Corporate Whistleblowers

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 exposed the technology collapse at Theranos, the life science start-up at the center of a new HBO documentary.

In January, Tyler Shultz and Erika Cheung told their stories at a session hosted by Stanford University’s McCoy Family Center for Ethics in Society. They talked about how disorienting and frightening their experiences at the company were after they realized the touted blood testing system didn’t work.

Cheung said she doubted herself at first. She had a feeling “that there was something wrong going on here, but maybe there is something I’m not seeing. You’re surrounded by so many talented people… Everyone else was being very nonchalant about what was going on, just going through the motions and the grind of every day, knowing there were so many problems.”

More in this clip. A video of the entire session is available on YouTube. 

4/2 update: CNN reports that Cheung and Tyler have started an organization called Ethics in Entrepreneurship.


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Some might see whistleblowers as lucky lottery winners when their multimillion-dollar rewards come through. But, the title of the piece in the February 4 issue of The New Yorker reflects the other side of the story: “The Personal Toll of Whistleblowing”

“Whistleblowers are usually, but not always, employees or members of the group on which they’re blowing the whistle; after they do so, their lives are never the same,” writes Sheelah Kolhatkar. She joined The New Yorker in 2016 after a writing about Wall Street and financial crime for Bloomberg Businessweek.

“Institutional denial, obfuscation, and retaliation are hallmarks of many whistle-blowing cases,” she writes.

new york whistleblower artKolhatkar runs through a list of notable whistleblowers, including New York City police officer Frank Serpico, tobacco company whistleblower Jeffrey Wigand; Sherron Watkins of Enron; and National Security Agency contractor Edward Snowden. That they were all portrayed in Hollywood films is no surprise. Whistleblower tales are often David versus Goliath dramas.


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its largest whistleblower awardMajor breakthrough for whistleblowers reporting commodity frauds

WASHINGTON, D.C. | July 12, 2018—The Commodity Futures Trading Commission (CFTC) today announced its largest whistleblower award to-date in a commodity fraud case.  According to the Commission, it issued “an award of approximately $30 million to a whistleblower who voluntarily provided key original information that led to a successful enforcement action”
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people-walking-inside-buildingToday, we expect Wall Street to be as much a part of the community as Main Street. For corporations with social responsibility commitments and investor groups with social responsibility mandates, whistleblowers are a crucial force for compliance. Whistleblowers ensure that businesses play by the rules, including those that they’ve set for themselves, as part of their social responsibility commitments. As the number of whistleblower claims rise, both in quality and scope, the potential impact of these cases on socially responsible investing, and on companies committed to and impacted by such frameworks, needs to be placed in the spotlight.

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Good news for Pennsylvania whistleblowers
Pennsylvania Supreme Court rules whistleblowers eligible to receive noneconomic compensation as rewards.

The Pennsylvania Supreme Court issued a big decision for whistleblowers in Bailets v. Pennsylvania Turnpike Commission, 2018 WL 1516785 (Pa. 2018). The Court ruled that noneconomic damages are compensable under Pennsylvania’s whistleblower law.

Ralph Bailets was a former Manager of Financial Systems and Reporting with the Pennsylvania Turnpike Commission. During his tenure, he became concerned about the government contractor Ciber Inc., which was politically-connected to leaders of the Commission. When competing for one infrastructure project, Ciber offered the most expensive bid, yet still was chosen for the contract. As Ciber struggled to perform the contract, Bailets took the issue to his supervisor. Bailet’s supervisor initially warned him that Ciber had friends in high places, and later advised colleagues that Bailet “should be kept on a short lease.” He was fired shortly thereafter.


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In his testimony before Congress last week, Facebook CEO Mark Zuckerberg received tough questions from members of Congress about wildlife trafficking and the illegal ivory trade on his two-billion user social media site.

At the Joint Senate Committee Hearing, Senator Chris Coons (D-DE) referenced a recent Time article examining illicit wildlife crime on Facebook, stating, “wildlife traffickers are continuing to use Facebook tools to advertise illegal sales of protected animal parts.” Zuckerberg responded, “we’re going to have more than 20,000 people at the company working on security and content review.”


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Photo by Mike De Sisti / Milwaukee Journal Sentinel<br /> Will Kramer, a safety consultant with Safety Management Services Company, was the whistle blower against Greif Inc. and the CLCM drum reconditioning plants. While in the plants in 2015 and 2016, Kramer says he witnessed many workplace safety problems and environmental issues. Photo by Mike De Sisti / Milwaukee Journal Sentinel.

Will Kramer knows what it means to be a whistleblower. As a former investigative staffer in the Senate, Kramer has ample experience working with whistleblowers. Later while serving as a health safety consultant, Kramer became one himself when he uncovered deeply disturbing conditions and improper handling of hazardous waste at several Greif Inc. plants. Kramer reported potential health, safety, environmental and securities violations to government regulators, members of Congress and the news media after the plants failed to address these issues. Now, as a law student, Kramer has written an important piece on the whistleblower mindset.


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In Digital Realty Trust v. Somers the Supreme Court issued a destructive decision that will have far-reaching consequences for whistleblowers. Seemingly unaware of the practical consequences of its decision, the Supreme Court unanimously ruled to leave whistleblowers who report internally without critical protections under the Dodd-Frank Act.

Writing for Law 360, NWC Executive Director Stephen M. Kohn explains that employees now take grave risks in using internal compliance programs. In light of the Supreme Court’s decision, whistleblowers should hire an attorney and take their complaints directly to the Securities and Exchange Commission (SEC).


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Following Wednesday’s devastating Supreme Court decision in Digital Realty Trust, Inc. v. Somers, whistleblowers were in need of some good news. The Tenth Circuit answered the call yesterday with a solid decision in Gensberg v. Porter affirming an amicus brief submitted by the National Whistleblower Center.

Carl Genberg was an executive for the Ceregenix Corporation who suspected misconduct by the Board of Directors. When he suspected misconduct including insider training, he reported this to the Board. As a result of his actions, Genberg was fired. Yet when he brought a whistleblower suit before a federal district court, the judge dismissed his case upon a summary judgment motion by Ceregenix.


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