Four years ago, Eric Ben-Artzi was awarded $8.25m by the Securities and Exchange Commission for helping to uncover false accounting at Deutsche Bank.

Now the 48-year-old former risk manager, a nephew of the wife of Israeli prime minister Benjamin Netanyahu, is going broke.

“I would need a near miracle to avoid bankruptcy at this point,” said Mr Ben-Artzi from Tel Aviv, where he is in quarantine after a trip to the US.

That Mr Ben-Artzi failed to benefit from the SEC award is not surprising. The securities watchdog had allocated it to him in 2016, a year after it fined Deutsche Bank $55m for artificially boosting its balance sheet. But Mr Ben-Artzi rejected it, writing in the Financial Times that he could not take money that had been extracted from “Deutsche’s shareholders instead of the managers responsible”.

He suggested a revolving door culture of top lawyers shuffling between the SEC and Deutsche Bank had made the watchdog go easy on management.

His sacrifice attracted praise from around the world — and heavy fire from former friends and allies.

A series of costly court battles

Since he was fired by Deutsche in 2011, Mr Ben-Artzi has gone through a bitter divorce. He ended up moving from the US to his native Israel, leaving behind his children and racking up hundreds of thousands of dollars in court fines and child support debts. At one point, a court issued a warrant for his arrest.

The law firm that helped him take his whistleblower claim to the SEC, Labaton Sucharow, sued him in 2015, worried by emails from him that he might refuse the award and deprive them of an agreed 18 per cent fee. Labaton Sucharow declined to comment

He was also sued by a Canadian firm, Kilgour Williams, whose principals, Colin Kilgour and Dan Williams, had supported Mr Ben-Artzi’s claim by providing expert testimony.

When he renounced the award, Mr Ben-Artzi said his ex-wife, his lawyers and advisers should be paid what they were entitled to. But the various legal claims have eroded the whistleblower payout and now threaten to exhaust it completely. Though Mr Ben-Artzi has not personally received a penny, he is likely to be saddled with unmanageable debts.

Progress has been made in the painful seven-year divorce battle between Mr Ben-Artzi and his ex-wife. He recently saw his two sons for the first time in six years. The former Mrs Ben-Artzi received about half the SEC award. She did not respond to a request for comment.

Labaton Sucharow collected their fee of $1.5m. Kilgour Williams is yet to be paid, however. They had initially agreed to a 3 per cent cut of any payout. This was later changed. In a new arrangement agreed in 2014, Kilgour Williams would receive 5 per cent of any award to Mr Ben-Artzi but would also submit an independent whistleblower claim; if that was successful, Mr Ben-Artzi would receive 60 per cent of the second claim.

When Mr Ben-Artzi’s FT article appeared in 2016, the Canadians were furious. Their own whistleblower claim had been rejected and they felt that by turning down his award and embarrassing the SEC, Mr Ben-Artzi had hurt their chances of winning an appeal.

They wrote to Mr Ben-Artzi: “We understand that you regard your share of the award as dirty money and have decided not to personally accept any portion of the award. Therefore, we request that you direct the SEC to direct $2,500,000 to us.”

Under the original agreement, Kilgour Williams would have received $247,500. The amended deal would have given them $412,500. Nonetheless, Mr Ben-Artzi signed a letter agreeing to ask the SEC to send them millions of dollars — roughly equivalent to the remainder of the whistleblower payout.

He then had second thoughts. Although Mr Ben-Artzi believed Kilgour Williams deserved to be paid for their work and was unattached to what he did indeed see as “dirty money”, he learnt there was a chance he might have to pay tax on the award even though he had not drawn any of it himself. There was also ongoing litigation with his ex-wife.

Kilgour Williams maintained that the signed letter was an enforceable contract, creating a $2.5m debt. A judge ruled in their favour. There is an appeal, and Kilgour Williams declined to comment citing the ongoing litigation, but Mr Ben-Artzi is left worrying whether the remainder of the award will be enough to pay the Canadian advisers, continuing claims from his ex-wife and a potential tax bill. He does not need his PhD in maths to know it does not add up.

One of his former business partners has little sympathy, noting that — whatever the final outcome — he has been able to create significant wealth for his children through the payments to his ex-wife.

The need for the right lawyer

The saga has highlighted questionable aspects of the whistleblower programme. Mr Ben-Artzi said he was always bothered by the revolving door between Wall Street and Washington. He believes that protected Deutsche Bank executives but also helped his own whistleblower claim. Jordan Thomas, Mr Ben-Artzi’s lawyer at Labaton, was a senior lawyer at the SEC before he built a practice around submitting whistleblower complaints to it.

Mr Ben-Artzi believes another Deutsche whistleblower — who has always remained anonymous — submitted valuable information to the SEC but had his request for an award turned down, in part, because he lacked a lawyer with first-hand knowledge of the regulator.

A senior SEC official later told a court he found the unnamed whistleblower unimpressive, describing him as “disjointed” and having “difficulty articulating credible and coherent information concerning any potential violation of the federal securities laws . . . [He] brought with [him] to the meeting a wet brown bag containing what [he] claimed to be evidence”.

This whistleblower, who has since had financial and health problems, was seen by FT reporters, however, as a credible and helpful witness as they researched the story that first revealed the Deutsche allegations in 2012.

A third whistleblower, Matt Simpson, has fared much better. He received the same sized award as Mr Ben-Artzi and stayed in the financial industry.

Having been vindicated in his allegations against Deutsche Bank and then taken on the SEC, Mr Ben-Artzi now has his sights set on even more formidable foes.

“While ordinary people cannot influence Deutsche Bank or the SEC, because the relevant people are very remote, a popular movement to make all attorneys public servants — combined with tough restrictions on revolving doors — would go a very long way towards fixing the legal system.”