WHISTLEBLOWER NEWS QUOTE OF THE DAY:

"AIG therefore did not have a duty to defend or indemnify Office Depot against the whistleblower suit, and was in fact statutorily precluded from doing so."

— Judge Stephen V. Wilson

DAILY WHISTLEBLOWER HEADLINES:

BREAKING: SEC Hands Whistleblower $17M For Juicy Tip

The U.S. Securities and Exchange Commission said on Thursday that it has awarded $17 million — its second largest award yet — to a former company employee whose detailed tip gave the regulator a major leg up in an investigation and enforcement proceeding.

The award was the largest announced since a September 2014 payout of more than $30 million. Per the regulator's rules for its five-year-old tipster program, no details on the underlying enforcement action were released on Thursday. However, given that the SEC hands out awards ranging from 10 to 30 percent of the sanctions it secures, the action could have brought in between $56 million and $170 million. read more »

Employees using shadow IT for whistle-blowing

 

Wait until you hear what employees in Europe are using cloud services for, oh boy.

Blue Coat Systems has polled more than 3,000 workers in France, Germany and the UK, asking them about their cloud usage habits.

As it turns out, some employees use cloud services (Dropbox, Box, Office 365, Slack, LinkedIn, Facebook, Gmail, etc.) to store data before starting a new job, for corporate espionage, whistle-blowing and even ‘personal protection’.

Eight per cent of employees said they stored data to be later used for whistle-blowing, and those employees are most usually HR professionals (17 per cent). read more »

Broward County’s $18.9 million airport flip-flop and a new, secret whistleblower case

With little public discussion, the Broward County Commission has overwhelmingly approved an $18.9-million payout to airport contractor Tutor Perini to settle a bitter disputeabout who was to blame for costly construction delays.

Paperwork filed in support of the deal, including the settlement itself, revealed that an unidentified whistleblower recently sued Tutor Perini in circuit court using the Broward County False Claims Ordinance. The whistleblower’s claims are not known, but sources said an unhappy subcontractor filed the complaint. Whistleblowers who help the county recover money lost to fraud or other schemes can recover a reward of up to 25 percent of the proceeds. read more »

West Virginia University seeks to dismiss whistleblower lawsuit

West Virginia University is asking the court to dismiss a lawsuit brought by a former procurement officer who alleged he was fired for raising concerns about practices. WVU filed a motion to dismiss on June 6, denying any wrongdoing and claiming that Mark Stewart filed the lawsuit under the wrong law.

In his initial complaint, Stewart filed under claims of whistleblower law, however, in his amended complaint, those claims were omitted. 

Stewart claims when he started employment at WVU, he began observing unlawful and unethical activity within the Procurement, Contracting and Payment Services Department. read more »

Whistleblower: EPA Official Covered Up Methane Leakage Problems across US Natural Gas Industry

A watchdog group today charged that a high-ranking federal official connected to the fossil fuel industry committed scientific fraud and possibly criminal misconduct in a case with sweeping ramifications for global climate change and the safety of workers and neighbors of natural gas sites across much of the United States. The group called for an expedited investigation due to the urgent climate and safety implications of the EPA’s failure to curb widespread methane emissions.

The complaint alleges that Dr. David Allen, then-head of EPA’s Science Advisory Board, has led an ongoing, three-year effort to cover up underreporting of the primary device, the Bacharach Hi-Flow Sampler, and a second device used to measure gas releases from equipment across the natural gas industry.

As with other federal agencies, the EPA’s Office of Inspector General is a watchdog over potential misconduct within the agency. The OIG has investigative powers and can refer criminal matters to the Justice Department. read more »

 

Owasco whistleblower wins suit against prison system over claims of misused money

A federal jury today ruled in favor of an Owasco man who blew the whistle on fraud within the state prison system.

But the jury in Rochester awarded the prison employee, William Murray, only $6,500. When he sued the state, he was seeking $1.6 million.

The jury found that two superintendents at Five Points Correctional Facility in Seneca County -- Thomas Poole and Joseph Lempke -- retaliated against Murray after he complained about the misuse of a federal grant intended to educate inmates on overcoming alcohol and drug abuse, said Murray's lawyer, Terrance Hoffmann of Syracuse.

Murray has been an alcohol and substance abuse treatment counselor at Five Points since 2004. He complained to state officials that prison officials were abusing federal grant money for inmates' substance abuse education, Hoffmann said.

The prison wasn't giving the inmates anywhere near the 330 hours that were required to complete the program, Hoffmann said. The prisoners were getting less than half that time, he said. Murray claimed the prison falsified documents by overstating inmates' attendance at the treatment programs. read more »

Bad-Faith Claim Sticks In Office Depot’s Row With AIG

Office Depot Inc. can continue to pursue its suit alleging AIG Specialty Insurance Co. failed to pay for the company’s losses from a whistleblower suit after a California federal judge on Tuesday ruled state law precluded the payment but let the company proceed with a bad-faith claim against the insurer.

Judge Stephen V. Wilson dismissed Office Depot’s breach of contract claims against AIG, finding the state insurance code barred the insurer from paying on a $30 million claim Office Depot made after settling a California False Claims Act lawsuit.

“AIG therefore did not have a duty to defend or indemnify Office Depot against the whistleblower suit, and was in fact statutorily precluded from doing so,” Judge Wilson said in his decision. read more »

WHISTLEBLOWER settlement news:

SEC Issues $10M In Whistleblower Awards Over One-Week Period

In a clear sign of the increased awareness – and effectiveness – of the SEC's whistleblower program, the SEC awarded four whistleblowers, over a one-week period in May, a total of nearly $10 million for their assistance in three separate enforcement actions.

May 13, 2016: the SEC awarded $3.5 million to a whistleblower who provided useful information in an ongoing investigation. Notably, the information the whistleblower provided did not cause the Commission to open a new line of inquiry; rather, the information "significantly contributed" to the ongoing investigation by focusing the Commission on a particular issue and providing additional settlement leverage during its negotiations with the company.

May 17, 2016: the Commission announced an award of $5-$6 million (its third highest in history) to a "former company insider" who provided a detailed tip, which, according to the Commission, "led the agency to uncover securities violations that would have been nearly impossible for it to detect but for the whistleblower's information."

May 20, 2016: the Commission jointly awarded more than $450,000 to two individuals for a tip that led to the opening of a corporate accounting investigation and for their assistance as the investigation proceeded.

Andrew Ceresney, Director of Enforcement for the SEC stated that when employees – who are often well-positioned to identify wrongdoing – "report specific and credible tips to us, [the SEC] will leverage that inside knowledge to advance [its] enforcement of the securities laws and better protect investors and the marketplace."

These awards reaffirm the SEC's intent to encourage whistleblowers to come forward and provide useful information – and show that the program is gaining momentum. The SEC's whistleblower program has now awarded more than $62 million to 28 whistleblowers read more »