If you believe that your employer, or another company or person, is defrauding the government or committing financial fraud and you are deciding whether to report the fraud, ask yourself whether you have detailed information about the fraud and who committed it.
Various ways to blow the whistle
There are various laws under which you may initiate a whistleblower action and be entitled to a monetary award if the government recovers money as a result of your information. Three of those laws are:
- The False Claims Act allows private individuals to reveal fraudulent conduct by filing a lawsuit on behalf of the government. Through counsel, whistleblowers may file a “qui tam” lawsuit on behalf of the government and are entitled to receive 15-30% of the proceeds the government recovers. The False Claims Act has particular requirements and procedures which must be followed carefully.
- The SEC Whistleblower Program allows individuals with detailed information on fraud by banks, hedge funds or other financial entities to file claims. If a person provides the SEC with original information concerning financial fraud that leads to a recovery of more than $1 million, the person can receive an award of 10-30% of the amount collected.
- The IRS Whistleblower Program rewards individuals who report major tax evasion by businesses or individuals. If the IRS collects $2 million or more as a result of the information provided, the individual may receive an award of 15-30% of the amount collected.
Your knowledge and information are valuable – don’t discuss your potential case
Be careful not to discuss your potential case with anyone other than a whistleblower attorney. Public knowledge of the information can impede recovery of a reward for the whistleblower.
For purposes of a qui tam lawsuit, a whistleblower must be an original source of the information presented. “Original source” means an individual who either:
- “prior to a public disclosure . . ., has voluntarily disclosed to the Government the information on which allegations or transactions in a claim are based,” or
- “has knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions, and who has voluntarily provided the information to the Government before filing an action.”
31 U.S.C. § 3730(e)(4)(B).
The whistleblower must have information indicating that the fraud was “material” to the government’s payment decision. Just because something is immoral does not necessarily mean that it can form the basis for a fraud claim. The misconduct must have been something that would have mattered to the government.
Corroboration of your case
Knowing of fraud and proving fraud are two different things. Fraud must be pled with “particularity.” This means that the potential whistleblower needs to have specific evidence concerning the wrongdoing, not just conclusions that it happened. Evidence can include 1) descriptions of situations observed and/or conversations overheard; and 2) documents, including but not limited to: emails, text messages, or other forms of written communication; spreadsheets; meeting minutes; company handbook regulations; and other notes or written records.