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

The Fourth Circuit U.S. Court of Appeals in Richmond, Virginia, issued an opinion yesterday that denies protection to employees who file retaliation claims under the False Claims Act (FCA). The three judges ignored the friend-of-the-court brief I submitted that argued how the plain language of the FCA protects all employees who file claims, including claims of retaliation, and how it is in the public interest to protect such whistleblowers.

Jason Mann began working for Heckler & Koch Defense, Inc. (HKD), in 2007 as Manager for Law Enforcement Sales. In 2008, HKD submitted a bid to sell rifles to the Secret Service. The job order called for rifles with "ambilevers" that would allow them to by used by right-handed or left-handed agents. HKD, however, did not have ambilevers, but submitted its bid anyway. HKD rifles also lacked a two-stage trigger. HKD stood to make over 30% profit on the sales. Mann expressed concern about the defects to his supervisor, and began investigating the issue. HKD's general counsel then announced that Mann should not expect to continue working for HKD. HKD's CEO ordered all personnel not to cooperate with Mann's investigation. Mann was placed on administrative leave, denied access to the building, and lost access to his email. HKD's own investigation found that management had violated federal acquisition rules. On June 11, 2008, Mann filed a complaint in federal court alleging that HKD engaged in retaliation against him in violation of the FCA. The Secret Service rejected HKD's bid. On July 17, 2008, HKD claimed that Mann had helped a small police department acquire machine guns. It fired Mann using the machine gun issue as its basis.

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The Wall Street Journal is reporting today on the hurdles that whistleblowers face when they provide tips about financial fraud to the Securities and Exchange Commission (SEC) and Commodities Futures Trading Commission (CFTC) under the Dodd-Frank Wall Street Reform and Consumer Protection Act. Called "Whistleblower Bounties Pose Challenges," the article says that, "collecting the bounty could be a challenge." According to the article, the SEC is predicting that it will get 30,000 whistleblower tips each year, and half of them could lead to claims for rewards. The mismatch between the number of reports to process and the funding provided to investigate them could lead the SEC to ignore many valuable tips, just as it ignored the tips about Bernie Madoff's scheme.

The article notes how the IRS has had a bounty program for four years, but has yet to pay the first penny of any reward. Of the 5,678 tips the IRS received last year, 460 appear to qualify.  "It's time to start moving," Stephen Kohn, told the Journal. He is Executive Director of the National Whistleblowers Center and a lawyer representing Bradley Birkenfeld. The Journal explains the Brad Birkenfeld case as follows:

Mr. Birkenfeld tipped off the IRS about the tax fraud that led to last year's agreement by UBS to pay $780 million to the U.S. government and hand over names of suspected tax cheats. Mr. Kohn said his client deserves between 15% and 30% of the $580 million recovered by the IRS. ($200 million went to the SEC.) According to Mr. Kohn, Mr. Birkenfeld also is entitled to a percentage of the money recovered from individuals as a result of his whistleblowing, though the final tally on that amount isn't known.

Dean Zerbe is special counsel at the National Whistleblowers Center. He told the Journal that before a federal law increased the size of IRS awards, the agency got just a "handful of legitimate claims" every year. "The new scheme has already proved a huge success in terms of producing very good information." More information about the Birkenfeld case is available here.

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