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

President Obama recently nominated Robert E. O’Neill to serve as U.S. attorney for Florida’s Middle District, one of the country’s busiest regions. The nomination will be reviewed by the Senate Judiciary Committee in the coming months and will need to be approved by a vote of the full Senate. However, there are questions regarding his nomination based on O’Neill’s alleged involvement with whistleblower retaliation.

Between 1999 and 2003, O’Neill was former federal prosecutor Jeffrey J. Del Fuoco’s supervisor. Del Fuoco was in charge of investigating a corrupt Manatee County, Florida sheriff, Charles B. “Charlie” Wells, and an elite group of his deputies known as the Delta Squad. Then Assistant U.S. Attorney O’Neill gave Del Fuoco a glowing review, stating he “was able to demonstrate the legitimacy of the investigation and the fact that the corruption was rampant.”

 

The street crime-fighting record of Sheriff Wells was praised, but there were a number of allegations over the years that he mixed public and private business. Sheriff Wells was an advisor to Florida governor Jeb Bush. When George W. Bush appointed a new U.S. attorney, Paul I. Perez, Wells met with Perez to express his “opinion that Mr. Del Fuoco needed to be closely supervised.” According to the St. Petersburg Times “given the history of investigation into the Sheriff’s Office, Perez’s visit put him in a position where it could have appeared he was being influenced by Wells, an expert on legal ethics says.”

In 2002, Del Fuoco was still working on the sheriff’s case, but was spending most of his time investigating corrupt police officers in another city. So, when he discovered a black vehicle watching his home he assumed that it was as a result of that case. However, it was quickly discovered that a Manatee sheriff’s employee had run Del Fuoco’s tag numbers through the Florida Crime Information Center (FCIC) computer in order to get his home address and other personal information. Del Fuoco, concerned for his family, repeated asked Perez for protection, but received nothing for those efforts.

Out of frustration that the DOJ had done nothing to protect his family, Del Fuoco filed a lawsuit against the Sheriff and some of his employees for illegally accessing law enforcement data to retaliate against him for prosecuting Delta Squad members. The lawsuit “ helped poison Del Fuoco’s relations with supervisors, who felt he had acted rashly.” Del Fuoco’s lawsuit also helped spur more allegations involving the Manatee Sheriff’s Office to be reported to the U.S. Attorney’s Office. However, in May 2003, Del Fuoco was transferred from the criminal to civil division, all contemporaneous with filing a lawful complaint of whistleblower retaliation with the U.S. Office of Special Counsel (OSC). Del Fuoco considered his demotion to be in retaliation for filing the lawsuit against the politically connected sheriff. In fact, shortly after Del Fuoco was removed from the investigation into Sheriff Wells the investigation of Wells was dropped and the investigators were told that since Wells “swings a big bat,” there “would be no further investigations targeting him.” Del Fuoco resigned his position at the DOJ in August 2005.

Please click here to read a letter dated April 26, 2004 from Attorney Stephen M. Kohn to former Attorney General John Ashcroft detailing the improper and illegal harassment suffered by Mr. Del Fuoco and his family.

The National Whistleblowers Center hopes that the Senate Judiciary Committee conducts a full investigation into whether or not nominee Robert E. O’Neill retaliated against whistleblower Jeffery J. Del Fuoco for having the guts to stand up to a corrupt, politically connected sheriff. If the committee concludes that O’Neill illegally retaliated against a whistleblower, then they should not approve of his nomination.

Related Articles:

“Robert O’Neill nominated for U.S. attorney” St. Petersburg Times, June 9, 2010

“Was Manatee sheriff a target of prosecution or persecution?” St. Petersburg Times, March 29, 2008

“Former Manatee County sheriff merits closer scrutiny” St. Petersburg Times, April 4, 2008

April 26, 2004 letter from Attorney Stephen M. Kohn to former Attorney General John Ashcroft

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The Swiss parliament finally approved the deal made between UBS and the U.S. government that requires UBS to turn over the names of 4,450 U.S. citizens who held accounts at the Swiss bank. The NWC issued the following release:

 

The agreement with UBS was only for a small portion of the names of tax cheats and the fine was a drop in the bucket compared to the entire $20 billion dollar illegal program.  In order to overcome the damage done by the Department of Justice's prosecution of the whistleblower, Bradley Birkenfeld, the IRS and President Obama should follow the intent of the law and issue Mr. Birkenfeld his reward and immediately commute his prison sentence."

 

Stephen M. Kohn, Executive Director of the National Whistleblowers Center and attorney for Bradley Birkenfeld, said:

 

"Bradley Birkenfeld is the most important fraud whistleblower in American history resulting in one of the largest collections ever, but the deal cut with UBS permits the majority of violators to get off scot-free.  The message from the Birkenfeld case should have been: if you illegally shelter the money you will get caught, if you turn in fraud you will be rewarded. Instead, the message being sent by the Justice Department and UBS is clear: if you get caught your wrist will be mildly slapped, if you turn it the fraud you will go to jail."

 

Dean Zerbe, co-counsel for Mr. Birkenfeld said, "Getting the swiss to agree to release the names is taking more dance steps then Fred Astaire. Clearly going forward the answer has to be for the IRS to work with whistleblowers and the information they provide and not wait for the swiss to finish their tap dancing."

The National Whistleblowers Center urges all members of the public to send letters in support of Mr. Birkenfeld's clemency petition, which is pending before the Pardon Attorney.

 

Links:

 

Clemency Campaign Action Alert

"Swiss Parliament Backs UBS Pact" Wall Street Journal

 

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Attorneys for the NWC submitted a letter to Attorney General Eric Holder calling for an investigation of BP and the entire oil industry, including contractors and subcontractors, for fraud committed against the U.S. government. The letter explains that the False Claims Act, the most powerful law available to deter fraud and enforce federal regulations, is the best legal to available to the Department of Justice to hold BP accountable for the full extent of their actions.

The letter outlines a number of the misrepresentations BP made to obtain authorization to drill at the Deepwater Horizon rig, and explains, "while the purpose of the False Claims Act is not to protect the environment per se, it is applicable in this case because it is intended to ensure honesty and openness when companies do business with and obtain benefits from the United States, such as a lease." (Read the full letter here).

This is a topic we have written about before, and we continue to advocate for whistleblower protections for oil industry employees. Members of the public can take action by sending letters to Congress supporting best practice whistleblower policies. Employees looking for legal advice can contact the Attorney Referral Service of the National Whistleblower Legal Defense & Education Fund.

The NWC press release is available here.

*Meryl Grenadier (NWC Fellow) drafted this post.

 

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*This post was drafted by Meryl Grenadier (NWC fellow)

In the past 24 hours there have been significant developments in the case of UBS whistleblower Bradley Birkenfeld. Three years ago, the former UBS banker provided the U.S. government with detailed information on how to identify the names of 19,000 American citizens who held illegal secret bank accounts at UBS bank in Switzerland (read the letter from Mr. Birkenfeld's attorneys outlining this information here). He reported the largest tax fraud scheme in history, and for the first time there was a crack in the vault of Swiss bank secrecy.

Bradley Birkenfeld also warned that Swiss politicians would do everything in their power to protect Swiss bank secrecy and block the release of UBS client information. This prediction became reality yesterday when the Federal Assembly of the Swiss parliament rejected a part of the deferred prosecution agreement between UBS and the U.S. Department of Justice. This part of the agreement requires UBS to turn over the names of 4,450 American tax criminals by August 20 of this year, a small fraction of the 19,000 clients.

In response to the vote, Senator Charles Grassley sent a letter to the U.S. government, expressing his outrage at the mishandling of information provided by Mr. Birkenfeld and the misguided reliance on the Swiss government for UBS USA information. Senator Grassley wrote (read the full letter here):

I am worried that the Internal Revenue Service ("IRS") is doing next to nothing to identify tax evasion by U.S. taxpayers utilizing these accounts while waiting for ratification of the treaty.

It seems this information [provided by Mr. Birkenfeld] would allow the IRS to trace individuals in the U.S. that had UBS bank accounts…  Using this information to identify U.S. clients would appear to be more productive than simply pursuing agreements and treaties with the Swiss, especially since those avenues seem limited to specific individuals. 

Today's vote in Switzerland only underscores the need for the IRS to encourage whistleblowers to come forward.  Mr. Birkenfeld blew the whistle on just one bank. What is the IRS doing to encourage more whistleblowers to come forward about offshore bank accounts?

As we have written before, the U.S. Justice Department admitted in court proceedings that "but for Mr. Birkenfeld" the illegal $20 billion tax evasion "scheme" by the Swiss banking giant UBS "would not have been discovered by the U.S. government."  Despite his historic contribution toward enforcement of tax laws, Mr. Birkenfeld remains the only banker prosecuted and incarcerated by the U.S. government.

The U.S. Senate estimates that $5-7 trillion in tax revenue is lost in undeclared offshore bank accounts. There must be consistent policies regarding the treatment and encouragement of whistleblowers throughout the U.S. government. It is our hope that Senator Grassley’s letter will encourage a full evaluation of how Mr. Birkenfeld’s information was used (or misused), the prosecution of the high-level UBS officials who initiated and planned the $20 billion tax evasion scheme, and justice for all honest American taxpayers.

It remains imperative that those who support whistleblowers, accountability and transparency continue to send letters in support of Mr. Birkenfeld’s clemency campaign. His prison sentence continues to have a chilling effect on all international bankers who posses similar information.

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In its March issue, Harpers Magazine challenges the official and widely reported story that three prisoners being held in Guantánamo Bay committed suicide in an act of “asymmetrical warfare.”  The article, written by Scott Horton, is based largely on observations of whistleblower Joe Hickman, the highly decorated Staff Sergeant who was on duty as the guard for Camp America’s exterior security force the night the “suicides” occurred. Horton uses Hickman’s disclosures to clearly demonstrate that the official report is false.

Some major findings from the article include:
 

• The three detainees were taken to a black site referred to as “Camp No,” which, according to the article, soldiers believe is operated by the CIA. Later that night, the same white van that was used to transport prisoners to “Camp No,” returned to Camp America and went directly to the medical clinic.
   
• Well before the time official reports state that the prisoners were found in their cells, accounts spread throughout Camp America that three prisoners had died by “choking on cloth.” The following morning, the camp’s commanding officer told a gathering of personnel that “we all know” that the prisoners died by choking on cloth, but an official account would be released saying that they had committed suicide by hanging themselves. All present were ordered not to contradict or undermine the official account in any way.
   
• The story then traces a cover-up of the deaths involving many different agencies of the federal government—including the Justice Department—that has continued for three and a half years, and has continued into the Obama Administration.

The NWC supports whistleblower Joe Hickman for trying to bring the truth to light. Whistleblowers would agree with Sergeant Hickman that “silence was just wrong.” Please read the full Harpers article for the rest of this incredible story.


*Meryl Grenadier (NWC fellow) contributed to this posting.

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On Tuesday the National Whistleblowers Center (NWC) released a statement inviting the press to the deposition of Ms. Sibel Edmonds.  The Ohio Elections Commission then made it clear that the deposition must be closed to the press. However, the proceedings will eventually be available on video. In addition, Ms. Edmonds and her attorneys will be available outside of the NWC for comment before and after the deposition. The NWC is located at 3238 P St. NW, Washington, DC 20007.
We apologize for any inconvenience.

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Yesterday, I blogged about a pending multi-million dollar False Claims Act (FCA) lawsuit agains Pharm giant Wyeth. Today's news brings another example of how the FCA can be used to bring gross misconduct to light. This case, involving a western Pennsylvania psychiatric institution has settled for far less money than many of the more highly publicized FCA cases, but the shocking allegations are what really caught my attention.

The whistleblower in this case, Dr. Stefan Kruszewski, was a psychiatrist reviewing records of the Southwood Psychiatric Hospital. Southwood is a private facility that houses over 100 juvenile boys who are wards of the state. For the care of these kids, Southwood is paid through state and federal contracts. Dr. Kruszewski reported that Southwood, in order to inflate their government payments, "...held juveniles who did not require hospitalization, prescribed and administered unnecessary medication to increase government reimbursements, and billed the government for care that was not provided." (Pittsburgh Tribune Review)

The Department of Justice has settled this lawsuit and Southwood is paying $150,000 and is being forced to make necessary changes to raise its standard of care and clean up its act. Under the settlement, Southwood is not admitting any wrongdoing, but it is unthinkable that a hospital would take advantage of, indeed abuse,  vulnerable young children in order to make a quick buck off of the taxpayers. The story also shows how valuable the False Claims Act can be in bringing to light all kinds of misconduct when government money is involved. Congress should continue to work to pass current legislation which is designed to strengthen the FCA.

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Did you know that whistleblowers reporting under the False Claims Act have accounted for over $1 Billion in recovered federal and state taxpayer dollars this (fiscal) year alone?  This Marketwatch.com article details the biggest fraud recoveries in '08, including hundreds of millions of dollars from companies such as Amerigroup, Merck, Bechtel, CVS, and Pratt & Whitney. 

Despite these results, the False Claims Act (a civil war-era law that was last amended in 1986) is in need of some retooling. Senators Grassley and Leahy are pushing an amendment package (Bill # S. 2041) that would close the loopholes created by destructive Supreme Court decisions, such as Allison Engine Co. v. U.S. . this legislation should be enacted immediately. Further, because we know that the DOJ is letting hundreds of FCA cases languish without investigation, the DOJ needs to hire more civil fraud attorneys and focus more resources on ferreting out government contractor fraud.

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If you do the math on a Washington Post story yesterday it turns out the paper reported on what amounts to 225 scandals.

The Justice Department told the Post there is a backlog of approximately 900 False Claims Act cases, and that the backlog could take years to unclog. Obviously the time involved can damage the ability to pursue even the most meritorious cases. Justice also told the Post that they reject about 75% of all filed FCA cases, and most of those have little merit. I would bet that quite a few of the cases rejected have some merit but why quibble over that? If there are 900 cases in the system and a quarter represent cases that should be pursued, that means there are 225 good cases of fraud stuck in a black hole. That means we have not one scandal but as many as 225 scandals, because each such case deserves priority treatment the Justice Department simply does not have the resources to handle. These 225 cases have to be relatively big and they likely involve major contractors who can continue to commit fraud against the United States. Of the remaining 675 in which the Justice Department may investigate and see no merit, the inability to kick them back to private attorneys quickly does not help.

Private Attorneys would at least like to clear their own backlog but they would also like the chance to pursue some of those cases. Justice may have legitimate reasons not to pursue a case a private attorney might take a chance on, but if the case waited three years for an initial determination very few whistleblowers will still have the resources, time and ability to continue the fight even if they are right.

But the fact is, according to Justice there must be at least 225 cases that have merit. How can we let this continue? We know. We know by Justice's own procedures that there must be some 225 cases of major fraud and nobody can even get to deal with them. That's a pandemic of fraud and we are not fighting the disease. Within those 225 cases that means, important safety concerns and governmental functions are being undermined by unscrupulous contractors. The contractors who profit from fraud gain a competitive advantage and push out honest contractors who want to do good work. Fraud is very profitable and if you can get away with it provides a great competitive advantage. Right now you can get away with it.

These aren't small cases. Nobody takes the trouble to file a False Claims Act case these days if they can't find at least millions in damages because by the time the Relator gets their share, it does not leave much for what now appears to be years and years of legal work. Billions of dollars of fraud are lost this way. The whole point of the FCA is to punish and deter fraud. How do you deter fraudulent activity when it is clear to everybody that the Justice Department does not have the people power to stop it?

At least some of the fraud must compromise vital government activity. More and more contracts are being used to do what we used to think of as inherently governmental functions. The very mail room in the Justice Department where these cases arrive is run by a private contractor now. Its scary to think about how dependent national security is on private contractors who can commit fraud in this environment. It is also hard to think of anything that corrodes our basic faith in government more readily than the extensive nature of this fraudulent activity.

The Post story blew the whistle (if you will pardon the expression) on the problem, but who are we to blame? Certainly not the career Justice lawyers who are overworked beyond reason. Assistant United States Attorneys working on False Claims Cases have dockets of 60 cases. Open the file on each case and look at it and a whole week is gone. Main Justice has only 75 lawyers they can assign to these cases. The people trying to deal with these cases want to investigate the cases responsibly and they want to win even in a judicial environment hostile to whistleblowers. There are simply not enough attorneys and investigators to go around.

Justice has approximately the same number of attorneys working on these cases that they did in the early 1990s when far fewer cases were brought, far less government functions were handled by private contractors and when the kinds of cases were not generally as complicated or big. How do you investigate a fraud, which may have occurred in Afghanistan or Iraq? How does the same lawyer become an expert on Medicare regulations AND Defense contract procedures overnight?

Here's a starting suggestion. Hire all the lawyers. There has never been a better time. The only area of law experiencing growth right now besides fraud is bankruptcy, so there should be plenty of attorneys looking for work. I don't care if the Justice Department has to appoint special attorneys general to investigate one case or if they want to just take the first 750 resumes that come across the door, we have to do something. There are private law firms that have that many attorneys. Why is it so outrageous for the federal government to hire enough attorneys and investigators to deal with a serious issue of national importance, which would, if they did it save as opposed to cost tax money? We hear lots of talk about cutting waste fraud and abuse in an election year.

We don't hear much talk of a bill to specifically expand Justice by enough lawyers and more investigators to fight fraud. What else could the government spend money on which would certainly return money to the taxpayer directly and also improve the quality of work done for the government? Here is a law that actually gives investigators and lawyers at least some chance of fighting fraud in a courtroom. Now if we could only get enough people involved in bringing the cases there we might be able to find out what is going on in those 225 scandals sitting on a shelf in a Government office.

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This weekend, The Detroit News reported that the remaining federal criminal charges against DOJ whistleblower Richard Convertino will be dropped. Mr. Convertino, a career federal prosecutor, was hit with conspiracy and obstruction charges after blowing the whistle on DOJ mismanagement of terror investigations.

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