We are supposed to be in the lazy days of summer. But it has been anything but in the world of whistleblower recoveries under the False Claims Act. This is the statute that allows whistleblowers to (i) bring a lawsuit on the government’s behalf for any fraud or misconduct that caused the government to suffer a financial loss, and (ii) obtain between 15 and 30 percent of the government’s recovery. Well, it has been a very busy time for whistleblowers with roughly two dozen separate recoveries in the last several weeks alone. It might well be the longest string of whistleblower recoveries on record. Click here for a complete listing of these whistleblower successes.
To be exact, there have been 23 whistleblower recoveries since June 27, with four double-hit days (July 5; July 13; July 22; August 1), and two triple-hit days (June 30; July 27). The recoveries for this banner period have covered the full gamut of government fraud including unlawful kickbacks; billing Medicare/Medicaid for unsupervised, unqualified, ineligible, unnecessary or otherwise unauthorized medical care; billing Medicare/Medicaid based on falsified time or service records; maintaining improper financial arrangements with referring physicians; marketing medical devices for unapproved uses; financial fraud; government contracting fraud; government grant fraud; and customs fraud.
This whistleblower work has resulted in roughly $500 million in government recoveries, not to mention the detection and cessation of serious misconduct. One of these recoveries is worthy of particular mention. That is the July 26 agreement by Massachusetts-based State Street Bank and Trust Company to pay upwards of $400 million to settle charges of overcharging its clients — many of whom were public pension funds and non-profit organizations — on foreign currency exchange (FX) rates. See DOJ Press Release. What was especially notable about this case is that it originated with famed Bernie Madoff whistleblower Harry Markopolos who reported the wrongdoing under the whistleblower provisions of the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA).
One additional whistleblower success during this record period and not included above is the $17.8 million award on August 3 to a pair of whistleblowers for reporting a major IRS tax fraud. According to the Wall Street Journal, the parties involved in the case weren’t disclosed but it appears to stem from the prosecution of Wegelin & Co, the Swiss bank that closed after it pleaded guilty in 2013 to conspiring with U.S. taxpayers to hide money from the IRS. What makes this whistleblower award so special, other than the fact that IRS whistleblower awards are relatively scarce, is that the U.S. Tax Court for the first time ruled that the award include a portion of criminal fines and civil forfeitures.
So hats off to this courageous band of whistleblowers for their great work in standing up and being heard in the face of such fraud and misconduct. And may it send a strong signal to all those would-be whistleblowers contemplating saying something when they see something. It can be a long and difficult journey. But it may just be the worth the price — on so many different levels.
* * *If you would like more information or would like to speak to a member of Constantine Cannon’s whistleblower lawyer team, please click here.