions against Bristol-Myers Squibb Company (BMS) and its subsidiary, Apothecon, Inc., for Medicare and Medicaid fraud linked to its drug pricing and marketing practices. According to U.S. Attorney Michael J. Sullivan of Boston, BSM negotiated a settlement with the U.S. Department of Justice and the attorneys general of several states, agreeing to reimburse state and federal governments a total of $499 million, plus over $16 million in interest. The drug company, which fully cooperated with the government, admitted that it paid illegal remuneration to doctors and health care providers to influence them to purchase BMS' pharmaceuticals and prescribe certain BMS drugs for "off-label" usage. BMS and its Apothecon caused the submission of fraudulent claims against Medicare and Medicaid.

KKC and the other six law firms will share approximately $50 million as their share of the federal government's settlement amount, and an additional share of the state settlement amount, which totals approximately $328 million. The firms also will share in the state settlements.

Bradley Birkenfeld

Bradley Birkenfeld is an American banker and whistleblower whose disclosures to the U.S. Department of Justice (DOJ), the U.S. Internal Revenue Service (IRS), the U.S. Securities and Exchange Commission and the U.S. Senate Committee on Homeland Security and Governmental Affairs led to a massive fraud investigation against the Swiss bank UBS, his former employer.^[8][9][10] In February 2009, as a result of the information he gave U.S. authorities, the DOJ announced it had reached a deferred prosecution agreement (DPA) with UBS that resulted in a $780 million fine and the release of previously privileged information on American tax evaders.^[11][12]

In 2008, Birkenfeld pleaded guilty to conspiracy to defraud the United States by abetting tax evasion by one of his clients and was sentenced in 2009 to 40 months in prison.^[13] Many advocacy groups from around the world criticized Birkenfeld's prosecution and sentence on the grounds that it would discourage financial industry whistleblowers.^[14] Birkenfeld subsequently fired his lawyers, Schertler and Onorato, and hired Kohn Kohn & Colapinto to represent him and his whistleblowing claims.

On 11 September 2012, the IRS Whistleblower Office awarded Birkenfeld $104 million as a whistleblower.^[15][16] Birkenfeld received the award under the IRS whistleblower program, which gives informants a percentage of money the U.S. government recovers after fraud is found.^[17] The award was the largest whistleblower payout in history, to either an individual or a group.^[18][19] It surpassed the $96 million awarded to GlaxoSmithKline whistleblower Cheryl D. Eckard in 2010.^[20]

The IRS explained its decision by citing Birkenfeld’s “exceptional cooperation” and the “breadth and depth” of the information he provided, all of which led to “unprecedented actions” against UBS. IRS amnesty programs have since collected $5 billion from people who participated in UBS’s illegal scheme based on the information provided by Birkenfeld.^[21]

See also

• Tax protester constitutional arguments

Notes

External links

• Kohn, Kohn & Colapinto website
• Murphy v. IRS The August 2006 Murphy decision (later vacated).