Enron Whistleblower Receives $1.1 Million

Almost 2 years before Enron declared bankruptcy and created one of the largest financial meltdowns in history, a whistleblower tipped off the Internal Revenue Service (IRS) that the company was using illegal tax shelters to generate income.

After nearly 10 years, the IRS finally paid the whistleblower a $1.1 million reward. Ironically, if the IRS had pursued the information in 1999, when the whistleblower first came forward, the government may have realized the depth of Enron's problems and may have been able to avoid the financial disaster that ruined the portfolios of Enron investors.

The tax fraud reported by the whistleblower allowed Enron to evade taxes in amounts of more than $600 million and to report almost $300 million in false profits. The whistleblower estimates the numerous schemes he knew of and reported about involved over 10 billion taxable dollars.

The Enron whistleblower received a 15% reward for the money he helped the IRS to recover. However, the rates have increased since 1999. In 2006, the law was changed to allow whistleblowers to receive between 15% and 30% in cases involving more than $2 million.

In this case, the whistleblower received a significantly diminished amount because Enron declared bankruptcy in 2001, making the total amount the IRS could recover much smaller than the actual amount of tax fraud that occurred.

Source:
IRS pays Enron whistleblower $1.1 million, The Washington Post with Bloomberg Business, March 15, 2011