Whistleblower Protection Blog

Whistleblower Protection Blog

Advocating Whistleblower Rights for over Twenty Years

Fourth Anniversary of Dodd-Frank Finds Financial Reform Under Attack From Corporate America

Posted in Corporate Whistleblowers

Today, July 21, 2014, is the fourth anniversary of the passage of the Dodd-Frank Act — the most significant financial reform law enacted since the Great Depression to combat Wall Street and financial fraud.  However, the law is under attack from Wall Street and Corporate America, and its most important provisions are in danger.

Dodd-Frank was passed in 2010 in reaction to the financial crisis and stock market fallout from the Great Recession.  The federal government had to bail out major banks and corporations, and the President and many members of Congress felt obligated to make sure it would never happened again.

Part of those reforms was to include robust protections to encourage corporate whistleblowers to report financial fraud and securities violations.  As the Dodd-Frank Act was being written, attorneys with the National Whistleblower Center worked directly with the Senate Banking Commission to ensure that whistleblowers could maintain anonymity, protect their jobs, and receive monetary rewards as an incentive for providing critical information about financial fraud to the Securities Exchange Commission.  After the Dodd-Frank Act was signed into law, attorneys with the National Whistleblower Center also met directly with every Commissioner of the Securities and Exchange Commission and submitted written comments to the SEC that greatly influenced the shape of the final whistleblower rules for the SEC’s whistleblower program. Continue Reading

Updated SEC Whistleblower Awards List, July 2014

Posted in Corporate Whistleblowers, 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

Justice Dept. Inspector General Report Once Again Validates Whistleblower’s Allegations About FBI Lab Scandal

Posted in FBI Whistleblower Blog, FBI Whistleblowers, Forensic Justice, Freedom of Information (FOIA)

But IG Recommendations Fall Far Short

Twenty. Years. Yesterday, July 16, 2014, the Justice Department Office of the Inspector General (OIG) released its third report of Federal Bureau of Investigation (FBI) Lab misconduct first alleged twenty years ago – in 1994 – by Dr. Frederic Whitehurst.

Washington Post Investigative Reporter Spencer S. Hsu, in his coverage of this latest report, summed it up by saying, “Justice Department officials have known for years that flawed forensic work might have led to the convictions of potentially innocent people, but prosecutors failed to notify defendants or their attorneys even in many cases they knew were troubled.”

To review the timeline:

In 1994 Fred Whitehurst first made his whistleblower allegations of shoddy science and manipulated evidence during court proceedings in the first World Trade bombing case and later to the Justice Dept. Inspector General.

In 1996, the Department of Justice (DOJ) set up a Task Force to investigate Dr. Whitehurst’s claims in order to determine if anyone was wrongfully convicted. At the same time, the OIG conducted its own evaluation, and issued the “1997 OIG Report” that found problems with 13 FBI Lab examiners and suggested that all of the forensic work of the criticized examiners be reviewed by the DOJ Task Force. The ensuing DOJ Task Force review was done in secret, they never issued a final report, and the FBI and DOJ later claimed that no convictions were overturned as a result of their intensive reviews.

In 1998, the FBI and DOJ agreed to settle Dr. Whitehurst’s whistleblower retaliation claims and paid him a record-breaking settlement amount of $1.16 million. [CNN, “FBI whistle-blower leaves, gets $1.16 million” (Feb. 27, 1998).]   Continue Reading

NWC joins Amicus Brief in Support of Whistleblower’s Petition for Certiorari

Posted in False Claims / Qui Tam, News

On June 26th, 2014, the National Whistleblower Center joined in an amicus brief filed in Kalyanaram v. New York Institute of Technology before the U.S. Supreme Court in support of the Petition For Writ Of Certiorari.

The issue involves whether whistleblowers can be required to reveal the fact they have filed a False Claims Act case, which is under seal, during employment litigation.  In Kalyanaram, the Second Circuit sanctioned the whistleblower because he did not reveal the existence of his FCA lawsuit during questioning at an arbitration hearing. Revealing it would have violated the FCA’s sealing provision, which is essential to ensure the confidentiality of the Government’s investigation.  The whistleblower’s employment case was dismissed with prejudice.

The Second Circuit’s decision placed the whistleblower in the position of having to pick his poison: Comply with the FCA and risk dismissal of his employment case or face sanctions that could include dismissal of his FCA claim. If the Court’s decision is allowed to stand, it will have far reaching implications for future whistleblower reward cases in which lawsuits are filed under seal as to not tip off the defendant companies.

The Amicus asked the Supreme Court to hear this case in order to clear up the confusion that exists among litigants and the lower courts regarding the circumstances under which facts relating to a qui tam suit under the FCA may be disclosed in an arbitration proceeding without violating the sealing provisions.

The National Whistleblower Center was represented pro bono by three professors of law at Indiana Tech, James J. Berles, Adam Lamparello and Charles E. MacLean.

The Amicus brief is linked here.

Intelligence Whistleblowers Should Use “Expanded Protections” With Caution

Posted in National Security, News, Uncategorized

New intelligence community whistleblower protections lacking

On July 7, 2014, President Obama signed the “Intelligence Authorization Act for Fiscal Year 2014.” This bill includes a section providing “Protection Of Intelligence Community Whistleblowers.” These protections specify that employees who divulge information about possible misconduct within their agencies to their Inspectors General or other designated intelligence offices will be protected.

Stephen M. Kohn, Executive Director of the National Whistleblowers Center released a statement urging intelligence agency whistleblowers to use these new protections with caution:

 “The whistleblower provisions passed in the Intelligence Authorization Act are a very small step forward. They are weak and essentially unenforceable. The provisions empower the President to exercise his discretion in determining the procedures to protect whistleblowers.  None of the protections mandated by the Whistleblower Protection Act (which covers other federal employees) are included. There is no provision permitting discovery or hearings, let along judicial review. The law does not ensure due process or even stipulate the remedies for which whistleblowers would be entitled if they were to miraculously prevail in a case.  The law does not provide for attorney fees to be paid to prevailing whistleblowers, who could go broke just trying to report fraud in government programs.”

 “Due to the lack of procedural protections, the law could easily morph into a bureaucratic trap leaving whistleblowers vulnerable and unemployed.  The law needs to be amended to have some teeth. In the meantime, we advise whistleblowers to use these new provisions with extreme caution, if at all.”

 It should also be noted that the new provisions do not cover intelligence agency contractors.

We Must Stop Illegal Gag Orders

Posted in Corporate Whistleblowers, False Claims / Qui Tam, News

The post below was co-authored by Stephen M. Kohn, Michael D. Kohn David K. Colapinto, partners of the law firm Kohn, Kohn and Colapinto, LLP.

 One of the most destructive tools used to silence whistleblowers are non-disclosure agreements (often found in employment contracts and severance agreements) which prohibit employees from disclosing fraud and other crimes to law enforcement agencies.  Today’s Washington Post story exemplifies the problems faced by employees in every sector of the economy who are required to sign these gag orders in order to obtain jobs or badly needed severance payments.

On March 9th, we filed a complaint with the Department of Justice and the Securities and Exchange Commission seeking to have these agencies take strong action against illegal gag orders.  The complaint, based on information provided to the government by former KBR employee Harry Barko, exposed how KBR forced its employees to sign illegal gag orders when they were disclosing fraud in government contracting to company officials.  This complaint was reported in the Washington Post on March 10th.  Since then, the SEC has initiated an investigation into these practices. Today’s Post story indicates that momentum is building to stop these practices.    Continue Reading

Three Judge Panel of the D.C. Circuit Court of Appeals Shields Evidence of KBR Contracting Fraud In Iraq War Under Attorney-Client Privilege

Posted in Corporate Whistleblowers, False Claims / Qui Tam, News, Uncategorized

Washington, D.C.  June 27, 2014. Today the D.C. Circuit court issued a decision in the case of In re: Kellogg Brown & Root, Inc., et al., finding certain reports produced during internal corporate investigations were covered under the attorney-client privilege even though the documents show employees believed there was contracting fraud taking place during the Iraq War.  The Court granted a “writ of mandamus” and reversed the lower court’s ruling that had ordered KBR’s internal review of the fraud allegations to be produced in a False Claims Act case.

The underlying case concerns a whistleblower complaint filed by a former KBR employee,  Mr. Harry Barko, on behalf of U.S. taxpayers seeking damages for KBR falsely charging the government for illegal contracting practices during the War in Iraq.  The documents in question concerned an in-house review of allegations raised by employees who observed improper contracting practices and reported fraud to KBR’s investigators.  The lower court, which had ordered the release of the documents, also ruled that these documents in question were “eye openers” and supported Mr. Barko’s claims that taxpayers were overcharged by KBR.

Mr. Stephen M. Kohn, one of Mr. Barko’s attorneys, issued the following statement:

Mr. Barko will file an appeal of this decision. The court incorrectly issued a writ of mandamus upholding KBR’s claim of privilege.  The documents at issue demonstrate illegal contracting practices and should not be kept secret from the public.  KBR obtained billions of dollars in government contracts to support the Iraq War effort.  The lower court, which reviewed the documents prior to issuing its decision, correctly held that these materials were not covered under the attorney client privilege.

We are confident that upon further appeal the position argued by KBR will be reversed. Continue Reading

House Panel Investigates Alleged Interference with Whistleblower’s Testimony

Posted in Government Whistleblowers, News

The Washington Examiner reports that Rep. Patrick McHenry, R-N.C., will investigate whether  a letter to the House Financial Services subcommittee constituted interference with congressional oversight or an attempt to intimidate future witnesses appearing before the panel. The letter that sparked the investigation came from John Dowd, a criminal defense lawyer representing Liza Strong, the Consumer Financial Protection Bureau’s employment services chief and requested that a whistleblower’s testimony be stricken from the record.

Ali Naraghi, the CFPB whistleblower in question, delivered his opening statement despite Dowd’s objection. The whistleblower currently is an examiner in CFPB’s southeast region.

Read the Washington Examiner’s full article here:

House panel to probe CFPB executive’s attempt to strike whistleblower’s testimony from official record

Senators Demand Answers on Surveillance of Whistleblower Communications with Congress

Posted in News

Senators Chuck Grassley and Ron Wyden issued the following press statement today in regard to the National Intelligence Agency’s plans to implement continuous monitoring of security clearance holders and it’s impact on whistleblowers who communicate with members of Congress:

Grassley, Wyden Press for Answers on Continuous Monitoring of
Whistleblower and Legislative Branch Communications

            WASHINGTON – Senators Chuck Grassley and Ron Wyden are pressing the Director of National Intelligence to explain in detail how the intelligence community plans to implement continuous monitoring of security clearance holders without undermining legal protections for whistleblowers or constitutional protections for the separation of powers between the executive and legislative branch.

In a letter to Director of National Intelligence James Clapper, Grassley and Wyden noted that any monitoring within the executive branch must preserve the rights and confidentiality of whistleblowers when making protected disclosures to Congress or Inspectors General.

The senators wrote, “If whistleblower communications with Inspectors General or with Congress are routinely monitored and conveyed to agency leadership, it would defeat the ability to make protected disclosures confidentially, which is especially important in an intelligence community context.  Truly meaningful whistleblower protections need to include the option of a legitimate channel for confidential disclosures.  Inspectors General and Congress provide such an option.  However, if potential whistleblowers believe that disclosing waste, fraud or abuse means putting a target on their backs for retaliation, they will be intimidated into silence.  The failure to provide such protected alternatives could result in whistleblowers choosing to make unprotected disclosures in public forums, with potential negative consequences for national security.” Continue Reading

Supreme Court Issues Decision On Key Whistleblower Rights Case

Posted in News

Ruling Protecting Testimony Before Federal Grand Juries Will
Have Widespread Impact On Fraud Investigations

Washington, D.C. June 19, 2014. Today, the U.S. Supreme Court issued a landmark whistleblower decision in the case of Lane v. Franks.  The Court held that truthful testimony before a federal Grand Jury is “clearly” protected speech under the First Amendment.

The Supreme Court in an unanimous decision recognized the “importance” of protecting speech when “public corruption” is at issue, acknowledging that corruption cases “often require testimony” from government employees willing to blow the whistle on their managers. Demonstrating an awareness of the dilemma facing employees who witness fraud, the Court held that the failure to protect whistleblowers from retaliation “would place public employees who witness corruption in an impossible position, torn between the obligation to testify truthfully and the desire to avoid retaliation and keep their jobs.” 

In a statement issued today, Stephen Kohn, Executive Director of the National Whistleblower Center, said:  “Given the widespread use of Grand Jury proceedings to investigate securities, banking and tax fraud, today’s ruling will have widespread impact.  It will have a direct and major impact on the willingness of public employees to expose corruption in government.”

“The right of every American citizen to truthfully testify about criminal activities, including fraud in government contracting, is a cornerstone to a democracy.  Criminals – even if they are high-ranking elected officials or billionaire bankers, cannot retaliate against any person who truthfully testifies about their crimes,” Kohn said.

“Retaliating against whistleblowers who provide truthful information about potential federal crimes to federal law enforcement is already an obstruction of justice.  The Supreme Court has clarified that it is also unconstitutional.  This ruling gives a green light to all public employees who have information concerning official corruption and fraud, and want to expose these crimes,” Kohn added.

In its amicus brief before the Supreme Court, the National Whistleblower Center cited to Supreme Court cases from 1884 and 1895, and pointed out that the Court had historically protected a citizen’s “duty and right” to testify in criminal proceedings.

Links:

Brief of the National Whistleblower Center

Supreme Court Decision