Corporate Whistleblowers

 In Hollywood, everyone loves a whistleblower. Actress Meryl Streep played one early in her career in Silkwood, and she plays one again in The Laundromat. The film offers a goofy take on what became known as The Panama Papers, an international expose of the offshore finance industry.

During the publicity tours for the film, Streep speaks in support of whistleblowers. At the opening, Streep said:

The reason this, the Panama Papers, was exported to the world was because of the work of over 300 investigative journalists who got the word of John Doe, the whistleblower … out into the world,” Streep said. “Some people died for it … And people die still to get the word out. This movie is fun, it’s funny, but it’s really, really, really important.


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10/21 update: One Monday, the U.S. Securities and Exchange Commission announced it is rescheduling Wednesday’s meeting on proposed changes to its whistleblower program. According to the SEC’s open meeting website, the meeting, previously scheduled for October 23rd, is “cancelled.”

Stephen M. Kohn, chair of the NWC board, issued a statement; ” We welcome the postponement of the October 23rd meeting. It is vitally important that the SEC understands all of the issues and gets this rulemaking right.”


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Almost all of the money management or securities firms on Wall Street “entrusted with the life savings of their clients lie, cheat and steal one way or another.”

Not the kind of thing you might expect to read in Forbes, but columnist and former whistleblower Edward Siedle offers a lively column this week inviting others in the finance industry to “join the whistleblower revolution.”

If you work on Wall Street in the money management or securities industries—like I used to—you should serious consider becoming an SEC whistleblower. Why? Because almost all firms in these industries that are entrusted with the life savings of their clients lie, cheat and steal one way or another. If you don’t already know this, you’re probably new to the business. You’ll find out soon enough, like I did early in my career as the Compliance Director of a global asset manager.

He writes that the terms “lie, cheat and steal,” are rarely heard on Wall Street.

Money management lawyers and securities regulators typically use sterile, colorless terms such as misrepresentations, failures to disclose and mischaracterizations as to the nature, sources and amounts of fees, conflicts of interest involving self-dealing and fiduciary breaches.


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Harvard Law School professor Terri Gerstein writes that the case of the IC whistleblower is strangely familiar to her.

A worker learns of brazen violations of law and feels compelled to speak up. The boss and his buddies go bananas, demanding to know the worker’s identity, making veiled or explicit threats, disparaging the worker’s credibility…

Terri Gerstein

Gerstein is director of the State and Local Enforcement Project at the Harvard Law School Labor and Worklife Program. Writing in The American Prospect, she describes what she’s seen in her years of enforcing workplace laws: A fast food is worker fired after reporting a gas leak to the fire department. An airport skycap reported fired the day after appearing at a press conference about minimum wage violation. Countless examples of workers being pressured to stay quiet about sexual harassment.

These examples point to the need for better protections for workers who report serious illegality. The focus on these high-profile whistleblowers should be a catalyst for strengthening whistleblower laws in general, which are currently a patchwork.

Protections vary from statute to statute and from state to state. Ideally, these laws would include strong protection against retaliation; confidentiality; standing for whistleblowers to bring their own lawsuits; and finally, incentives for coming forward. These goals are not unrealistic; the False Claims Act, for example, allows people reporting fraud against the government to file their own lawsuits. The Securities and Exchange Commission and the Internal Revenue Service have paid millions of dollars to whistleblowers who have provided original information leading to successful enforcement actions.
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Whistleblowers would be protected and rewarded for exposing accounting misdeeds under a bill scheduled for a vote in the House this week. The bill would attach a whistleblower protection provision to rules governing the the Public Company Accounting Oversight Board (PCAOB) – often referred to as “Peekaboo.”

The PCAOB, according to the panels’website, “oversees the audits of public companies and SEC-registered brokers and dealers in order to protect investors and further the public interest in the preparation of informative, accurate, and independent audit reports.”

But, according to a recent investigation by the Project on Government Oversight (POGO), it’s doing a terrible job. Could better protections for whistleblowers get the effort back on track? One of the recommendations in the POGO report notes that “whistleblowers could help make enforcement of the audit firm industry easier and more effective.”


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Margot Robbie plays a fictional character in the upcoming movie about sexual harassment at Fox News. In the trailer for “Bombshell,” her co-workers glance at her as she heads to the elevator. Her hand shakes as she presses the button for the second floor C-suite.

Then, Gretchen Carlson, played by Nicole Kidman, gets in, head high, but struggling to smile. Eventually, Carlson blew the whistle and sued Roger Ailes and Fox News for sexual harassment. But not before she collected evidence of the misbehavior and contacted a lawyer.

Insider the MIT Media lab. Tinker Ready photo
Media Lab

Women (and to a lesser extent, men) who speak out about sexual harassment or improprieties face the usual challenges as whistleblowers. They are fired, shunned by co-workers and personally attacked – very personally. Unlike IRS and SEC whistleblowers, they usually have no path to compensation unless they sue. It’s difficult to maintain anonymity.

This week, two cases emerged that highlight the nightmare of blowing the whistle on gropers, flashers, rapists, and pedophiles. The revelation of secret funding from Jeffrey Epstein has tarred the mighty MIT Media Lab and brought down its super-smart, well-respected director. And, a lawyer for Harvey Weinstein offered to “place” articles to cast accuser Rose McGowan as “unglued,” according to documents published in a new book.


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The AARP calls Medicare’s coverage of medical devices “a boon to beneficiaries but also a big draw for fraudsters, who exploit older Americans’ health care concerns to enrich themselves.” This week’s Modern Healthcare offers a piece that argues a recent False Claims Act case involving medical device kickbacks to doctors “illustrates an increasingly tenuous arrangement that may spur more whistleblower cases.” The piece also appeared Crain’s Chicago Business. 

The story refers to a July case where  the FBI, the Department of Health and Services and the Department of Justice joined in the whistleblower suit against spinal implant company called Life Spine. The feds charge that the company paid doctors to use their devices. The kickbacks included “millions of dollars of consulting fees, royalties, and intellectual property.”

In a release on the case, Manhattan U.S. Attorney Geoffrey S. Berman said: “Kickbacks to doctors can alter or compromise their judgment about the medical care and services to provide to patients,and can increase healthcare costs. This office will continue to hold companies and the people who run them accountable when they make improper payments to doctors.”

Life Spine tells Modern Healthcare in a statement “that both parties are engaged in discussions and look forward to resolving the matter.”


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A round up of whistleblower news.

Whistleblower rewarded for exposing security flaws. From The New York Times

The government said the video surveillance software it bought from Cisco was “of no value” because it did not “meet its primary purpose: enhancing the security of the agencies that purchase it.” In many cases, the Cisco software actually reduced the protection provided by other security systems, the complaint said…

Lawyers for whistle blower James Glenn told the Times he was was working as a Cisco subcontractor, but was laid five months after he reported problems. When Glenn realized a year later that he could still hack into the surveillance system, he  contacted the F.B.I. Cisco has agreed to pay $8.6 million. More here from Reuters, which reports that Glenn will receive about $1 million.

Government Accountability Office on how the feds can do better

A recent GAO blog post talks about specific whistleblower issues and cases they’ve looked into.

After NASA’s Inspector General investigates potential reprisal, the NASA Administrator is responsible for determining within 30 days whether it actually happened. Whistleblowers count on a speedy resolution to their complaints.However, we found that NASA hadn’t been meeting the 30-day time frame since 2008. We recommended that NASA take steps to fix it….
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The Department of Justice announced last week that Encompass Health Corporation, formerly known as HealthSouth Corporation, has agreed to pay $48 million to resolve allegations that it was enrolling patients in its program and charging Medicare whether they would benefit from rehab or not. The DOJ called the company nation’s largest operator of inpatient rehabilitation facilities.

The qui tam cases were brought by a former company physician in Florida, the head of therapy at a Texas facility and the medical director at a Virginia hospital.

From the DOJ press release:

The government alleged that beginning in 2007, in order to ensure compliance with Medicare’s rules regarding classification as an (inpatient rehabilitation facility) IRF, and to increase Medicare reimbursement, some Encompass IRFs falsely diagnosed patients with what they referred to as “disuse myopathy” when there was no clinical evidence for this diagnosis. Additionally, Encompass IRFs allegedly admitted patients who were not eligible for admission to an IRF because they were too sick or disabled to participate in or benefit from intensive inpatient therapy.


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Medicine is a profession with high ethical standards. At the same time, there is much money to be made. Bad players find ways to siphon some of the nearly $600 billion we spend on Medicare each year. So, both the health care industry and its regulators constantly struggle with how to cope with the kickbacks, conflicts of interest and billing for unnecessary care.

Illustration by Nora Valdez

Last year, $2.5 billion of the $2.8 billion in Department of Justice False Claim Act recoveries involved the health care industry. In 2019, whistleblowers working with the DOJ included hospital administrators, sales representatives, home health care workers, physicians and patients.

Now, they may have more muscle. Maria Durant, a partner with the firm Hogan and Lovells, told a group of lawyers gathered in Boston last week there has been a major shift in the way courts interpret the validity of medical opinion. She spoke at a conference on health care law held Thursday by the Boston Bar Association. 
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