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The Savvy Whistleblower - A False Claims Act Whistleblower Blog

Dear IRS Commissioner – The IRS Whistleblower program doesn’t have to be a black box.

Nothing Requires the IRS to Be A Black Box.

Nothing Requires the IRS Whistleblower Program to be A Black Box.

Periodically, perhaps frequently, I rant about the IRS whistleblower program.  Why does the IRS think it can operate as a “black box?”  Why the over-application of rules against communicating with whistleblowers and under-application of rules that allow communication with whistleblowers?  I believe the problem is embedded within the IRS culture.  There’s an opportunity for the new IRS Commissioner, whoever that may be, to change the WO’s black box nature.

Recently, Taxpayers Against Fraud (TAF) posted a provocative message on its listserv.  “If you were going to have coffee with this nameless, faceless future IRS Commissioner, what steps would you suggest that he or she take to change the culture at the IRS for the benefit of the IRS whistleblower program?

When I think about one change that a Commissioner could make to improve the culture of the IRS for whistleblowers, I think of proper application of 6103.

6103 is the rule that IRS folks cite when they don’t want to talk to a whistleblower reward claimant about the actions the IRS has taken in response to a whistleblower claim. 6103 prohibits improper communication but has about twenty exceptions, including at least three that would cover whistleblower communications.  When I hear someone at the IRS say they cannot talk about a claim because of 6103, I complain about the overly broad application of the rule and the unnecessarily limited interpretations of the exceptions.  I point out that whistleblower communications qualify as exceptions to 6103.  Eventually, the IRS person and I acknowledge that the IRS person, for whatever reason, just doesn’t feel comfortable about communicating because of 6103, and we move on.

The situation has always bothered me, and I have it in the back of my mind whenever I am dealing with the Service.  I’ve been to some events with IRS WO staff.  I enjoy their company and like to hear their perspectives on the whistleblower program.  Over lunch one time, an IRS employee explained that IRS employees are disciplined severely for violations of 6103.  Even a whiff of a 6103 violation will make an employee’s life hell.  The reaction of most anyone is to avoid anything that looks like a breach of 6103.  The reaction is to overreact.  Don’t tell anyone anything about anyone else’s tax file.  Ever.  No matter what.

This closed mouth strategy extends to whistleblowers who want information about the status of their claim.  Because of 6103 and the history of severe discipline surrounding 6103 violations, people who work in the WO are often highly resistant to sharing information with whistleblowers.  When I point out the exceptions to 6103, they see that I am correct, but there is no incentive for WO staff to risk running afoul of 6103.  They won’t get any recognition for informing a whistleblower about a case; their communications may become part of a court case; and they might be investigated for a 6103 violation.  The risk of keeping a whistleblower informed just isn’t worth it.  It’s easier and safer for WO staff to keep quiet.

My suggestions to the new IRS Commissioner are to do some special trainings for WO staff on the exceptions to 6103, to exempt WO staff from disciplinary violations that could arise through communications with whistleblower claimants, and to incentivize IRS employees that work to take advantage of whistleblower information.  The training, if conducted properly, could help WO analysts to evolve their understanding of 6103 exceptions and how they apply to whistleblower claimants.  The exemption from disciplinary actions would help to lessen generalized fear associated with talking to whistleblowers about another file.  The incentives are needed because there are many disincentives to IRS employees who want to make use of whistleblower information.  Something needs to be in place that informs IRS employees that they will be rewarded for acting on whistleblower information, and these incentives need to extend beyond the staff of the WO.

A new IRS Commissioner could be important in changing the Service’s attitude toward whistleblower awards.  The changes I suggest would be relatively easy and are fully within the power of the Commissioner.  Too often, whistleblower advocates run to Congress and want more laws put in place because they believe new laws are the answer to the problems.  The major problem I see with the IRS is not a dearth of rules but negative attitudes and a closed mouth culture.  Good leadership is the way to change both.



Whistleblowers and Standing – Private Rights of Actions are Limited

gavelI’ve run into two types of problems with understanding whistleblower standing lately – one from prospective clients and one from attorneys.  The prospective clients usually want to know why they can’t sue for violations of a particular statute; the attorneys want to know why they can.  I answer with some kind of reference to the legal concept of “standing.”

Standing is the right to file a lawsuit or a petition under the circumstances.  Many federal laws involving fraud against the government can only be brought the government.  In other words, only government enforcement agencies have standing. In other words, a whistleblower who happens upon fraud against the government cannot sue the fraudster under a specific statute because he does not have standing under that statute.

Three elements must be in place for someone to get standing to appear in court.  These are 1) there must be an actual (live) controversy, 2) the federal statute in question gives the federal court jurisdiction to hear the matter, and 3) the parties are residents of different states or otherwise fit the constitutional requirements for federal court jurisdiction.  All three of these elements must be satisfied in order for a party to bring a case in federal court.

Prospective clients get confused, oddly enough, about the first element, the requirement for an actual or live controversy.  The controversy must be between the plaintiff and the defendant.  Whistleblowers tend to gloss over the fact that the live controversy must have damaged them personally and directly.  They also overlook the fact that many federal statutes give only the government standing to bring an action for violations of those statutes.  Let’s look at a hypothetical.

Client discovers massive off label marketing violations while working in sales for a pharmaceutical manufacturer..  Client looks online and finds out that a US attorney in California is suing another manufacturer for the same conduct and is using Federal Food, Drug, and Cosmetic Act violations as the basis for the lawsuit.  Client reasons that he can also sue under the FD&C.  Client tells attorney to file an FD&C lawsuit on behalf of the client. Attorney wonders why she didn’t go into accounting.

This problem is easy to address.  The live controversy, FD&C violations, is between the government and the manufacturer, not between the manufacturer and the client.  FD&C isn’t in place to recompense individuals.  The client has no recourse under FD&C and cannot bring a case under FD&C.

BUT – if the circumstances allow, the client can bring a False Claims action.  If the client has knowledge of certain kinds of lies told by the manufacturer to the governments, the client may be able to bring an action under the False Claims Act.  The FD&C violations would be “underlying” violations that form the basis for the False Claims action.  In other words, the manufacturer may be lying about its compliance with the FD&C and the client may have knowledge of those lies.  If so, those lies would be false claims, and those false claims could be reported through the False Claims Act.

I run into attorneys who have the opposite reaction to the hypothetical; those attorneys know full well that an individual does not have standing under many statutes, like the FD&C.  They can’t understand how an individual can get standing to address FD&C violations through a False Claims action. I go through the FCA spiel, talk about how the whistleblower stands in the shoes of the government, talk about the obligations the whistleblower has to meet to achieve a monetary award, yada yada.  Attorneys are usually skeptical, and I understand why. FCA actions are exceptions to the normal rules of standing, and they aren’t part of the law school curriculum or bar exams. To a well-trained attorney, an FCA action seems like some kind of ninja law.  Attorneys would rather stick with something more traditional, like wrongful termination actions or anti-retaliation law violations.

Sorting through standing questions is just the start of a qui tam action, but standing is a big hurdle.  Experienced qui tam attorneys have successfully addressed the standing issue, but a lot of attorneys like to dabble in False Claims actions, and they make mistakes.  I’ve been asked to do a post mortem on some of these mistakes, and it’s sad to see how attorneys and clients can get confused and really mess up a qui tam before it ever gets rolling.  Usually, the damage cannot be undone, and the claim is ruined.

FCAs, in the best of circumstances, are highly speculative propositions.  Confusion about standing leads to confusion about rights of action, and if all this leads to a misstep in drafting the complaint, the case is doomed the minute it is filed. Please seek experienced False Claims counsel if you want to use the FCA to address fraud against the government.  Make sure the relator has standing.


Stuff I Use – Dual Monitors

dual monitor set upLast week, a colleague set up dual monitors for my desktop system, and it makes all the difference in the world for the way I write big documents.  I can drag and drop content easily; I can keep track of multiple files, and I can monitor my email, twitter account, whatever…without sacrificing screen space.  I can’t imagine why I would ever go back to a single monitor system for my writing.  The change to dual monitors makes things much easier, and I can get documents done faster with fewer problems.

Qui tam complaints can be huge.   Recently, I was working on amending a complaint that totaled more than 200 pages.  I was adding content and expanding the number of pages, so the document was becoming unwieldy.  I estimated I had about a hundred pages of new material to incorporate, and I was worried the new content would be confusing and overly technical.

I was also working with a colleague who had his own ideas about what to add and what to change in the document.  This meant that in addition to making my own changes to the document, I had to figure out how to incorporate my co-writer’s ideas efficiently.  I usually write alone and hand the document off to one or more proofreaders.  This project was different. We wanted to reconsider every aspect of it – content, organization, wording – everything.  And we wanted to evolve the document by working together simultaneously. An asynchronous approach, handing my updated version of the document to my colleague after I was done, wasn’t going to work.

Fortunately, my colleague suspected that my desktop computer needed to be updated and that my existing set up was not the most effective way to go about the job.  He walked into my office and immediately criticized my monitor, my mouse, and my keyboard.  He demonstrated, to the extent he could, the advantages of dual monitors, and he recommended a track ball and a split keyboard.  I had been vaguely annoyed with my computer set up anyway, and I was slightly intimidated by the task we had before us, so I was easily persuaded.  Off we went to Best Buy to purchase two new 23” monitors, a Logitech trackball, and a Microsoft split keyboard.  The package cost a somewhere between $500 and $600, depending on what new cables we had to add.  We went back to my office, and he set everything up.

Writing heaven ensued. I had an open file with a list of paragraphs to include in the document on my right screen with the original document open on the left monitor.  I highlighted a couple of sentences on the right and dragged the language to its spot on the document and dropped it in place.  Oooohh. I got shivers. This new set up was going to work well.

My colleague insisted on setting the monitors far back on my desk. I am used to working with my monitor very close; my eyesight is not terrific, so I initially had problems seeing the menu line in software and the names of files in directories.  Because my colleague felt so strongly about the need for increased distance between me and the monitors, he tinkered with display settings to make it work. I don’t really know what he did or what settings he changed, but the current settings work great.  I can read everything on both screens without strain.  I am a little worried about replicating the display settings should something go wrong with the computer. I’ve decided to try not to think about it and to enjoy my new system.

The dual monitors are so helpful that I am trying to figure out why I’ve never seen other attorneys use a similar system.  I thought back to all the attorneys’ offices I have seen, and even for the attorneys that write almost exclusively for their practice, I have never seen a dual monitor system.  After getting used to the system over the last week, I am convinced that it’s the best way to manage the writing demands for my practice.  I won’t be returning to the single monitor set up any time soon.

It’s Just Dicta – A little legal analysis for whistleblowers

dictaArmchair legal analysis can be irresistible to whistleblowers.  Why fight the impulse?  Whistleblowers should be highly educated about their potential case.  Some surf the Internet to all hours of the night, and all of a sudden, they find a legal opinion that supports their point.  Those finds can be exhiliarating and validating for the whistleblower.  Just be aware that a common error in legal analysis is the misuse of dicta.  Before you trumpet your finding to any and all that will listen, be aware that the little gem of information you found may not be helpful to your cause because “it’s just dicta.”

The term “dicta” refers to written opinions of a judge that do not embody the resolution or determination of the specific case before the court. Dicta are written expressions in a court’s opinion that go beyond the facts before the court and are individual views of the author of the opinion.  Dicta are not binding in subsequent cases as legal precedent.

“Dicta” is the plural form of dictum, in case you are interested in such things.

I used to be a hearing officer, and through that experience, I became intimately familiar with the way attorneys deal with dicta and holdings.  Before I was an attorney, I didn’t entirely grasp what was going on when someone would say, “It’s just dicta.”  I’ve learned that this is a way of dismissing a particular citation as not sufficiently authoritative.  In my practice now, I occasionally come across a well-meaning whistleblower who carefully reads a court case and triumphantly announces that she has found legal support for a challenging claim or legal position.  Sometimes this bit of information proves to be very, very helpful.  Sometimes, though, the whistleblower has just found some dicta.

Dicta, in argument, are often discussed as conforming to or contrasting from the holding of a case.  The term “holding” refers to the legal principle derived from a judicial decision. The holding is the part of the written opinion of a court in which the law is specifically applied to the facts of the specific  controversy before it, in other words, the “instant” case. The holding is relied upon when courts use the case as an established precedent in a subsequent case.

Laymen confuse the holding and dicta.  Sometimes, lawyers do too. Sometimes, lawyers blur them intentionally.

I used to preside over administrative hearings, and those areas of law can be very sloppy.  In that particular area of law, one could literally find an appeals panel opinion to support almost any position one wanted to take in a particular case.  When I would take the trouble to read the original opinion cited by one of the attorneys, it was not unusual to find that some dictum was taken completely out of context.  The holding of the case was not relevant, in conformity with the dictum, or contrary to the dictum.  After seeing so many instances of non-conforming dictum being improperly presented to support a contrary holding, I started requiring counsel to provide me with hard copies of any cases cited.  I found the practice of misinterpreting dicta was rampant.

Through my practice of routinely comparing dicta cited to case holdings, I learned that many attorneys simply messed up.  They would do a computer search for an odd topic, and the legal research service would duly spit out a list of cases.  The attorneys took the highlighted quotes and stuck them in a memo.  The memo went to the hearing officer.  Not the greatest way to approach legal analysis, but it’s understandable.

Whistleblowers don’t usually have legal research engines; they frequently happen upon a case during an Internet search.   Cases on the Internet are put there for a whole lot of reasons, many of which have nothing to do with the desire to accurately reflect the state of the law on a particular subject.  On the contrary, many cases are put onto mainstream Internet sites precisely because they are weird or startling or just plain wrong.  Whistleblowers who want to delve into doing their own legal analysis should keep in mind that the pool of cases to which they have access through the Internet is flawed.  Lots of mainstream Internet cases are, to put it bluntly, legal pigs.  It’s going to be tough for counsel to make some of those pigs fly.  A qui tam case needs something better.

I am abundantly sympathetic to whistleblowers that often have to fight against attorneys pushing the opposing viewpoint, and I again see how the problems of improper legal analysis arise, and yes, those problems are completely understandable.  Too often though, I have seen a whistleblower risk a lot for a skewed interpretation of some written remark in a legal opinion.  Try to keep in mind – your little gem may only be dicta.  Get some decent legal advice.

On My Reading List – The Definitive Dossier on PTSD in Whistleblowers

Monk had OCD not PTSD but what an awesome qui tam relator he would have been!

Monk had OCD not PTSD, but what an awesome qui tam relator he would have been!

Today, I saw Dossier was available and immediately downloaded it. I want to know if Michael Volpe found anything that matches my perceptions of whistleblowers.  Volpe is an investigative journalist. In Dossier, he explores links between PTSD and famous historical whistleblowers, like Frank Serpico.  Perceptions about whistleblowers and mental health are a problem because lawyers have arcane notions about people with mental health issues, and those notions sometimes wrongfully prejudice government prosecutors against solid qui tam claims.  Maybe Dossier will be a positive resource.

One in five people experience some type of serious mental illness at some point in life. Whistleblowers, like anyone else, are susceptible to, or actually experience, emotional issues and mental health problems.   Whistleblowing creates additional stress for people, and qui tam relators have all the typical burdens of life, plus those created by the act of whistleblowing, plus those generated by the qui tam process itself. Bringing a qui tam action takes extraordinary patience, skill, and drive.  Many qui tam claimants I come across have the drive, but no patience. In addition, they have skills in a certain area, but the skill set needed to bring a qui tam claim to successful resolution is broad based.  Many would- be qui tam claimants like to shake things up, and some are confrontational.  Many, many whistleblowers need the instant and persistent validation of having colleagues, friends, and family tell them that the fraudster is a bad operator, the whistleblower is right, and on and on.  Unfortunately, qui tam relators don’t have the ordinary opportunities for emotional support that other litigants have; the qui tam complaint remains under federal court seal, usually for years, and the relator is not allowed to talk to anyone about it, except for qui tam counsel.  For the most part, the qui tam whistleblower suffers alone.

It’s a recipe for disaster.

I am wondering how Michael Volpe will deal with the issue of whistleblowers and mental health disorders in Dossier and how his personal prejudices about PTSD will impact the book.  I wonder about Volpe’s grasp of either subject – whistleblowers or PTSD. I assume Dossier is an anecdotal survey and wonder if anyone has performed a properly designed study about the prevalence of PTSD in whistleblowers.  I would love to know, but in terms of priorities, researching this subject takes a back seat to the thousands of other subjects I have to research.  Even so, it’s a topic I mull over fairly regularly.

I believe it’s likely that PTSD is more prevalent in qui tam relators than in the general population.  I believe whistleblowing can trigger PTSD.  Qui tam whistleblowers may have suffered some trauma, and the revelation of fraud may trigger recollections of earlier life-threatening experiences.  For the whistleblower, the discovery of fraud may cause a whistleblower to feel as if his life is being threatened, and depending on the nature of the fraud, an objective person may say those perceptions are appropriate or inappropriate for the siltuation.  Whistleblowers and whistleblower counsel need to know that whatever the current circumstances may be, those feelings of danger are very real and detrimental to the whistleblower.    When I see what seems to be PTSD in a whistleblower, I recommend a comprehensive mental health assessment. These kind of recommendations can be difficult.

I know my colleagues will often resist making such suggestions to clients and that even a whisper of a mental health issue can prejudice a prosecutor against a qui tam relator, no matter what the mental health issue might be.  PTSD, depression, anxiety – those issues have nothing to do with the merits of a claim.  I could imagine bipolar disorder having a small impact on the way a claim is managed; I can imagine Borderline Personality Disorder having some impact, maybe.  A relator with Obsessive Complusive Disorder could be an awesome asset in a case.  Think about someone like the television character Monk for an example. Sure, he needs some accommodation for the OCD but what a smart and talented fellow!  Monk would be a terrific qui tam relator.

In any event, I am just an attorney who happens to have a background in human services working with people with disabilities.  Attorneys can help qui tam relators with their qui tam cases, but for mental health assessment and emotional support, qui tam relators need to seek professional and qualified mental health practitioners, and they can’t expect their attorneys to fill this need.  All attorneys, including government prosecutors could/should improve their understanding of the diverse nature of mental health issues to, at minimum, reduce the chances of a good qui tam claim being tainted by prejudice.  It’s kind of ridiculous that whistleblowers still face such stigma.  The legal profession needs to become a little more tolerant of differences in general.

The intolerance of the legal profession is a whole other subject, but for PTSD and whistleblowers, Volpe’s Dossier is one of the few mainstream discussions available right now.  If anyone wants to check it out, look for The Definitive Dossier on PTSD in Whistleblowers by Michael Volpe, published by Amazon Digital Services, Inc.  You can be find it at Amazon.com.

CLEs on the Cheap from West Legal Ed!

I got the app!I fantasize about cheap CLEs because I like to learn new things without regard for details like requirements or expense.  I have a few areas of life where there is little to no constraint, and one of those is books.  If I want a book, I get it.  Today, I add CLEs to that very short list.  Now, for a whole year, I can get whatever CLE I want, as long as it is on West Legal Ed!  I am ridiculously excited.

CLE stands for “Continuing Legal Education,” and up to a year ago, I had to take courses that other people thought I should take.  I am licensed in four states, and those states put me through the beginner lawyer requirements each time I got a new license.  The state bars often call these newbie courses “Bridge the Gap.”  They bring in some harmless curmudgeon to talk about employment law, some thirtyish white guy to discuss obscure ethics issues, and some AA member to tell us we will probably drink too much.  The only thrill from my annual CLE compliance run was the TAF conference, where I could listen to and talk about nerdy qui tam topics for two days straight.

New York, after the newly admitted attorney has a few years of experience, requires counsel to take courses in three areas – ethics, skills, and law practice management (LPM).  I always have tons of skills credits, and smart CLE marketers combine skills with ethics because they know almost every attorney needs ethics, but LPM?  LPM credits are not required by a lot of states, and when you find them, they are distressingly cookie cutter.  How many LPM credits can a boutique firm practitioner take without falling over from boredom?  You get an hour of malpractice training, which counts for LPM credit, plus you get a discount on your malpractice insurance.  Sure, sign me up for that, but afterwards????  I don’t want to run a larger firm, and I don’t care about the problems of larger firms.  Predictive coding for cases???  Management by objectives??  Been there, done that, a long, long time ago.  Hey, State of New York! Let me do my nerdy, geeky skills stuff, and let me alone.

No go.  State of New York wants its LPM quotient met, and by goodness, I will comply.  I needed something marginally interesting, in a convenient format.  Fortunately, I finally comply for audio downloads, so I checked into Westlegaled.com, and they have bunches of technology and marketing oriented programs that qualify for LPM credit.  Cool.  I buy seven hours of these.  Then, Westlegaled contacts me and asks if I want to buy an annual subscription.  I say, well, too late; I just bought all this crap.  They say, “Hey, no problem.  We will return those purchases, and give you the deal, and let you buy those programs or whatever on the subscription.”  I am sold!  I think it worked out to 188.00 difference, and I can now take whatever CLEs I want for an entire year for less than $200.00!  If you pay for CLEs, you know that’s a steal.

I still have to take the LPMs, but I can tolerate them if they are technology and management focused.  I listened to my first one about setting up a niche practice, and it was painless, even interesting.  I will get through my LPM requirements, and then I will start banking credits for future years.  I predict I will be in CLE heaven – doing skills credits, and only skills credits – in exactly one year.  Sigh…. Paradise…..

Training at the DC Chapter of the ACFE

The ACFE Challenge CoinOur new little group presented on whistleblower law for the DC chapter of the ACFE.  The day went well.  I was surprised to find that the DC chapter is afraid of a little snow, but those in attendance were big fun.  Three of us moderated the event – me, Tom Borgers, and Louise Harris.  We discussed international whistleblower trends, national whistleblower trends, the four mandatory qui tam programs in the US, and how those programs compare to anti-retaliation programs.  People liked the small group exercise, which always surprises me because small group exercises are commonplace in higher education circles, but no one seems to do them in continuing legal or professional education.  I liked teasing the participants and then poking at the OSC representative, Shirine Moazed, a little bit.  She took it well and defended her office like a champ.

Shirine Moazed is the Chief of the Washington Field Office of the U.S. Office of Special Counsel.  She spoke for close to forty-five minutes about federal government whistleblowers and the anti-retaliation policies in place to protect them.  I could not resist bringing up Scott Bloch, the former head of the OSC, who filed a complaint in a Virginia court complaining that his efforts to protect whistleblowers at the OSC were squelched for political reasons.  Shirine corrected me on a lot of points.  She offered up some explanation about Bloch not caring enough about retaliation complainants to have messed with them; he reportedly spent most of his time messing with “disclosure” complainants.  Because of this distinction, the damage suffered by federal employee whistleblowers is thought to be far less than one would imagine – or so I’m told.  I listened politely, tried not to roll my eyes, and later was congratulated for my self-restraint.

My view is anti-retaliation programs that do not have a qui tam component are doomed.  Retaliation, like it or not, is human nature, and for a variety of reasons, it’s really, really tough to get a pro-whistleblower decision.  For that reason, I think qui tam programs make the most sense.  If someone is going to retaliation against you for pointing out some kind of misconduct, make them pay for the privilege.  The defendant will think twice about punishing whistleblowers in the future, and the whistleblower can walk away with a little cash and some self-respect.

Participants in the session walked out with a better than average understanding of what qui tam programs are available and how to spot a likely qui tam claim.  I haven’t done any kind of exhaustive search on the subject, but I believe the United States is the only country in the world offering mandatory qui tam programs right now. Lots of countries and government entities talk about whistleblower protection.  Keep in mind that unless there is a qui tam component involved, anti-retaliation provisions aren’t going to help a whistleblower much.

When you speak at one of these events, the Chapter typically rewards you with a little gizmo.  Louise, Tom, and I each got a little ACFE challenge coin.  Louise explained the lore of the coin to me; she claims that if we go drinking, we put our coins on the bar, and whoever doesn’t have a coin has to buy the round.  I’m skeptical because I have been at a lot of bars with a lot of CFEs, and I’ve never seen these coins before, but she has me convinced enough to carry the coin with me to all future events.  If I see you at an event, you can bet I am laying that coin down.  I figure it will save me a fortune.

Hoo Boy! Can’t Wait to Speak to the DC Chapter of the ACFE!

I’m not kidding.  Tom Borgers, Louise Harris, and I are going to be at the March 25th meeting of the DC chapter of the Association for Certified Fraud Examiners, and I, for one, plan to enjoy myself.  We’re going to do a half day session worth 5 CPEs, and it will mark the first time that Borgers is appearing with the firm.  Much as I like Tom, it’s really the panel discussion with government folks that has me excited.

We’re going to talk about whistleblowers, of course, and I promise it won’t entirely consist of the same old crappy “talking heads” kind of presentation you may be used to seeing, particularly from lawyers.  We’re going to talk about international and domestic whistleblower programs; we’re going to look at the nitty gritty of some government whistleblower programs, and then we are going to practice identifying types of whistleblower complaints and for which government reward programs they may qualify.  Fun, yes. But here’s the really exciting part….

I got word yesterday that the United States Office of Special Counsel is sending a spokesperson that has been with the Office for years, and I am very interested in hearing what she has to say because she was with OSC before, during, and after Scott Bloch.  Like a zillion other folks, I was deeply interested in news reports of Scott Bloch’s escapades when he ran the OSC, from the opening anti-gay hiring zingers to the FBI raid of his office to his contempt conviction to his Virginia lawsuit alleging that he was pressured to close thousands of whistleblower cases.  I have respect for Jason Zuckerman, Bloch’s replacement, and I can’t wait to hear what the OSC is doing to dig itself out from the Bloch era problems.  Should be fascinating listening.

If you want to go, you can contact the DC chapter of the ACFE (?) or write Kathy@lindastengle.com for more information.

Whistleblower Hurdles – Scheme Complexity


Now, what happens again?

Now, what happens again?

Whistleblowers often develop their awareness of government fraud schemes over years. For me, I first had some nagging questions about what was going on; then, I studied those around me and formed a hypothesis.  I then watched for a few more years, refining and confirming my hypothesis. Then I started shooting my mouth off.  It was all clear to me because I had studied the misconduct for about nine years.  The scheme was not so easy for anyone else to understand because it was complicated and being conducted in a little backwater niche of the law.   

I’m like a lot of whistleblowers.  I get annoyed with having to wait in line to have a bureaucrat look at and take action on a whistleblower report of misconduct.  My clients typically have a simpler view of the way the bureaucrat decides to handle the complaint, and it’s usually very positive.  “Oh, man!  When the prosecutor sees this, he is going to salivate!”  Or “The only reason the government wouldn’t take this case is if there is a political conspiracy to squelch it.”

Mmmm, not so much.  Prosecutors want cases they can win, and they know they must be able to explain them to a jury.  If the subject matter is complicated, as it often is in financial industry cases, the whistleblower advocate has to be able to explain it to the prosecutor in an easy to understand way.  When I see a potential client fumbling around with a zillion papers, insisting on special coddling in order to be able to articulate the scheme, or insisting that only some rare quant can understand the violations being alleged, I worry the case is dead in the water.  I’m a very sympathetic listener.  If you can’t make me understand it, with my background, how are you ever going to get a jury or a prosecutor to understand it?

Prosecutors sometimes do salivate over a case but not as often as whistleblowers think they should.  I work with some great prosecutors who have a real zeal for protecting the government fisc, and then I work with folks who, well, just aren’t that into it.  They are more worried about things like the pile of cases they already have on their desk, or the firepower of the target defendant, or their win/loss rate.  Many times, they just don’t know what the heck the whistleblower is talking about or how they can use the admittedly new FERA to allow a case to go forward.

One of the nagging concerns I have about shops that keep doing the same type of prosecutions again and again is that fraudsters frequently change things up.  They add another layer of complexity to an already complex money laundering scheme, or they move accounts around, or they are doing creative things with synthetic CDOs that no one has ever considered.  If the anti-fraud legal bar is going to be effective, we need to be willing to learn new tricks, right?

We have to learn them through whistleblowers.  Be patient, guys.  Some of this stuff is new to all of us.

Got my CFE! Woot!

Not the logo I was thinking of.  Hmmm.

Wait!  I’m not an associate member, am I?

I am officially a Certified Fraud Examiner, and I am proud and excited.  I passed the application process, achieved the requisite level of experience working anti-fraud, took the test, and waited for the final approval!  Made it!

I was sufficiently intimidated by ACFE’s warning to use the logo and letters correctly that I read the logo rules book and had my paralegal check it too.  My membership package came last week, and in it was a nice looking certificate, the logos rule book (hard copy), a pin, and information about how to keep up with the CPE training requirements.  For me, the accounting aspect of the ACFE is what I find most useful.  Very few trainings for lawyers have anything to do with accounting, spreadsheets, or finance industry fraud.

Fraud Examination is the methodology for resolving fraud allegations from inception to disposition.  Because I am a qui tam attorney, I deal with fraud against the government and against shareholders.  In my cases, the whistleblower and I work to alert the government to a fraud or false claims scheme.  The government then decides what it wants to do about resolving the problem.  Other CFEs work in corporate compliance positions, and still more have their own practice and try to get expert witnessing work when they can.

Fraud examiners are different from forensic accountants and auditors.  Audits are recurring, and the auditors approach their work with a level of professional skepticism.  For the most part, audits are not adversarial.  Fraud examinations are adversarial in nature because they work to assign blame for a particular fraud.  Fraud examiners are trained to assume the investigation will end in litigation.  Forensic accounting, on the other hand, is work done by accountants for potential or actual criminal or civil litigation.  When I did some work for an economic crimes unit, I had an assignment to value stolen antiques and collectibles.  This was more of a forensic accounting task than a fraud examination.  We already knew everything about the fraud mechanism.  We were trying to figure out how much the guy stole.

So, how I plan to incorporate the CFE into my qui tam practice, but I had to study up on the use of the logo and the letters.  No stretching or distorting the logo; no changing its colors; no using it as a watermark.  Too bad, I liked that last idea.  On the letters, there was little direction.  After striking out with finding advice on my particular situation, I decided to put the CFE in the middle. The logo is going to be more difficult.  I know what I can’t do with it, just not sure what I will do with it.