Who is Committing Fraud at Your Company?

Attention Whistleblowers, be on the lookout for the following individual at your company:

• Age 31 to 45;
• Working in accounting, operations, sales, upper management,    customer service or purchasing;
• Living beyond their means;
• Experiencing financial difficulties; and
• Never been charged or convicted of fraud.

According to the ACFE’s 2010 Report to the Nations on Occupational Fraud & Abuse, these attributes are the most common in 1,843 cases of fraud that were studied.  If you are looking to cash in on whistleblower payouts, be on the lookout for these individuals at your company.

Why Whistleblowers Are Important

Whistleblowers serve a great service to the American Taxpayer and the future of the United States.  Whistleblowers are on the front-lines battling the injustice of unethical managers, owners, and Government officials.  Without Whistleblowers, billions of dollars of fraud, waste, and abuse would go unnoticed and the American Taxpayers would be the ones paying for it.  According to a PricewaterhouseCoopers study, whistleblowers uncovered 43% of fraud, and law enforcement and auditors combined uncovered 22% of corporate fraud.   As previously reported in “Whistleblower Payouts Could Have Reached $252 Billion in 2013,”  the United States Government could have recover $840 billion in fraud in 2013.

In order to uncover the maximum amount of fraud possible, Lawmakers, Corporations, Law Enforcement, Auditors, Department of Justice,  and Whistleblowers need to work as one to help ensure that the American Taxpayers are no getting cheated.

“One Team, One Fight”

Whistleblowers: Show Me the Money!

This post is a 2nd in a series of blogs on the book "The Whistleblower's Handbook" by Stephen Kohn.  The 2nd chapter of the  book is called "Follow the Money" or as I like to call it SHOW ME THE MONEY!   Kohn outlines the four qui tam laws that provide financial incentives to whistleblowers, which I have covered in a previous post "Whistleblower Programs with Monetary Awards."

According to the "False Claims Act Correction Act of 2008," dated September 25, 2008,  a great deal of fraud would go unnoticed absent the assistance of whistleblowers.  Complex economic wrongdoing cannot be detected or deterred effectively without the help of those who are intimately familiar with it. Law enforcement will always be outsiders to organizations where fraud is occurring. They will not find out about such fraud until it is too late, if at all. When law enforcement does find out about such fraud, it is very labor intensive to investigate. Fraud is usually buried in mountains of paper or digital documents. It is hidden within an organization. Many different people within an organization, in multiple offices, divisions, and corporate capacities, may have participated in the illegality. Because of the complex nature of economic crime and the diffuse nature of business environments, it may not be apparent, perhaps for years, that malfeasance is afoot. By then, victims will have been hurt, records and witnesses will have disappeared, and memories will have faded Given these facts, insiders who are willing to blow the whistle are the only effective way to learn that wrongdoing has occurred. Information from insiders is the only way to effectively and efficiently piece together what happen and who is responsible. Insiders can provide invaluable assistance during an investigation by identifying key records and witnesses, interpreting technical or industry information, providing expertise, and explaining the customs and habits of the business or industry. Help from an insider can save time and expense for both law enforcement and putative defendants by focusing the investigation on relevant areas. Because of the valuable information brought by insiders, it is no surprise that Government officials state: ‘Whistleblowers are essential to our operation. Without them, we wouldn’t have cases.’

Question: How do you know if you have a case under the False Claims Act?

One Simple Answer: Does the taxpayer on the hook for any of the costs that may be incurred for any misconduct you have identified.  As reported on in a recent post "Whistleblower Payouts Could Have Reached $252 billion in 2013," estimated annual fraud losses of among companies in the United States is $840 billion.  This means that fraud is all around us...time to rat out your company and save money for the taxpayers and cash in a fat check yourself!

Comprehensive National Whistleblower Protection Law

This blog post will begin a series of posts on the book “The Whistleblower’s Handbook” by Stephen Martin Kohn.  The book is organized into different rules and checklists that guides an individual on how to become a whistleblower.
Rule 1 “Understand the Maze” discusses the laws that have been recently passed to protect whistleblowers.  Stephen acknowledge a key point that “to this day Congress still has not passed a comprehensive national whistleblower protection law.”
According to the The Obama-Biden Plan:
“Protect Whistleblowers: Often the best source of information about waste, fraud, and abuse in government is an existing government employee committed to public integrity and willing to speak out.   Such acts of courage and patriotism, which can sometimes save lives and often save taxpayer dollars, should be encouraged rather than stifled.   We need to empower federal employees as watchdogs of wrongdoing and partners in performance.   Barack Obama will strengthen whistleblower laws to protect federal workers who expose waste, fraud, and abuse of authority in government. Obama will ensure that federal agencies expedite the process for reviewing whistleblower claims and whistleblowers have full access to courts and due process.”
President Obama has stated that whistleblowers acts save lives and save taxpayers dollars; however, Congress nor the President has passed a comprehensive national whistleblower protection law.   According to the National Whistleblower Center, “The absence of a comprehensive National Whistleblower Protection Act has resulted in serious loopholes in protection.   This creates major hardship for honest employees who speak the truth to prevent disaster, only to learn that their government has let them down. ”  It’s time to act Mr. President and the members of Congress…what are you waiting for?  Pass a comprehensive national whistleblower protection law NOW!

Wall Street Financing Whistleblower

A Wall Street Hedge Fund Manager agreed to pay a former Herbalife executive turned whistleblower $3.6 million if the executive lost his job after whistleblowing. The agreement between the Hedge Fund Manager and the Herbalife whistleblower states that the whistleblower will be reimbursed for lost wages and benefits. According to ABC News, the Hedge Fund Manger, known for his “short” positions, stands to make $1 billion if the price of Herbalife’s stock collapses. For those who are not aware of a short position, an investor will make more money if the stock price falls. Heralife (HLF) stock currently sits at $58 and has 25 million shares shorted or 35% of Heralife’s shares. The Head Fund Manager, Bill Ackman, claims that the company is operating in violation of Chinese Law and operates much like a pyramid scheme. In December 2012, Acman took a $1 billion short against Heralife.

Hedge Fund Managers paying whistleblowers to disclose fraud should put Fortune 500 companies on notice that reporting fraud is the new Golden Nugget for Wall Street. I’ll sure this is not the last time we see Wall Street paying whistleblowers to rat on their companies.

Related Links: http://abcnews.go.com/Blotter/bill-ackmans-secret-deal-herbalife-whistleblower/story?id=23415501

http://nypost.com/2014/02/28/ackman-to-expose-herbalife-fraud-in-china-on-march-11/

http://finance.yahoo.com/q/ks?s=HLF+Key+Statistics

Key Elements of a Successful Whistleblower Case

What are the key elements of any successful whistleblower case?  What cases is the Department of Justice willing to pursue?  The two key elements of a Qui Tam whistleblower lawsuit is: 1) what harm has been done to the United States Government, and 2) what evidence does the whistleblower have to support their claims.

The amount of money the United States Government can recover in the whistleblower lawsuit is one of the critical factors of a successful whistleblower case.  For example, the Department of Justice intervened on the Qui Tam lawsuit against Johnson & Johnson and recovered $149 million to settle kickback allegations. 

The second critical factor is the evidence the whistleblower can provide the United States Government to support their allegations.  For example, in a health care fraud case, the whistleblower provided first-hand knowledge of various ways the company deliberately sought to increase billings by submitting claims in violation of federal guidelines.  The best documents that a whistleblower can provide are ones that show that fraud was committed, that the fraud was intentional, and that the fraud was also widespread throughout the company.  In addition, the whistleblower should provide witnesses that support their allegations, specifically, names, titles and address of the witnesses.

False Claims Act Cases Recover $3.8 Billion in 2013

The Justice Department best defense against fraud is Qui Tam civil lawsuits under the False Claims Act.  In 2013, the Justice Department recovered $3.8 billion in settlements and judgments involving fraud against the United States Government.  The number of lawsuits soared to 752, and was the second largest annual recovery under the False Claims Act since January 2009.  In addition, Whistleblowers were awarded $345 million under the False Claims Act.

The largest recoveries under the False Claims Act related to heath care fraud, which reached $2.6 billion.  The False Claims Act is the United States Government primary civil remedy to redress false claims for government funds and property under government contracts, as well as under government programs.  In 1986, Congress strengthened the False Claims Act by increasing incentives for whistleblowers to file lawsuits on behalf of the government, which has led to more investigations and greater recoveries. 

The highest risks area in the Government that results in the highest recoveries is health care fraud.  No wonder why my doctor visit costs over $1,000.  The biggest risk areas within the health care field relates to pharmaceutical and medical devices.  Doctors, Accountants, Office Managers in the health care industry, fraud is everywhere…rat on your bosses and co-workers and make millions.  For examples of successful Health Care Whistleblower cases, read my last blog “Whistleblowing on Health Care Fraud.”

Related Link: http://www.justice.gov/opa/pr/2013/December/13-civ-1352.html