A website of information for those considering blowing the whistle

Do I Have a Viable Whistleblower Case?

Wood blocks game

If you believe that your employer, or another company or person, is defrauding the government or individual shareholders and are deciding whether to report the fraud, ask yourself this:

  1. Can I file a lawsuit to stop this behavior or can I file the information with the IRS or SEC?
  2. Do I have enough detailed information to even file a lawsuit or report to the IRS or SEC?
  3. What information do I need ?

Various ways to blow the whistle

There are various whistleblower laws which apply. Three of them are:

  • The False Claims Act allows private individuals to reveal fraudulent claims by filing a lawsuit on behalf of the federal government or the states. Private persons, known as relators, through counsel, may file a “qui tam” lawsuit on behalf of the government and can receive 15-30% of the proceeds the government recovers. The False Claims Act has particular requirements and procedures which must be followed carefully.
  • The SEC Whistleblower Program allows individuals with detailed information on fraud by banks, hedge funds or other financial entities to file claims. It awards individuals who provide the SEC with original information of financial fraud which leads to a successful enforcement action. Participants can be awarded between 10-30% of the moneys collected when these amounts exceed $1 million.
  • The IRS rewards individuals who report major tax evasion by businesses corporations or individuals (generally when $2 million or more at issue). The award to the whistleblower ranges from 15-30% depending on the threshold amount in dispute.

Your Knowledge and Information is Valuable–don’t discuss it

Be careful not to discuss your potential case with anyone other than a whistleblower attorney. Public knowledge of the information can impede recovery of a reward for the whistleblower.

Original Source

For purposes of a qui tam lawsuit, a whistleblower must be an original source of the information presented. “Original source” means an individual who either:

  1. “has voluntarily disclosed to the Government the information on which allegations or transactions in a claim are based,” or
  2. “has knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions, and who has voluntarily provided the information to the Government before filing an action.”

31 U.S.C. Section 3730(e)(4)(B).

Publicly Undisclosed Information

The information underlying the allegations in a qui tam lawsuit must not have been publicly disclosed. Public disclosure may prevents a person from pursuing an action based on certain publicly known information.

Publicly known information refers to information disclosed “in a Federal criminal, civil, or administrative hearing in which the Government or its agent is a party; in a congressional, Government Accountability Office, or other Federal report, hearing, audit, or investigation; or from the news media.” 31 U.S.C. Section 3730(e)(4)(A).

Materiality

The whistleblower must have information indicating that the fraud was “material” to the government’s payment decision. In other words, liability under the False Claims Act is imposed only where a defendant both knowingly violated a requirement and knew (or should have known) that the requirement actually affected the government’s payment decision.

Just because something is immoral, does not necessarily mean that it is fraudulent and that the government was affected by it.

Corroboration of your case

Suspecting or even knowing of fraud, and proving fraud, are two different things. Fraud must be pled with “particularity.” This means that the potential relator needs to have details as to the wrongdoing, not just conclusions that it happened. Sometimes, this can take the form of documents, emails or texts.

Evidence can also include 1) descriptions of situations observed and/or conversations overheard; 2) documents, including but not limited to: emails, text messages, or other forms of written communication; meeting minutes; company handbook regulations; and other notes or written records.

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