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

On April 24, Senate Democrats delayed a confirmation vote on Labor Secretary nominee Thomas Perez. Committee Chairman Tom Harkin of Iowa was concerned that Republicans would use a threatened separate hearing as a forum to attack Perez in his absence. Read more.

Senate Republicans have criticized Perez for his involvement in a deal with the city of St. Paul, MN that left a whistleblower with nothing.  Senator Chuck Grassley, Ranking Member of the Senate Judiciary Committee in coordination with Issa and House Judiciary Chairman Bob Goodlatte, released a joint staff report about how Perez orchestrated a controversial quid pro quo with the city that prevented the Justice Department from recovering hundreds of millions of dollars back to the taxpayers, and left a whistleblower who filed the suit out in the cold.  

Here is an excerpt from the joint staff report. 

"In early February 2012, Assistant Attorney General Thomas E. Perez made a secret deal behind closed doors with St. Paul, Minnesota, Mayor Christopher Coleman and St. Paul’s outside counsel, David Lillehaug. Perez agreed to commit the Department of Justice to declining intervention in a False Claims Act qui tam complaint filed by whistleblower Fredrick Newell against the City of St. Paul, as well as a second qui tam complaint pending against the City, in exchange for the City’s commitment to withdraw its appeal in Magner v. Gallagher from the Supreme Court, an appeal involving the validity of disparate impact claims under the Fair Housing Act."

According to the joint staff report, this deal cost the U.S. Government the opportunity to recover as much as $200 million.

The Department of Labor’s OSHA Whistleblower Protection Program enforces the whistleblower provisions of more than twenty whistleblower statutes protecting employees who report violations of various workplace safety, airline, commercial motor carrier, consumer product, environmental, financial reform, food safety, health insurance reform, motor vehicle safety, nuclear, pipeline, public transportation agency, railroad, maritime, and securities laws. Rights afforded by these whistleblower acts include, but are not limited to, worker participation in safety and health activities, reporting a work related injury, illness or fatality, or reporting a violation of the statutes.

Read the full joint staff report here. 

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The Internal Revenue Service Whistleblower Office announced that it paid a record $125.4 million in 2012 to whistleblowers that provided evidence of tax cheating, but new rule changes place future recoveries at risk.  The IRS report, which was made public on Wednesday, stated that more than 80 percent of the total paid out by the IRS in 2012 went to Bradley Birkenfeld, a former employee of UBS AG who received $104 million.

In total, the IRS issued 128 whistleblower rewards for the 2012 fiscal year, though just 12 of those cases involved more than $2 million in unpaid taxes.  Whistleblowers helped the IRS collect more than $592 million.  

However, proposed rules to the IRS whistleblower law are drawing criticism from the NWC, U.S. Sen. Grassley and others. The IRS’s proposed rules will make it harder for whistleblowers to collect awards and limit the scope of cases that qualify for awards. 

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In today's editorial, the New York Times expresses concerns about the targeted surveillance of whistleblowers at the Food and Drug Administration (FDA). The editorial recounts the claims made by six scientists and physicians who raised concerns about the safety and effectiveness of devices approved by higher FDA officials. FDA managers then began a campaign of targeted surveillance that included the installation of special software to capture every image that appeared on the computer screens of these whistleblowers. The editorial notes how the FDA managers sought criminal charges against the whistleblowers.  When that failed, the FDA began firing them. The editorial acknowledges how Sen. Charles Grassley warned FDA officials that interfering in a congressional investigation is against the law. The editorial then urges that if the whistleblowers' claims are true, the managers responsible are the ones who should be punished.

If you agree that targeting whistleblowers with invasive surveillance is wrong, you can TAKE ACTION. You can read more about the landmark case brought by these FDA whistleblowers here.

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Senator Charles E. Grassley (R-IA) recently released a letter to Mary Schapiro, the Chairman of the Securities and Exchange Commission (SEC) expressing his “serious concerns” with the Proposed Rules for implementing the whistleblower provisions of Dodd-Frank. Senator Grassley pointed out that that the “SEC does not have distinguished record of utilizing information from whistleblowers to correct wrongdoing in the public markets” and the whistleblower provisions of Dodd-Frank were created to remedy this serious problem.

The Senator laid out a number of his concerns with the SEC’s Proposed Rules including that the procedures for submitting a whistleblower claim are “overly complex, unduly burdensome, and include undefined terms that are often vague or overbroad.” He also explained that the exemptions the SEC created disqualify broad groups of people from filing whistleblower claims in contradiction of Congress’ intent.

One of Senator Grassley’s concerns has received a great deal of media attention – the SEC’s emphasis on internal compliance. As the Senator so aptly points out, “it is important to foster strong internal compliance functions, [but] the SEC should not throw the whistleblowers to the wolves by forcing them to take this first step. The SEC’s primary purpose is to protect investors-not internal compliance programs-from potential harm caused by fraud and misconduct.” The NWC has always maintained that whistleblowers should be protected from retaliation if they report to internal compliance, but requiring them to do so would violate the intent of Congress and would not be in the best interest of investors.

Senator Grassley did not have much sympathy for the SEC’s concerns. He explained that the DOJ and IRS have already been through this process and would be able to provide guidance on how to address the SEC’s concerns “without eviscerating whistleblower protections.” In sum, Senator Grassley’s letter tells the SEC to get over its hostility against whistleblowers and do its job.

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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):

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Last Wednesday, Robert Mueller, Director of the Federal Bureau of Investigations, appeared before the Senate Judiciary Committee for an oversight hearing.  Sen. Charles Grassley (R-Iowa) used the opportunity to question Dir. Mueller about how the administration's proposed whistleblower bill (S. 372) came to propose the repeal of the protection for FBI employees (5 USC 2303).  Dir. Mueller testified that he did not recall what that section of law said off hand, but promised to get back to Sen. Grassley about that. The Director also promised to check whether any FBI employees were involved in making the proposal to repeal 5 USC 2303.  You can read about the exchange in The Washington Times. The National Whistleblower Center (NWC) has now posted a transcript of the Senate Judiciary Committee Oversight Hearing, and of Sen. Grassley's press conference where he says he will place a hold on all Justice Department nominations until his questions are answered.

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