Whistleblower Protection Blog : Whistleblower Lawyer & Attorney : National Whistleblower Legal Defense and Education Fund : Whistleblower Protection, Fraud Claims : Washington DC

Our work for whistleblowers benefits indispensably from the work of generous and dedicated interns. Here is our intern class for the Spring semester of 2012.  Standing are Dasha, Kelly, Lauren, Jerry, James and Nicole. Seated are Chris, Kara, Nora and Monique.  Thank you all.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Corporate criminals rejoice. The Grimm Act packs seven deadly punches for whistleblowers. This law would make it more difficult for employees to report Wall Street corruption, Ponzi schemes, and other fraud – not easier. What happened to Congress fighting fraud?

The leadership in the House of Representatives is positioning the Grimm Act (H.R. 2483) to move quickly through Congress. It’s a license to steal for Wall Street and big corporations. Here’s how:

1. Gag Orders Legalized

The Grimm Act permits companies to enforce, “any established employment agreements, workplace policies, or codes of conduct,” regardless of the impact on the right of an employee to report corporate crimes. This means that companies can force employees to sign agreements forfeiting their whistleblower rights.

2. Workplace Retaliation Legalized

“Any adverse action taken against a whistleblower for any violation of such agreements, policies, or codes shall not constitute retaliation.” It looks like retaliation, smells like retaliation, but it’s not retaliation. (Emphasis added to the bill text.)

3. Law Enforcement Crippled

The Grimm Act requires the SEC to, “promptly notify any entity that is to be subject to [an investigation]” before beginning an investigation. Tipping off companies suspected of violating the law allows the corporations to intimidate witnesses and tamper with evidence before the investigation begins.

4. Whistleblower Anonymity Destroyed

The Grimm Act allows, and in most cases requires, the SEC to, “disclose to the employer’s audit committee such information provided by the whistleblower.” This means that the SEC would not only be unable to guarantee confidentiality, but it would be required to turn whistleblowers over to the very corporations accused of wrongdoing.

5. Corporate Accountability Minimized

The Dodd-Frank Act provides incentives for companies to self-report violations, including reduced fines and penalties. The Grimm Act creates a gaping loophole, allowing companies to claim they self-reported even when a whistleblower makes a report to the SEC. This applies even if the company initially covered up problems and retaliated against the whistleblower.

6. Most Whistleblowers Disqualified

People found guilty of fraud are reasonably excluded from obtaining the benefits of the new SEC whistleblower program. However, the Grimm Act disqualifies employees who in any way “participated in” a violation. This subtle-but-deliberate disqualification in the Grimm Act would cut out the vast majority of whistleblowers from protection, as almost every whistleblower “participates” in the violations they uncover. Think of all the low- and mid-level employee¬s, such as secretaries who take phone calls and clerks who make photocopies. These people are “participating” in violations, and are therefore disqualified from the whistleblower program.

7. Awards Program Broken

The Grimm Act makes whistleblower awards discretionary, returning the SEC whistleblower program to its pre-Dodd Frank Act status. That version of the program was completely discredited by a 2010 report by the SEC Inspector General. The report showed that the SEC helped only five people and awarded only $159,537 during 20 years of operating a discretionary program. The report lamented that the discretionary program was, “not fundamentally well-designed to be successful,” and made recommendations that were implemented by the Dodd-Frank Act. The Grimm Act turns back the clock.

---

If you want your Member of Congress to fight fraud and protect your investments, take action and ask them to oppose Wall Street’s license to steal. Share your thoughts about the Grimm Act in the comments.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Last week, the Department of Labor’s Occupational Safety and Health Administration (OSHA) ordered AirTran Airways to reinstate a whistleblower pilot and pay more than $1 million in back pay and compensation. The pilot worked at AirTran Airways which is now a subsidiary of Southwest Airlines Co. OSHA found that AirTran fired the pilot for reporting numerous concerns about mechanical safety.

On August 23, 2007 , the pilot raised concerns regarding a sudden spike in the pilot's mechanical malfunction reports (PIREPS). AirTran managers immediately removed the pilot from his flight. Managers conducted an internal investigative hearing on September 6, 2007. It lasted for only 17 minutes . A week later, the pilot was terminated. The airline’s reasoning behind this termination was that he failed to provide a satisfactory answer when asked about the spike in reports. However, OSHA’s Whistleblower Protection Program found that the pilot gave reasonable and appropriate answers to the airline’s questions and concluded that the airline’s action was indeed punitive. OSHA declared that the airline violated Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (AIR21) which provides protection for airline employees who raise safety concerns. OSHA does not release the names of whistleblowers in its press releases.

Stephen Kohn states in The Whistleblower’s Handbook that the number of whistleblowers are increasing as ordinary people realize the importance of keeping companies and government accountable for the well being of the whole society. It is important that people know that there are laws designed to protect their rights as a whistleblower and agencies like OSHA enforce various whistleblower provisions. OSHA enforces over twenty laws with whistleblower protections for employees raising environmental, transportation safety, corporate misconduct and other violations. The statutes of limitations for these laws vary from 30 days (for environmental and occupational safety and health concerns), to 90 days (for airline employees), or 180 days (for truck drivers, nuclear whistleblowers, and corporate misconduct issues under the Sarbanes-Oxley Act (SOX)).

Every day, workers must seriously think about the consequences if they do not report dangers they discover on the job. One person’s courageous act can possibly bring changes in policies and save lives.

Intern Kelly Yoon contributed to this blog entry.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

You can catch Dr. Coleman-Adebayo's lecture at the Mid-Manhattan Library on C-Span/Book TV starting tomorrow. Called No FEAR: A Whistleblowers Triumph, the lecture draws on her book, NO FEAR: A Whistleblower's Triumph Over Corruption and Retaliation at EPA.  You can read our coverage of her book signing here.

C-SPAN will air Dr. Coleman-Adebayo's lecture:

Saturday, January 21st at 9:15am (ET)
Saturday, January 21st at 4:30pm (ET)
Sunday, January 22nd at 10pm (ET)

UPDATE: Dr. Coleman-Adebayo's lecture is now available from C-SPAN online.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

California Assemblyman Anthony Portantino (pictured; D-La Cañada Flintridge) has won committee approval for his bill to give employees in the Legislature the same protections afforded to other state workers when they report waste, fraud and abuse. Assembly Bill 1378 will give legislators and their employees protection from retaliation for reporting "improper governmental activity." The bill provides criminal and civil liability for violations. In a recent amendment, the bill limits the right to pursue civil remedies to employees, not legislators themselves. The Sacramento Bee reports that Assemblyman Portantino suffered retaliation himself after we was the lone Democrat to vote against a budget bill.  The Speaker slashed the budget for his office staff. Thus, when Assemblyman Portantino agreed to the amendment to limit civil claims to employees only, he was giving up his own rights for the sake of his employees. The outcome: a committee vote on January 10 with 10 votes in favor and no opposition. Congratulations!

UPDATE:  On January 19, 2012, the Sacramento Bee reported that A.B. 1378 died in the Assembly's Appropriations Committee. The bill did not get the required motion and second required for consideration. The State Auditor said that the bill would cost about $400,000 a year, and would put the Auditor's office in the position of investigating its own "client." It is hard to see how the anti-retaliation provision would interfere with the "independence" of her office. And if the anti-retaliation provision ends up costing the State money, it would probably be a result of liability for actual retaliation -- showing that there is a problem to be addressed. It is not unheard of, though, for a bill for transparency and against corruption and retaliation, gets buried through a procedure that does not require legislators to generate a record of who voted yes and who voted no.  Hopefully, California voters will call on members of the Appropriations Committee to explain why they did not make the required motion and second to advance A.B. 1378.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

On-line activists in West Virginia have launched a whistleblower web site called Honest Appalachia.  It provides a means for whistleblowers to upload documents for public disclosure. The project’s lead developer, Garrett Robinson, told WFPL that the objective is to help local journalists get information about local issues that can help them make more useful reports about Appalachian issues. The project could benefit from the regional focus as local journalists are more likely to have the background necessary to assess the authenticity of submitted documents. Honest Appalachia is using open source software that anyone can download, and is even encouraging others to adapt and contribute to the software.  The On-Line Submission Guide has helpful information for whistleblowers who want to avoid discovery of their identities.  For example, don't access Honest Appalachia from a work computer.  It can be monitored. Other tips explain how to use a public wifi site while reducing your risk of being identified.

A better way for whistleblowers to protect themselves, however, is to consult an experienced whistleblower attorney. A whistleblower website has no legal grounds to resist a subpoena seeking information about sources. An attorney does. Attorneys have a legal duty to maintain a client's confidences, and experienced attorneys will be in the best position to advise a whistleblower about other legal protections.

Given the Appalachian focus, we can expect that published documents will address environmental, economic and racial justice issues. Other issues can arise anywhere, so I will want to keep an open mind about what Honest Appalachia might yet reveal.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Truthout reporter Jason Leopold is reporting today that the Federal Bureau of Investigation (FBI) released five pages of a PowerPoint presentation that describe a previously unknown program of "blackballing" records that would not be disclosed in response to requests under the Freedom of Information Act (FOIA). Labor historian Trevor Griffey obtained the document while following up on Manning Marable's research on Malcolm X.  Dr. Marable was a Columbia University professor who founded the Institute for Research in African-American Studies.  He died last year, and Griffey made a FOIA request to the FBI to ask for its documentation about Dr. Marable's requests about Malcolm X. An FBI analyst eventually disclosed that a search on Marable turned up a single file that was "blackballed" per the "standard operating procedure." Griffey made another request for documents about the blackballing procedure. This request produced the five pages from a PowerPoint presentation.  It says that the FBI would blackball a record if it

Would disclose techniques and procedures for law enforcement investigations or prosecutions or would disclose guidelines for law enforcement investigations or prosecutions if such disclosure could reasonably be expected to risk circumvention of the law

This text is from FOIA Exemption (b)(7)(E) [5 U.S.C. § 552(b)(7)(E)]. What is disturbing is that instead of producing a copy of the document with the classified information blacked out, the FBI was denying the existence of documents that actually do exist. The whole point of FOIA is that we can build trust and confidence in government operations through a process by which government offices share their information, with certain limited exceptions. While the government retains the right to classify certain information, or even to respond that the existence of non-existence of a document is itself classified (the so-called "Glomar response"), it undermines public confidence when it makes a false statement that no document exists. The PowerPoint pages themselves had certain portions redacted so that we in the public cannot even know all the categories of documents that are "blackballed."  Hopefully, wiser heads will soon prevail and the FBI will reform its FOIA procedures so that the public will have accurate information about when and why information is withheld.

• Email This
• Print
• Comments (1)
• Trackbacks
• Share Link

Tune in today at 1:00pm EDT to Honesty Without Fear on Progressive Radio Network.

In the first half hour, guest host Dr. Marsha Coleman-Adebayo interviews Glen Ford, Executive Editor of the Black Agenda Report and host of Black Agenda Radio, about his recent article, “Occupy Wall Street Joins Occupy The Dream: Is It Cooptation, or Growing the Movement?”

In the second segment, Marsha interviews Dr. Margaret Flowers, a Congressional Fellow for Physicians for a National Health Program and organizer of Occupy Washington, DC. Hear about the parallels between the Occupy Movement and the Civil Rights Movement championed by Dr. Martin Luther King, Jr. Would Dr. King have supported the Occupiers? Also, learn about how Occupy Washington, DC has been supporting whistleblowers with demonstrations at EPA and for PFC Bradley Manning.

You can take action to improve protections for whistleblowers by signing the petition.

Submit Your Question to be asked on air during the show or call in to 1-888-874-4888.

Missed last week's episode?? You can listen to the podcast.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

By a 3-2 vote on a major case, the Department of Labor's Administrative Review Board (ARB) has limited the application of the Sarbanes-Oxley Act (SOX) whistleblower protection outside the boundaries of the United States. The case is Villanueva v. Core Laboratories, NV, ARB No. 09-108, ALJ No. 2009-SOX-6 (ARB Dec. 22, 2011) (en banc).  The decision is particularly disappointing after the ARB had called for supplemental briefing. Stakeholders on both sides, including the National Whsitleblowers, submitted amicus briefs setting out the applicable caselaw, legislative history, and contextual effects of this important legal issue.  Unlike prior decisions that summarily dismissed any extraterritorial application of SOX's whistleblower protection (such as the Canero and Ede), this time the ARB had full briefing of the relevant considerations and the majority still resists protecting whistleblowers from other countries.

Last August, I posted to this blog a description of the Villanueva case and the amicus brief submitted by NWC and the National Employment Lawyers Association (NELA). The brief argues that SOX should protect tax whistleblower William Villanueva, even though he worked for Core Lab's subsidiary in Columbia. Core Laboratories NV is a publicly traded company based in Houston, Texas. It provides services to the petroleum industry. For 16 years, William Villanueva worked as CEO of Saybolt Columbia, Core's subsidiary. On page 3, the ARB noted that "Saybolt Colombia does not register securities under Section 12 or file reports [with the SEC]." This fact became immaterial after the ARB's well-considered decision in Johnson v. Siemens Building Technologies, ARB No. 08-032, ALJ No. 2005-SOX-0151 (ARB March 31, 2011). In Johnson, the ARB held that SOX has always protected the employees of subsidiaries of publicly traded companies.

In 2008, Villanueva sent emails to corporate executives in Houston reporting how other company executives were engaged in tax transfer schemes that falsely transferred profits to low-tax Curacao, an island in the Caribbean Sea. He also reported that Core Labs accountants in Columbia were making false claims to evade the Columbian value added tax (VAT). After Villanueva refused to sign a false tax return, Core fired him.

Villanueva filed a complaint with the Department of Labor (DOL) claiming that he was fired in retaliation for raising his concerns. He claimed that his discharge violated the 2002 SOX law. An administrative law judge (ALJ) dismissed the case without a hearing on grounds that Villanueva worked outside the U.S. Villanueva appealed to the ARB. Earlier this Summer, the ARB asked for amicus briefs on the effect of the U.S. Supreme Court's decision in Morrison v. National Australia Bank, 130 S. Ct. 2869 (2010).

On page 5, the Villanueva majority notes that the president of Saybolt Latin America (an intermediate Core subsidiary) fired Villanueva in a letter "written in Spanish[.]" While reading this phrase, I had the sense that the ARB majority was motivated not so much by the remedial purpose of SOX as by the administrative inconvenience of helping whistleblowers from different cultures. On page 29, Judge E. Cooper Brown noted the majority's concern, on page 10, about how its decisions could be enforced extraterritorially. Certainly I would agree that the Department of Labor (DOL) ALJs are overworked. To me, however, the solution should not be to limit DOL services to whistleblowers in this country, but rather to explain how the remedial purpose of SOX requires protection of whistleblowers throughout the world, and then ask Congress to authorize the hiring of the necessary ALJs and enforcement attorneys.

Earlier this week, I submitted comments to DOL's new rules for SOX cases that reflect the changes enacted in the Dodd-Frank Act.  On pages 5-6, I urged the DOL to adopted a new rule that makes clear that SOX has the same extraterritorial reach as the SEC's enforcement authority. It makes no sense that U.S. securities law would require publicly traded companies to file reports that accurately reflect the state of the entire business -- including foreign operations -- and then deny protection to employees operating within those foreign operations who raise concerns about the propriety of company operations and reports. Hopefully, DOL leadership will see this wisdom and correct this policy in their final SOX regulations.

In the continuation of this blog entry, I discuss the majority opinion's reasoning and the insights of the two dissents.  I also provide a tip for SOX practitioners with extraterritorial issues.

• Email This
• Print
• Comments
• Trackbacks
• Share Link