1. What is a Whistleblower?
A whistleblower is a person who, on behalf of the federal government, state government or governmental authority, reports illegal, fraudulent or dishonest conduct by a person or an organization.
2. Importance of Internal Whistleblowers:
Encouraging “watchdog” type behavior from your employees allows your management team to catch on to internal problems early, giving room to make the changes necessary to promote a healthy business model.
- Fraud against the government is not a victimless crime. Like insurance fraud, everybody pays the price for fraud against the government.
- Keep an honest business model.
3. Whistleblower Programs to Keep in Mind:
Program Benefits Common Cases/Schemes
| False Claims Act (FCA)– “Lincoln’s Law” | Can pursue your claims even if Justice Department turns you down as private individual; Receive a percentage of the award received, if there is one (15 to 30%) | Mortgage Fraud; VA Refinance Fraud; Medicare/Medicaid; Fraud |
| Securities Exchange Commission (SEC) Created by Dodd-Frank Act | Can receive award from SEC if the government authorities recover more than $1 million | Issuance of false or misleading statements in financial reports; Insider trading; Ponzi schemes |
| Commodity Futures Trading Commission (CFTC) Created by Dodd-Frank Act | Offers the most protection for whistleblowers who wish to remain anonymous (even to government until award received) | Swap Markets |
| Internal Revenue Service (IRS) | Pays award up to 15% of amount it collects; If the amount collected exceeds $2 million, the IRS will pay 15-30% of amount collected | Off-shore accounts fraud; Corporate tax fraud; Employment tax fraud; Money laundering tax fraud; Filing false or misleading forms |
4. What’s the procedure for bringing a whistleblower action?
A whistleblower files an action under seal and serves it on the government (for FCA only).