Hagens Berman Blog

5 Reasons Why Whistleblower Tips Are So Important

by HB Whistleblower Legal Team

05/12/2016

Submit Tip:

Anyone who watches crime TV knows that helpful, bad-guy-crushing info comes from tipsters – the insiders with the scoop. While the world of whistleblowers reporting fraud doesn’t typically actualize in secret calls at payphones, self-destructing messages or meetings in dark parking lots, whistleblowers’ information can lead to government penalties in the billions of dollars, and with good reason. Whistleblower tips are important and they can result in criminal charges against wrongdoers and changes in policy. Need more convincing? Here are five reasons why reporting fraud is so crucial:
 

1. The majority of corporate fraud is reported through tips.

That’s right. Not only do whistleblowers bring forward valuable information that brings rewards to them and punishes fraudsters, but whistleblowers lead the pack in fettering out corporate fraud.

The vast majority of corporate fraud is detected by tips (42.4 percent), which came out on top compared to management review, internal audit, accident, external audit, surveillance, law enforcement, confession (not so surprisingly) or other means.

These statistics from the Association of Certified Fraud Examiners (ACFE) alone prove that whistleblower tips are a viable means of getting the job done and effectively detecting corporate fraud, and the U.S. whistleblower laws in place make it good and rewarding practice. Under the Dodd-Frank whistleblower programs and the state and federal False Claims Act laws, a successful whistleblower complaint can mean between 10 and 30 percent of the government’s overall recovery awarded to the whistleblower.

These whistleblower laws also create protections for whistleblowers; the False Claims Act’s Anti-Retaliation Provision prohibits termination, suspension, demotion, harassment or any form of discrimination in the terms and conditions of employment.

Additional programs under the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) extend similar benefits to whistleblowers, furthering rewards and protections for those who choose to blow the whistle on fraud against the government.

Another boon for whistleblowers who choose to offer tips on fraud: whistleblower attorneys have resources via anonymous tip lines to help protect those who report fraud against the government. By choosing the right whistleblower attorney, whistleblowers can further protect themselves from retaliation and can rest assured that their claim is brought in the safest and most effective manner possible.
 

2. Fraud costs taxpayers billions of dollars every year in the U.S.

Since 1986, False Claims Act recoveries (both federal and state) total more than $28 billion. In 2014 alone the Department of Justice recovered a record-breaking $3.5 billion in False Claims Act cases initiated by whistleblowers. Without whistleblowers, this syphoned funding would all be lost to the fraudsters. When they report fraud, whistleblowers do a service for everyone, not just those harmed by, for example, the securities fraud, kickbacks, health care fraud or construction/defense contracting fraud they’ve witnessed.
 

3. Reporting of fraud through company-established protocols often ends poorly for the whistleblower.

When we talk about the importance of reporting fraud and the benefits, protections and rewards that are available to whistleblowers, it’s important to remember that all of this exists under federal programs and federal and state whistleblower laws.

Increasingly, corporations develop internal “whistleblower” protocols, creating a perceived safe space for employees to point the finger at fraud. All too often, however, these internal reports fail the whistleblowers, leaving them with no legal protection against retaliation and no chance of any recompense for putting their job on the line.

For would-be whistleblowers, the existence of these landmines makes properly reported fraud all the more important to stopping corporate crimes. It’s key to be smart about how you blow the whistle. Internal reporting through company-established “whistleblower” protocols can have dire consequences. Before reporting on something within your company or organization, it’s best to speak with experienced whistleblower counsel at a law firm with a depth of experience ranging from financial fraud to the retaliation protection laws of the False Claims Act and the SEC and CFTC whistleblower programs.
 

4. The best vantage point is often an eye from the inside.

Typically, individuals who are close to the wrongdoing offer a unique vantage point, and oftentimes, whistleblowers offer insight into unseen actions and repercussions within a company. Would-be whistleblowers should be mindful that they may be the only ones with knowledge of fraud at hand. That said, it’s important that whistleblowers move quickly when making the decision to blow the whistle on false claims or securities/commodities fraud.

When filing a whistleblower claim, timing is critical and can in part determine the eligibility or percentage of your reward from the government for reporting fraud. If you think you’ve witnessed something that merits blowing the whistle, or if you need a second opinion, contact a whistleblower attorney to help you. The right whistleblower lawyer can conduct an evaluation of the potential fraud at hand and provide you with guidance in making your claim to the government.
 

5. Whistleblowers help justice reach places it wouldn’t otherwise.

Our final reason that whistleblower tips are important – beyond the whistleblower’s abilities to reclaim lost taxpayer money and enforce our financial market laws, whistleblowers often use their unique talents and perspective to fetter out fraud through federal whistleblower programs, their tips are important because becoming a whistleblower is a civic duty and helps right serious wrongs.

Whistleblowers help shed light on corruption that would otherwise go untouched, and when they choose to report fraud, they not only stand up for themselves against the fraudster but also perform a public service for the majority of us, because we all pay a price for fraud.

Fraud is serious. In the pharmaceutical and healthcare industries, whistleblowers have uncovered schemes that illegally increase the price Medicare pays for patient care, including unlawful billing for procedures or supplies. Healthcare fraud also includes payments to physicians or hospitals from pharmaceutical companies or others in return for drug promotion or purchasing – kickbacks – and off-label promotion of drugs and medical devices, leading only to fatter pockets for Big Pharma and the expense of public health.

In defense contracting, false claims can take many forms, including supplying the government with defective parts or intentional inflation of prices on government contracts or other schemes. Defense and construction fraud against the government can include lack of quality control, or failure to property test for defects or flaws in security.

Investors are preyed upon as well. In securities fraud, insider trading, Ponzi schemes and outright theft and embezzlement lead to an increasing number of whistleblower investigations each year.

Whistleblower tips shed a light on all kinds of wrongdoing, and those who have witnessed fraud or false claims against the government should realize the unique position they have. If you’re unsure about blowing the whistle, get the help you need to make your whistleblower claim.