Whistleblower Process

Filing a whistleblower claim and working it through the system can be a complex task.  Every case needs to be approached with care.

This page provides tips to prospective whistleblowers and outlines how we handle our whistleblower cases. Our  team offers years of experience in auditing, financial reporting, tax and fraud matters.  When a potential client contacts us, we begin by evaluating potential claims to determine the likelihood of success and educating the client on how to legally protect the value of the case.

While no one can tell for sure which way a case will turn out, we apply objective criteria to decide whether it makes sense financially, professionally and personally for you to move forward.  In evaluating the case itself, we focus primarily on a compelling narrative, credible supporting evidence and witnesses, and how much money the government stands to recover as a result of your efforts. Your interests – including your confidentiality — are our top priority.  We work hard to pursue and protect them.

One of our first tasks is to build a powerful documentary and graphic narrative of the case.  This narrative is based on all of the evidence we are able to gather for presentation to the U.S. Attorney, state attorney general, Securities and Exchange Commission, or IRS Whistleblower Office.   After preparing the narrative, we deliver it to the relevant regulator.  In a False Claims Act case, we then file a Complaint “under seal” (out of public view).  In an IRS case, we file a Form 211 with the IRS Whistleblower Office.  For SEC claims, we follow SEC Rule 21F-9 which requires submission of “original information” either through the SEC’s website or by completing SEC Form TCR.

Once we file the Complaint or Form, we continue to gather evidence, monitor the progress of your case with the government and work with Department of Justice (“DOJ”) or IRS to move the case along.  Typically, the government’s first course of action is to interview the whistleblower.  They are particularly interested in evaluating the whistleblower’s effectiveness in telling the story and responding to questions in an informal setting. We prepare you for this interview and stay with you every step of the way. After the interview, government attorneys and investigators normally request additional information and ask specific questions to deepen their understanding of key details.

A whistleblower case can take years to develop.  Therefore, patience and discretion are essential.  While the DOJ investigates your claim, the complaint and other documents filed with the government typically remain confidential.  This means that you cannot speak about the case with anyone but your attorneys and the DOJ.  Often, it takes the government two years or more to decide what to do with a case. We work with our clients to manage and expedite the process within the constraints of the system.

Mechanics of Whistleblower Claims

A whistleblower (or qui tam relator) must start with evidence that someone, typically a corporation or wealthy individual government contractor, has intentionally or recklessly billed the government more than they should or has paid less tax than they owe.  These violations occur in a variety of settings and industries including health care, child care, child protection, education, research, mortgage lending, defense contracting, and procurement.  With knowledge of such a fraud, a relator can file a lawsuit in the government’s name to recover the excess charges or the unpaid tax.  If the government recovers through negotiation or trial, the whistleblower typically receives between 10 and 30 percent of the government’s recovery depending on the particular situation.

The legal authority for whistleblower recoveries is typically in the Federal False Claims Act (“FCA”) or Internal Revenue Code. Additionally, many State governments have whistleblower laws.  Procedures vary somewhat between FCA and tax claims, but we’ll focus here on the FCA.  In an FCA case, the relator files a lawsuit under seal and provides a detailed disclosure document to the Department of Justice.  Initially, the DOJ has 60 days to investigate and decide whether it is interested in joining the lawsuit as a party.  Although a relator can pursue a case without the DOJ, the chances of success are significantly higher with the DOJ as a party.

It is important to keep in mind that a relator cannot recover if another relator has already filed a lawsuit based on the same set of facts.  Likewise, facts that have already been publicly disclosed generally cannot be used to build a whistleblower claim.

What about retaliation?  Even though the whistleblower’s identity remains secret while the case remains under seal, once the DOJ begins investigating, an employer may be able to guess who blew the whistle.  In this case, the whistleblower’s employer or fellow employees may be tempted to retaliate.  To counteract retaliation in FCA cases, the law contains provisions designed to protect whistleblowers and penalize retaliators.

A whistleblower who is discharged, demoted, suspended, threatened, harassed, or discriminated against by his or her employer for participating in an FCA claim is entitled to reinstatement plus two times the amount of back pay, interest on the back pay, and compensation for litigation costs and reasonable attorneys’ fees.

Tips for Preparing & Protecting Whistleblower Claims

Confidentiality is essential.  You should avoid communicating with anyone but an attorney about the facts in your case.  Prior to meeting with an attorney, you should write down everything you know about the fraud.  You may want to keep a voice recorder or pad ready to record things like

(a) the location of documents, computers, files and other evidence,
(b) names and contact information of anyone with knowledge of the fraud,
(c) laws, regulations, rules and procedures you think were violated, and
(d) any negatives about yourself or your involvement in the fraud.

It is not a good idea to attempt to record anyone but yourself unless your attorney advises you to do so.  Taping a conversation with another person without their knowledge may violate state or federal law.  The same is true of accessing physical files or computer data without authorization.

Participation in the fraud does not always rule out the whistleblower’s eligibility to right the wrong and receive some of the recovery.  However, a prospective relator should never plan such an event with the expectation of later suing.  Whatever you do, be sure to tell your attorney everything you know about the story regardless of your own views on whether the information is good, bad or indifferent.

We are happy to discuss potential claims on a confidential basis without charge or obligation.  To contact us about either a false claim or an income tax fraud, please visit our Confidential Case Evaluation page and fill us in. We will keep your contact and claim information strictly confidential. If you feel more comfortable initiating contact by phone, please call 404-255-6677.