Legally Speaking
Whistleblowers and Fraud
The recent devastation that has afflicted our country in the past several years has been followed by significant government assistance at national and state levels. Amid the outpouring of resources, information, and financial aid is the inevitable problem that occurs when there are millions of dollars available and inadequate oversight: fraud.
Fraud against the government has a long history, most notably as far back as the Civil War when munitions suppliers were adding sawdust to gunpowder and selling it to the Union Army. Government fraud commonly occurs within certain industries that are predominantly paid by the state and federal governments. Over the last century, the government has responded with laws that combat fraud by imposing stiff penalties against individuals, corporations, and other businesses.
The federal False Claims Act (FCA) and the Illinois Whistleblower Reward and Protection Act were designed to encourage individuals to report ongoing fraud against the government. These statutes offer protection from retaliation against the reporting person. In cases where this individual is employed by the guilty party, the employer may be liable for damages far in excess of lost wages, including attorney fees and costs for the employee who is fired, demoted, harassed, or otherwise discriminated against.
Similar to the companion Illinois statute, individuals and/or businesses violate the FCA when they:
• Knowingly present (or cause to be presented) a fraudulent claim for payment to the federal government.
• Knowingly use (or cause to be used) a false record or statement to get a claim paid by the federal government.
• Conspire with another to get a false or fraudulent claim paid by the federal government.
• Knowingly use (or cause to be used) a false record or statement to conceal, avoid, or decrease an obligation to pay money or transmit property to the federal government.
Key to the statute is that the prosecuting party doesn’t need to prove specific intent to defraud. Deliberate ignorance, reckless disregard for the truth, or falsity of information submitted will satisfy the definition of knowingly under the FCA.
The person who can bring a claim under these statutes is referred to as a realtor. This person may notify the government of ongoing fraud and the intention to pursue a claim if the person actually alerts the government to the fraudulent activity. The time period in which to file such a claim under the FCA is (1) six years from the date of the FCA violation; or (2) three years after the government knows or should have known about the material facts concerning the FCA violation. Under the Illinois Whistleblower Act, the civil action must be filed (1) no later than six years after the date on which the violation is committed, or (2) no later than three years after the date when facts material to the case are known, or reasonably should have been known, by the prosecuting state official. In no event can a case be filed more than 10 years after the date on which the violation is committed.
Procedurally, whistleblowers will notify the government of the fraud by filing a complaint, under seal, through their attorney. Thereafter, the government will investigate the claim and decide if they wish to intervene and take primary responsibility for prosecution of the case. If the government decides to prosecute the case, the whistleblower/realtor and his attorney remain in the case as a party to the action. If the government decides not to intervene, the realtor and his attorney can proceed with the case absent the assistance of the government. Parties who proceed without the government generally receive a larger percentage of the proceeds recovered.
There are huge incentives to report fraud—both monetarily and as a way putting a stop to the misconduct, thereby recouping lost revenue from the government. Whistleblowers also receive significant protection under these statutes and generally have their attorneys’ fees and costs of litigation paid by the guilty party. For more information, including information on taxpayer fraud, you can go to www.taf.org, www.taf.org/illinoisfca.htm, and www.whistleblowers.org. tpw
Fraud against the government has a long history, most notably as far back as the Civil War when munitions suppliers were adding sawdust to gunpowder and selling it to the Union Army. Government fraud commonly occurs within certain industries that are predominantly paid by the state and federal governments. Over the last century, the government has responded with laws that combat fraud by imposing stiff penalties against individuals, corporations, and other businesses.
The federal False Claims Act (FCA) and the Illinois Whistleblower Reward and Protection Act were designed to encourage individuals to report ongoing fraud against the government. These statutes offer protection from retaliation against the reporting person. In cases where this individual is employed by the guilty party, the employer may be liable for damages far in excess of lost wages, including attorney fees and costs for the employee who is fired, demoted, harassed, or otherwise discriminated against.
Similar to the companion Illinois statute, individuals and/or businesses violate the FCA when they:
• Knowingly present (or cause to be presented) a fraudulent claim for payment to the federal government.
• Knowingly use (or cause to be used) a false record or statement to get a claim paid by the federal government.
• Conspire with another to get a false or fraudulent claim paid by the federal government.
• Knowingly use (or cause to be used) a false record or statement to conceal, avoid, or decrease an obligation to pay money or transmit property to the federal government.
Key to the statute is that the prosecuting party doesn’t need to prove specific intent to defraud. Deliberate ignorance, reckless disregard for the truth, or falsity of information submitted will satisfy the definition of knowingly under the FCA.
The person who can bring a claim under these statutes is referred to as a realtor. This person may notify the government of ongoing fraud and the intention to pursue a claim if the person actually alerts the government to the fraudulent activity. The time period in which to file such a claim under the FCA is (1) six years from the date of the FCA violation; or (2) three years after the government knows or should have known about the material facts concerning the FCA violation. Under the Illinois Whistleblower Act, the civil action must be filed (1) no later than six years after the date on which the violation is committed, or (2) no later than three years after the date when facts material to the case are known, or reasonably should have been known, by the prosecuting state official. In no event can a case be filed more than 10 years after the date on which the violation is committed.
Procedurally, whistleblowers will notify the government of the fraud by filing a complaint, under seal, through their attorney. Thereafter, the government will investigate the claim and decide if they wish to intervene and take primary responsibility for prosecution of the case. If the government decides to prosecute the case, the whistleblower/realtor and his attorney remain in the case as a party to the action. If the government decides not to intervene, the realtor and his attorney can proceed with the case absent the assistance of the government. Parties who proceed without the government generally receive a larger percentage of the proceeds recovered.
There are huge incentives to report fraud—both monetarily and as a way putting a stop to the misconduct, thereby recouping lost revenue from the government. Whistleblowers also receive significant protection under these statutes and generally have their attorneys’ fees and costs of litigation paid by the guilty party. For more information, including information on taxpayer fraud, you can go to www.taf.org, www.taf.org/illinoisfca.htm, and www.whistleblowers.org. tpw