Whistleblower – False Claims Act

“Whistleblowing” is a term that refers to ordinary people reporting fraud and dishonest activities that harm the public. Numerous federal and state laws pave the way for whistleblowers to report suspected illegal activities and be protected from any retaliation.

Whistleblowers generally are uniquely positioned to have inside or non-public information about fraud and they play a critical role in combatting illegal activity and helping the government protect and recover public funds. Because the result of a successful whistleblower claim is that the government is able to stop fraud and protect public resources, whistleblower laws provide that whistleblowers are compensated for sharing information with the government and participating in pursuit of a whistleblower claim.

Examples of whistleblower programs include:

• False Claims Act: Lawsuits involving whistleblower claims often relate to improper government dealings that fall under the false claims definition. The federal False Claims Act imposes liability on individuals and companies who have defrauded federal governmental programs. The “qui tam” provision of the Act permits an individual to act as a whistleblower and sue a wrongdoer on behalf of the U.S. government. Our attorneys are well-versed on claims arising under the False Claims Act and understand the complexities involved in this significant and growing area of the law.
• Internal Revenue Service Whistleblower Program: The IRS Whistleblower program encourages reports of tax fraud and tax underpayments in violation of the Internal Revenue Code. In general, if the taxes, penalties, interest and other amounts in dispute exceed $2 million, the IRS will pay 15 percent to 30 percent of the amount collected. Many states have programs similar to the IRS’s whistleblower program but targeted to state tax fraud.
• The SEC and CFTC Whistleblower Programs: These programs reward whistleblowers who identify violations of the federal securities laws to the Securities and Exchange Commission and violations of federal commodity laws to the Commodity Futures Trading Commission.

Examples of conduct that can give rise to a whistleblower claims under one of the many different state or federal whistleblower programs include:

• Submitting false cost, billing, or pricing data
• Overcharging for or excessive markups of products or services
• Falsely claiming goods or services that are not provided
• Falsely certifying compliance with laws, regulations, or contract terms
• Delivering inferior services or products
• Submitting false applications for government loans or grants
• Fraudulently seeking to obtain a government contract
• Improperly transferring tax benefits from one company to another
• Abusing tax shelters
• Artificially depressing income reported by one subsidiary to another subsidiary
• Underreporting income due to investment in offshore tax havens
• Fraudulent manipulation of revenue or profits to avoid paying taxes
• Operation of a Ponzi or Pyramid Scheme
• Theft or misappropriation of funds or securities
• Insider trading
• Fraudulent or unregistered securities offering