A whistleblower can take many forms, including an employee or even a competitor. While employees may fear retaliation if they come forward with information on fraud, the law protects these brave people if they decide to come forward. In addition to protections, the government provides significant rewards that encourage people with real information to come forward.
What is whistleblowing?
Whistleblowing is when a person comes forward with information to expose fraud or illegal activity within a private, public or government organization. The wrongdoers usually are in violation of public law or could potentially damage a large number of individuals. Whistleblowers are usually members within the organization that has been alleged in the wrongdoing. However, there are examples of competitors coming forward with whistleblower information.
Anyone with knowledge of past or present fraud information can file a qui tam or whistleblower lawsuit. The whistleblower, or relator, doesn’t have to personally be harmed to bring a suit on behalf of the U.S. government.
How was whistleblowing established?
President Lincoln introduced The False Claim Act and passed in 1863 by a Congress concerned that suppliers of goods to the Union Army during the Civil War were defrauding the Army. The FCA provided that any person who knowingly submitted false claims to the government was liable for double the government’s damages plus a penalty of $2,000 for each false claim. Since then, the FCA has been amended several times.
Whistleblowers serve a higher purpose in American patriotism. Not only can their acts protect the government, but they can also protect the American people by exposing government officials for acts that violate civil rights and the constitution. The False Claim Act is an incentive of the act of blowing the whistle on wrongdoing. The law sets a high percentage for awards in that law for the purpose to incentivize whistleblowers to come forward.
How can a whistleblower be deterred from coming forward?
Whistleblowers often keep their identities secret because they fear retaliation from the powerful people or organizations they are blowing the whistle on. As a result, whistleblowing does not come without risk. If the whistleblower is employed by an organization they risk losing their job, demotion, suspension, and denial of promotion. In more extreme cases, they may even face personal threats, such as:
- Threats to them and their families
- Lawsuits
- Physical assaults
- Attempts on their lives
- Jail
Because of the personal risks they face, whistleblowers are often hesitant to come forward. However, whistleblowing is necessary to ensure tax dollars are not being wasted as well as to prevent other abuses and fraud. The first step to overcome these challenges is by providing the whistleblower with adequate protection and rewards.
Whistleblower rewards may depend on the type of whistleblowing you do
The most popular incentive offered to whistleblowers is a financial award. The government provides incentives to get information that could allow the government to collect against fraudsters. Several programs provide financial awards to successful whistleblowers. Some of these include:
The Federal False Claims Act
If the government decides to join the qui tam case, the relator can recover up to 25% of what the government obtains. However, the government can choose to decline. If the whistleblower decides to proceed, the relator could receive a reward of up to 30% of the government’s recovery.
Rewards for reporting fraud against the government. This reward is the most well-known whistleblower reward program. The False Claims Act is written broadly to reach all types of fraud that might result in a financial loss to the United States. There are seven violations of the False Claims Act:
- False Claims
- False Records or statements
- Conspiracy
- Conversion
- False receipts
- The unlawful purchase of government property
- Reverse false claims
Securities and Exchange Commission Whistleblower Reward Program
Whistleblower reward for reporting violations of the federal securities laws. The program allows whistleblowers to submit anonymous tips to the SEC if represented by an attorney. Under this reward program, the SEC issues awards to whistleblowers who provide original information that leads to enforcement actions with monetary sanctions that exceed $1 million.
Internal Revenue Service Whistleblower Reward Program
The IRS may reward people who provide specific and credible information to the IRS if the input results in collecting taxes, interest, penalties, or other amounts from the noncompliant taxpayer.
However, the information provided must be solid information. An “educated guess” or unsupported speculation doesn’t suffice for this reward.
There are two types of rewards:
- The IRS will pay 15% to 30% of the amount collected if the amounts in dispute exceed $2 million, and a few other qualifications are met, the IRS will pay 15% to 30% of the amount collected. However, if the case deals with an individual, his or her annual income must be more than $200,000.
- If the amount doesn’t meet the threshold of $2 million in dispute or cases involving individual taxpayers with a gross income of less than $200,000, the IRS will reward up to 15 percent up to 10 million.
CFTC whistleblower rewards
Rewards for reporting violations against the Commodity Exchange Act.
What are the factors that affect the number of rewards for whistleblowers?
The compensation that whistleblowers may receive varies from case to case. Some of the factors that may affect the compensation a whistleblower may be eligible for includes the following:
- Litigation assistance: Do your attorneys have experience with whistleblower matters? If they contributed to the government building its case, the reward for you and your attorney will likely be higher.
- Quality of information: How accurate was the information that you provided? Are you the original source? Your reward would be reduced if the information you provide has been disclosed previously to the government.
- Relator complicity: Was the whistleblower involved in the wrongdoing?
- Timeframe: How quickly was the fraud reported? A case will be more favorable the earlier an individual reports the fraud. Quick reporting can help authorities minimize any more damage that could potentially be done.
How can The Carlson Law Firm assist?
If you believe that you have information on a business or contractor defrauding the government, you should speak with a qualified Whistleblower Attorney. There are significant protections that an attorney can ensure you get while you go through a Qui Tam case.
The Carlson Law Firm is a veteran-owned-and-operated law firm that stands for justice. We take government fraud seriously. Contact us today to schedule a free consultation.
