Helping Whistleblowers Expose Fraud

In theory, the decision to blow the whistle on a fraudulent practice should be an easy one. In reality, however, we understand that the decision requires extensive analysis and weighing of factors to evaluate whether the risk is worth the reward. The attorneys at Robbins LLP understand the considerations you will face. We will help you navigate the decision-making process and be by your side throughout the case.

“Whistleblowing involves any action that reveals or reports unethical or illegal activities or information.” Such activities can include waste, fraud, abuse, corruption, or dangers to public health and safety. A whistleblower is a person who reports these activities to someone who is in a position to rectify the wrongdoing. A whistleblower might work inside the organization where the wrongdoing is taking place, or for other reasons, has information about wrongdoing that otherwise would not be known.

Various laws allow whistleblowers to bring forth evidence to show their knowledge of fraud perpetrated on the government. Many of these laws provide protection and monetary compensation for whistleblowers.

What Is The False Claims Act?

The first whistleblower law America enacted was the False Claims Act (FCA). In 1863, President Abraham Lincoln signed the law to target fraud in government contracting and against the government during wartime. The law has been amended since to provide increased financial incentives for reporting wrongdoing and reduce obstacles to bringing cases. At its core, the FCA encourages citizens to come forward with information that will help the U.S. government combat fraud against it.

The FCA makes it a crime for any person or organization to knowingly submit a false claim to the government and imposes civil penalties for each false claim made. A false claim includes schemes that result in a loss of money to the federal government.

Some examples of actionable activities under the FCA include:

Wrongfully obtaining federal funds
Inflating the price of a product
Providing less than purchased, substituted, or defective goods to the government
Kickbacks to doctors or hospitals when they prescribe certain drugs
Bill padding, upcoding, and other fraudulent submissions to Medicare for unnecessary lab tests and no reimbursable costs
Performing unnecessary medical treatments to the detriment of patients
Illegal marketing of drugs by pharmaceutical companies
Unethical referral schemes that pay doctors for their participation

When these claims are submitted to the government, the participants are engaging in:

Healthcare fraud
Tax fraud
Insurance fraud
Construction and procurement fraud
Pharmaceutical fraud
Defense contract fraud

The FCA allows individuals with firsthand knowledge of such false claims, known as relators, to file a lawsuit for violations of the FCA on behalf of the government, known as a qui tam action.

Once a relator files a qui tam action, the government is required to investigate the allegations in the complaint. After the government completes its investigation, it will either intervene and take on primary responsibility for prosecuting the action or decline to take over the action and allow the relator to proceed with the case personally.

Utilizing the power of the FCA, the U.S. government has recovered over $75 billion stolen from it. Because of the vital role whistleblowers play in fighting fraud against the government, if the qui tam action is successful, the relator is entitled to recover 15%-30% of the government’s recovery. Whistleblowers who identify and report FCA violations are also afforded protection against employer retaliation.

U.S. Securities & Exchange Commission (SEC) Whistleblower Program

The SEC Whistleblower Program went into effect on July 21, 2010, when President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act. According to the SEC, “[a]ssistance and information from a whistleblower who knows of possible securities law violations can be among the most powerful weapons in [its] law enforcement arsenal.” The SEC recognizes that whistleblowers are uniquely qualified to help it identify possible fraud early and allow the SEC to minimize harm to investors, preserve the integrity of the country’s capital markets, and hold accountable those responsible for unlawful conduct. According to the SEC’s 2023 Annual Report to Congress on the Whistleblower Program, the office received a record-breaking 18,354 tips in 2023, almost 50% more than the previous record set in 2022.

Whistleblowers who voluntarily provide original information to assist the SEC in recovering monetary sanctions totaling over $1 million are eligible to receive awards of 10%-30% of the money collected. As of November 2023, the SEC has issued awards totaling more than $1.9 billion to 397 individual whistleblowers since the inception of the whistleblower program in 2011. In 2023 alone, the SEC awarded nearly $600 million – the highest annual total by dollar value in the Program’s history – to 68 individual whistleblowers, including an award of almost $279 million – the largest in the history of the Program. The SEC Whistleblower Program also offers certain protections against employer retaliation.

The SEC Whistleblower Program encourages tip submissions from individuals with “specific” and “credible” information about a material violation of federal securities laws. It is therefore imperative that the tip submitted be thorough and compelling, demonstrates the violation was “material,” includes documentation of the violation, and makes it as easy as possible for the SEC to conclude that the alleged violation is worth pursuing. A whistleblower award will only be issued if the whistleblower complies with all of the SEC’s prescribed procedures. Therefore, if you have information on a federal securities law violation, you should engage the help of a whistleblower lawyer who has experience submitting tips to the SEC.

Some examples of actionable activities under the SEC Whistleblower Program include:

- Manipulation of a security’s price or volume
- Fraudulent or unregistered offer or sale of securities
- Insider trading
- False or misleading statements about a company
- A company’s failure to file required reports with the SEC
- Theft or misappropriation of funds or securities
- Fraudulent conduct or other problems with municipal securities transactions or public pension plans
- Bribery of foreign officials

Internal Revenue Service (IRS) Whistleblower Program

Since 1867, the Secretary of the Treasury has been allowed to pay such amounts as they deem necessary “for detecting and bringing to trial and punishment persons guilty of violating the internal revenue laws or conniving at the same” under the Internal Revenue Act.

For the first 140 years, few alterations were made to this system. However, this changed with the passage of the Tax Relief and Health Care Act in 2006. The Act made fundamental changes to the IRS whistleblower program, including creating a mandatory rewards law for whistleblowers in certain circumstances where awards were previously discretionary.

Now, the IRS Whistleblower Program allows a whistleblower to receive an award if the whistleblower presents specific and credible information about a tax fraud that leads the IRS to collect an amount over $2 million from an entity (such as a corporation) or an individual with a gross income of $200,000 for the relevant tax period.

If these criteria are fulfilled, the IRS whistleblower can recover between 15-30% of the collected proceeds, including penalties, interest, and monies obtained from other “laws for which the [IRS] is authorized to administer, enforce, or investigate.” If the submission does not meet the criteria for consideration, the IRS will consider it for the discretionary program under another tax code.

According to IRS Whistleblower Office Director John Hinman, the IRS whistleblower program is extremely successful. “Since issuing its first award in 2007 through fiscal year 2022, the IRS has paid $1.1 billion in awards to over 2,500 whistleblowers based on the successful collection of $6.6 billion from non-compliant taxpayers.”

The Commodities and Futures Trading Commission (CFTC) Whistleblower Program

The CFTC is an independent U.S. government agency that regulates the U.S. derivatives market, including futures, options, and swaps. Its mission is “to promote the integrity, resilience, and vibrancy of the U.S. derivatives market through sound regulation.” Through its Division of Enforcement, the FCTC investigates violations of the Commodity Exchange Act (CEA) and the CFTC Regulations. These violations can include fraudulent activity related to commodity futures, option trading, derivatives markets, or currency fraud.

Some examples of actionable activities under the CFTC include:

Fraud, including fraudulent solicitation, misappropriation of any mishandling of customer funds, and Ponzi schemes

Market manipulation, such as illicit trading strategies designed to manipulate prices, and spoofing (entering an order with the intent to cancel it before the transaction is completed)

Trade practice violations, including wash sales, fictitious sales, and inadequate oversight of traders, to name a few.

The CFTC Whistleblower Program provides monetary incentives to individuals who come forward to report violations of the CEA. A CFTC Whistleblower is any person, whether a U.S. resident or non-U.S. citizen, who voluntarily provides original information about a violation of the CEA or a CFTC regulation. The whistleblower’s information must lead to a successful CFTC action that results in monetary sanctions of over $1 million or in the successful enforcement of a related action brought by another governmental authority. CFTC Whistleblowers can be company insiders or any individual with knowledge of wrongdoing, including industry experts or any concerned individual.

A successful whistleblower will receive between 10%-30% of the amount of monetary sanctions collected in the CFTC’s enforcement action or a related action. Whistleblowers also have protections regarding the confidentiality of their identity, which the CFTC can only reveal in a few specific situations. Whistleblowers also have certain protections against retaliation by their employers.

Let us help you

The attorneys at Robbins LLP have experience successfully representing individuals who chose to expose fraudulent activity and we can guide you through the process. We will begin with a confidential consultation. If we determine your information is viable for submission, we will file your claim or submit your tip so you can hold the wrongdoers accountable and prevent them from causing future harm. We stay in touch as the government evaluates your claim and provide guidance whether the government accepts your claim or you decide to file suit individually. We are there for you every step of the way.

Our services are free of charge. We will represent you on a contingency basis, meaning we will advance all expenses incurred by the whistleblower litigation and only receive attorneys’ fees if we are successful in obtaining a recovery against the wrongdoer. Robbins LLP will never seek reimbursement for attorney fees or costs directly from our whistleblower clients.

Thinking Of Blowing The Whistle?

Robbins LLP’s whistleblower attorneys have experience representing individuals who expose fraudulent activity under the False Claims Act and SEC Whistleblower Program and can guide you through the process of filing your claim or submitting your tip so you can hold the wrongdoers accountable and prevent them from causing further harm. If you have information about fraud in violation of the securities laws or the False Claims Act, please contact our whistleblower attorneys online or at 1-800-350-6003.

Whistleblower Litigation