There is a long history in our country of courageous whistleblowers bringing attention to corporate and organizational wrongdoing – wrongdoing which often benefits a select few at the expense of all taxpayers as a whole. Whistleblowing, while courageous and important, can also be challenging, and those who do take decisive action to bring to light widespread corruption and other types of wrongdoing can face reputational and financial risks, particularly when not properly guided through the whistleblowing process.
At the same time, whistleblowers can reap great financial rewards, particularly in the context of proceeding with whistleblowing claims under state and federal False Claims Act (FCA) statutes or federal securities law whistleblower statutes. A properly represented whistleblower pursuing claims under such statutes may in fact be able to obtain millions of dollars in financial rewards in some cases, although the route to doing so is often complex, and thus it is important to work with experienced counsel in doing so.
Why Whistleblowers Matter
In the context of FCA and securities law whistleblower claims, those who come forward with valuable information regarding wrongdoing are providing an important and necessary service to their fellow Americans and to those directly impacted by the wrongdoing. Oftentimes, fraudulent behavior which victimizes taxpayers and investors can go completely unnoticed – even though the negative consequences of those victimized are very real – unless someone with inside knowledge of the fraud comes forward to bring it to light. Whistleblowing not only protects taxpayers and investors, but it also prevents healthy competition by preventing those who take illegal actions to enrich themselves from getting ahead in the market while honest market players struggle to compete.
FCA Whistleblower Rewards
The False Claims Act (or FCA) was enacted by the federal government during the Civil War as a response to unscrupulous providers of supplies to the Union forces. The FCA in essence makes it illegal to, among other things, bill the federal government for subpar, misclassified, unnecessary, or nonexistent goods or services. Today, most claims for FCA violations are brought in the context of fraudulent Medicare/Medicaid billing (i.e. upcoding services, or billing the government for medical procedures, devices, or prescriptions that were not necessary or were never provided) or in the field of military defense procurement. Additionally, FCA claims can be brought where a company or individual has illegally avoided paying the government what is properly due, such as in the area of customs fraud.
What separates the FCA from many other criminal and civil statutes is that it essentially deputizes ordinary citizen whistleblowers who have knowledge of such fraudulent practices to pursue a claim against an offender through a private lawsuit. Once an FCA claim is filed, the federal government then has the option of joining the lawsuit. If the lawsuit is successful and/or the defendant enters into a settlement agreement, the whistleblower can then receive a reward that is a portion of the penalties imposed, typically between 15% and 30%. In many cases, a private whistleblower – who could be a CEO or a data entry clerk or simply an outsider privy to information of wrongdoing – can receive millions of dollars of compensation for their services.
SEC Whistleblower Rewards
More recently, the Securities and Exchange Commission has adopted its own whistleblower program as part of the Sarbanes-Oxley Act reforms set in place in 2010 following a decade of corporate scandals and the recession of 2008-2009. Pursuant to the SEC Whistleblower Reward Program, a whistleblower with knowledge of violations of federal securities laws can anonymously submit information to the SEC via their attorney. Such information could relate to securities law violations such as insider trading, cryptocurrency fraud, Ponzi schemes, money laundering, improper securities offerings, and FCPA and bribery violations, among others.
If the information provided to the SEC provides significant assistance to the agency and results in a recovery by the SEC over a certain financial threshold, the whistleblower is then eligible to receive a financial reward totalling between 10% to 30% of the entire recovery. Since the inception of the SEC Whistleblower Reward Program, the program has paid out over $1 billion to whistleblowers with some rewards totalling over $100 million apiece.
Protect Your Interests By Working With Experienced Whistleblower Counsel
It is important to note that numerous state and federal laws provide protection from retaliation by employers and others for engaging in the protected acts of properly relating information regarding the violation of the FCA and securities laws to the federal government as part of an FCA claim or submission of information to the SEC. It is thus important to work with legal counsel who has the experience to not only assist you in compiling and submitting your information in pursuit of obtaining the largest whistleblower reward possible – while at the same time protecting victims of fraud and promoting fair market competition – but who also has the experience to protect you from retaliation and obtain justice if retaliation does occur. If you have information that you believe may form the basis of an FCA claim or SEC Whistleblower Reward Program submission, contact our office today to schedule a consultation with one of our attorneys.