Whistleblower Protection Blog

Whistleblower Protection Blog

Advocating Whistleblower Rights for over Twenty Years

ARB Decision Promotes Clarity And Uniformity In Whistleblower Cases

Posted in Department of Labor, News

In a long-overdue decision issued on October 9, 2014, the Department of Labor Administrative Review Board (ARB) finally clarified the standard of proof for employees to establish the “contributing factor” test in whistleblower retaliation cases arising under the Sarbanes-Oxley Act  (SOX) and other whistleblower statutes.  In a 2-to-1 panel decision in Fordham v. Fannie Mae, ARB No. 12-061, the ARB reversed and vacated an Administrative Law Judge’s recommended decision that had improperly weighed Fannie Mae’s defenses in determining whether the employee had demonstrated her whistleblowing was a contributing factor in her termination.

The majority opinion noted that Congress had created the “contributing factor” test to lower the standard of proof needed in whistleblower cases, and that once a “contributing factor” is shown the burden of proof shifts to the employer to prove by “clear and convincing” evidence that it would have taken the same action in the absence of the employee’s whistleblowing. Continue Reading

FBI Continues Culture of Retaliation Against Whistleblowers

Posted in News

Yesterday, Senator Chuck Grassley announced that 11 whistleblowers have come forward revealing that FBI managers are now using Loss of Effectiveness orders to retaliate against FBI employees who report wrongdoing in the agency.

“Every time we bring this to the administration’s attention, more whistleblowers come forward,” Grassley said.  “These whistleblowers never have the opportunity to make their case.  It’s stereotypical treatment of whistleblowers for the executive branch.”

An FBI internal inquiry reportedly agrees that this is a problem.  According to whistleblowers, the FBI Office of Integrity and Compliance has drafted a report calling for reform and more transparency in the use of Loss of Effectiveness orders. Continue Reading

Attorney General Supports Increased Whistleblower Protections Under Federal Banking Laws FIRREA

Posted in False Claims / Qui Tam, News

New York City, New York. September 17, 2014.  In a speech delivered today at New York University School of Law, U.S. Attorney General Eric Holder publicly endorsed enlarging U.S. whistleblower reward laws to include expanded rewards under the Financial Institutions Reform, Recovery, and Enforcement Act, better known as “FIRREA.”

The Attorney General acknowledged the tremendous success of other whistleblower reward laws, explaining how incentivizing whistleblowers would “significantly improve the Justice Department’s ability to gather evidence of wrongdoing while complex financial crimes are still in progress – making it easier to complete investigations and to stop misconduct before it becomes so widespread that it foments the next crisis.”

Stephen M. Kohn, Executive Director of the National Whistleblower Center, strongly praised Holder’s proposal:

“The Attorney General is spot-on. The current whistleblower reward laws have been remarkably successful in uncovering and policing tax and securities frauds. These laws are now the most important tools in the government’s arsenal against financial crimes. Expanding whistleblower reward incentives to the banking industry is crucial for protecting investors, taxpayers and the public interest.”

“Attorney General Holder is correct is recognizing that whistleblowers are absolutely key to the detection of fraud, and without strong protections and incentives, such as those contained in the False Claims Act, the overwhelming majority of fraud will go undetected, and white collar criminals will succeed in their schemes,” Kohn added.

A copy of Attorney General Holder’s speech is linked here.

Mr. Kohn has represented whistleblowers for over 30 years, including the most important bank whistleblower in U.S. history, Mr. Bradley Birkenfeld. Birkenfeld’s disclosures concerning illegal Swiss banking practices have resulted in over $5 billion dollars in recoveries for the U.S. taxpayers.

Mr. Kohn is available for comment, contact mjw@whistleblowers.org for details.

Recent SEC Whistleblower Awards

Posted in Corporate Whistleblowers

Compliance Professional Awarded $300,000 by SEC

Whistleblower Came to SEC After Reporting Fraud Internally and Company Failed to Take Action

On August 29, 2014, The Securities and Exchange Commission announced a whistleblower award of more than $300,000 to a company employee who performed audit and compliance functions and reported wrongdoing to the SEC after the company failed to take action when the employee reported it internally.

It’s the first award for a whistleblower with an audit or compliance function at a company.

“Individuals who perform internal audit, compliance, and legal functions for companies are on the front lines in the battle against fraud and corruption.  They often are privy to the very kinds of specific, timely, and credible information that can prevent an imminent fraud or stop an ongoing one,” said Sean McKessy, Chief of the SEC’s Office of the Whistleblower.  “These individuals may be eligible for an SEC whistleblower award if their companies fail to take appropriate, timely action on information they first reported internally.”

This particular whistleblower award recipient reported concerns of wrongdoing to appropriate personnel within the company, including a supervisor.  But when the company took no action on the information within 120 days, the whistleblower reported the same information to the SEC.  The information provided by the whistleblower led directly to an SEC enforcement action.

SEC Waives Eligibility Requirement for Whistleblower, Awards $400,000

Company Failed to Address Fraud Internally

On July 31, 2014, the Securities and Exchange Commission announced an award of more than $400,000 for a whistleblower who reported a fraud to the SEC after the company failed to address the issue internally.

The whistleblower’s claim for an award was denied in the Preliminary Determination because the information did not appear to have been “voluntarily” provided within the definition of Rule 21F-4(a)(ii). However, the agency later determined that based on the relevant events, which it considered to be “materially significant extenuating circumstances,” a waiver to be “appropriate in the public interest and consistent with the protection of investors.

This whistleblower provided the agency with specific, timely, and credible information that allowed for a more rapid investigation than otherwise would have been possible.  The whistleblower had tried on several occasions and through several mechanisms to have the matter addressed internally at the company.

“The whistleblower did everything feasible to correct the issue internally.  When it became apparent that the company would not address the issue, the whistleblower came to the SEC in a final effort to correct the fraud and prevent investors from being harmed,” said Sean McKessy, chief of the SEC’s Office of the Whistleblower.  “This award recognizes the significance of the information that the whistleblower provided us and the balanced efforts made by the whistleblower to protect investors and report the violation internally.”

The SEC’s whistleblower program rewards high-quality, original information that results in an SEC enforcement action with sanctions exceeding $1 million.  Whistleblower awards can range from 10 percent to 30 percent of the money collected in a case.  By law, the SEC must protect the confidentiality of whistleblowers and cannot disclose any information that might directly or indirectly reveal a whistleblower’s identity.

SEC Whistleblower Awards List August 2014

Posted in News

The SEC Office of the Whistleblower post Notices of Covered Action where a final judgment or order, by itself or together with other prior judgments or orders in the same action issued after July 21, 2010, results in monetary sanctions exceeding $1 million.Subject to the Final Rules, individuals who voluntarily provided the Commission with original information after July 21, 2010 that led to the successful enforcement of a covered action listed below are eligible to apply for a whistleblower award.Once a Notice of Covered Action is posted, individuals have 90 calendar days to apply for an award.

View the updated list below: Continue Reading

IRS Whistleblower Office News

Posted in Tax Whistleblowers

IRS Commissioner John Koskinen issued an August 2014 policy statement expressing his strong support for the work the IRS Whistleblower Office.  We hope that the IRS will act in conformance with this policy statement and aggressively support whistleblowers.

The full text of this policy statement is linked here.

On August 20, 2014,  the IRS Deputy Commissioner for Services and Enforcement, John Dalrymple, released a memo in which he shared the results of a comprehensive review of the IRS Whistleblower Office operating guidelines. The purpose of the review was to improve the timeliness and quality of decisions as the Service evaluates and acts on whistleblower information.  Continue Reading

WMATA Pays $5.6 Million to Settle False Claims Act and Whistleblower Retaliation Suits

Posted in News

Washington, D.C. August 20, 2014.  The Washington Area Metropolitan Transit Authority (WMATA) has paid $5.6 million to the United States, the District of Columbia, and Shahiq Khwaja to resolve whistleblower claims brought by Mr. Khwaja under the federal and District of Columbia False Claims Acts, and under the anti-retaliation provisions of the American Recovery and Reinvestment Act of 2009, among other laws.

Attorneys for Mr. Khwaja, David Colapinto of Kohn, Kohn & Colapinto, LLP and Geoffrey H. Simpson of Webster & Fredrickson, PLLC, view the settlement as a vindication for Mr. Khwaja, who brought suit in the United States District Court for the District of Columbia and filed an administrative complaint in the Department of Transportation in 2012.

David Colapinto, one of Mr. Khawaja’s attorneys said: “In this case, Mr. Khwaja tried to correct False Claims Act violations at WMATA before they occurred to save the taxpayers money, but he was retaliated against and fired for blowing the whistle internally. The government would not have recovered these funds on behalf of the taxpayers without Mr. Khwaja stepping forward. This settlement demonstrates that the False Claims Act is the most effective whistleblower law by restoring money to taxpayers and by protecting employees who report False Claims Act violations.”

According to Geoffrey Simpson, another of Mr. Khwaja’s attorneys, “this settlement is testament to Mr. Khwaja’s courage. Mr. Khwaja spoke out while employed by WMATA and continued to blow the whistle internally even in the face of resistance and hostility from his superiors. Without his fortitude, these claims would never have come to light.”

Related Link: DOJ Press Release

For Information Contact-
David Colapinto (202) 342-6980
Geoffrey Simpson (202) 659-8510

Senators Seek Release of FBI Whistleblower Report

Posted in Government Whistleblowers

On Tuesday, August 12, 2014, Senators Charles Grassley and Ron Wyden sent a letter to President Obama pressing him to release a report on effectiveness of the Federal Bureau of Investigation (FBI) regulations for protecting whistleblowers.  President Obama requested the report from the Attorney General almost two years ago.  The report “Protecting Whistleblowers with Access to Classified Information,” is 14-months overdue.  The Senators learned that the report was delivered to the President on June 2, 2014. Their letter stresses the importance of the Attorney General’s findings to Congress as they consider “any legislation related to this topic.”

“The FBI has a history of whistleblower retaliation, often shunning whistleblowers to basement offices without cause and giving them little or no work,” Grassley said in a press release Tuesday.  “It’s disturbing to see the trend continue in the most recent allegations of a new retaliation method called Loss of Effectiveness orders being used against whistleblowers at the agency.  The mentality at the FBI has to change if waste, fraud and abuse are ever to be rooted out of the agency.”

“Whistleblowers play a critical role in holding the government and its employees accountable,” Wyden added. “The FBI has had special rules for its own employees for decades that desperately need to be updated. It’s important for the Justice Department to explain whether they will fix this on their own, or if Congress needs to step in.”

Links:
Senator’s Letter to President
Previous post on FBI Whistleblowers

Video Interview: Reflecting on Dodd-Frank at Four Years Old, with LXBN TV

Posted in Corporate Whistleblowers

Following up on my recent post on the matter, I had the opportunity to discuss the Dodd-Frank Act with Colin O’Keefe of LXBN. In the brief interview, I share my thoughts on the impact of Dodd-Frank Act just past its four year anniversary and explain why financial reform is still very much under attack.

Whistleblowers Recover $98.15 Million for U. S. Taxpayers

Posted in False Claims / Qui Tam, News

Yesterday, the Justice Department announced that Community Health Systems, Inc., the nation’s largest operator of acute care hospitals, has agreed to pay $98.15 to settle multiple lawsuits against it filed under the False Claims Act. Nine whistleblowers stepped forward to report “a deliberate corporate-driven scheme” to bilk the U.S. taxpayers of millions of dollars.

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $20.2 billion through False Claims Act cases, with more than $14 billion of that amount recovered in cases involving fraud against federal health care programs.

For more information on this settlement see the DOJ Press Release.