What is whistleblowing?
Whistleblowing refers to the act of reporting evidence of fraud to the government under a federal or state whistleblower law or program. While each of these laws and programs has its own set of rules and regulations, in general, anyone with evidence of corporate fraud can be a whistleblower. Successful whistleblowers can be rewarded with a percentage of the money recovered by the government (in some cases, up to 30 percent) as a result.
What kinds of fraud do whistleblower laws cover?
Laws governing whistleblowing are complicated and sometimes overlap, but they are broad enough to cover many different types of corporate fraud. One way to think of the different categories of whistleblower cases is to ask who is being victimized by the fraud, and how? For example: are taxpayers the victim because a federal or state government program is being defrauded? Does the fraud involve violations of federal securities or commodities laws, victimizing shareholders, investors, or other market participants? Is the fraud related to taxes and schemes to defraud the government by failing to pay them?
Fraud against government programs
Frauds that victimize federal or state programs often are brought under the False Claims Act. The False Claims Act allows individuals, corporations, or other organizations with information about the fraud to file a lawsuit – called a qui tam action – in federal court on behalf of the government. The government then investigates the case and decides whether it wants to intervene. If the government declines to intervene, the whistleblower has the option to litigate the case on behalf of the government.
- False Claims Act cases commonly address:
- Medicare and Medicaid fraud
- Pharmaceutical fraud
- Financial fraud involving government-backed loans
- Fraud related to overcharging the government, billing for services that were never provided, or billing for defective goods
- Paying kickbacks or bribes
- Fraud involving government contracts
- Hospital, physician, nursing home, hospice, home health and other health care provider fraud
Securities and commodities fraud
The Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC) have each implemented whistleblower programs to promote the reporting of financial fraud that violates laws related to securities and commodities. Both of these programs require the whistleblower to provide “original” information or analysis. Whistleblowers often come from a wide variety of backgrounds. They may include:
- Financial sector employees
- Corporate executives
- Market analysts
- Traders
- Compliance officers
The SEC and CFTC whistleblower rules include important confidentiality provisions for whistleblowers and permit the filing of complaints anonymously. In order for these rules to apply, an attorney must file the complaint on your behalf. Here are some examples of frauds that may be reported to the SEC Whistleblower program:
- Ponzi or pyramid schemes
- Market manipulation
- False financial statements
- Insider trading
- Accounting or offering fraud
- Foreign bribery (FCPA)
Tax fraud
The IRS Whistleblower Program is designed to allow the identification of individuals or corporations who have perpetrated schemes to avoid federal taxes. Tax fraud is reported to the IRS Whistleblower Office.
Whistleblower monetary awards
Whistleblower monetary awards can be significant. Under the False Claims Act, whistleblowers are generally entitled to a reward of between 15 and 25 percent of the government’s recovery if the government joins the case, and 25 to 30 percent if the case is successfully litigated without the government’s participation.
Under the SEC and CFTC whistleblower programs, whistleblowers may be eligible for 10 to 30 percent of any money collected by the government in excess of $1 million.
How can a whistleblower attorney help?
Fraud schemes are often complicated, as are whistleblower laws. Whistleblower attorneys specialize in cases brought under the False Claims Act and other whistleblower programs, such as those of the SEC, CFTC, or IRS, and can help you figure out whether you have a viable case.
Consider a whistleblower lawyer’s ability to:
- Analyze the evidence. An experienced attorney will be able to assess your evidence and advise you on the strength of your claim. Although there are many types of evidence – including your description of what happened – it is often helpful to have documents. Particularly useful are documents that corroborate what you have seen, demonstrate that a fraud was committed, reveal the knowledge of the fraudster, and prove that the conduct was more than just a mistake.
- Conduct an investigation. A whistleblower law firm should support the client with the resources necessary to conduct a thorough investigation, to make a compelling presentation to the government, and to advocate effectively on your behalf. Ask whether the firm has investigative resources – for example, does it employ experienced investigators? Does it have lawyers who know the particular industry? Does it have access to the latest technology and information sources?
- Educate you about the risks and rewards. There are risks and rewards involved with any whistleblowing claim, and an experienced attorney should explain these to you openly and candidly, including how to protect yourself from retaliation.
- Understand the government’s perspective. Whistleblower claims require interaction with government lawyers, and it is important for a whistleblower attorney to maintain a constructive, collaborative relationship with agency personnel. A thorough case analysis includes understanding the government’s perspective – what types of cases are the government investigating? What are the best arguments to get the government’s attention? Ask whether a whistleblower attorney has prior experience working for the government.
- Explain the timing. Because whistleblower laws often include ‘first-to-file’ provisions that may preclude a whistleblower’s ability to get an award if someone else has filed a claim first, it is important to seek advice promptly. Whistleblower laws also contain statute of limitations, which limit the timeframe during which you can bring a claim and recover an award. File outside of this window, and you may be out of luck.
- Understand where to file. Federal courts in different jurisdictions can – and have – come to differing conclusions about the application of the same whistleblowing law. Because qui tam suits can often be filed in more than one jurisdiction, it’s important to hire an attorney who is well-versed in the type of claim you’re filing and can identify a favorable jurisdiction.
We know how whistleblowing works.
KTMC’s whistleblower practice is dedicated to fighting corporate fraud and is backed by the resources of a 100-attorney law firm. We are equipped to take on the biggest and best-financed defendants. Our attorneys understand whistleblower claims from many perspectives: as advocates before the Department of Justice, the SEC, the CFTC, and the IRS; as former government attorneys who have worked as federal and state prosecutors, SEC enforcement attorneys, government procurement officials, and consumer watchdogs; and as litigators who have brought fraud claims against multi-national corporations in numerous industries. KTMC clients also have access to our Investigative Services Department, which is headed by a decorated FBI agent with decades of experience investigating white-collar fraud.
Have you uncovered fraud? Are you considering becoming a whistleblower? Contact us today to learn more.
Disclaimer