08/27/2014 (press release: ReportGovFraudNow) // Jeffrey Keller
It’s an all-too-familiar story: A company discovers a way to bilk a government program and enrich itself at taxpayer expense. But increasingly, the story is getting a far more satisfactory ending. Frauds are being uncovered, and misappropriated funds recovered. A key reason for the change: the rise, and empowerment, of the whistleblower.
Whistleblowers are insiders who know of — or have reason to suspect — a scheme, and sound the alarm. The cases where they have sprung into action — and spurred positive results — abound these days, and more and more frauds are being stopped in their tracks. Some of these frauds — sometimes involving companies and firms that are household names — run in the hundreds of millions of dollars. Others are of a far smaller scale. But they all have one thing in common: They drain budgets and resources that were intended to help the people, not line the pockets of wrongdoers.
A recent case: A $1.3 million verdict in a qui tam lawsuit in San Francisco in June, where a jury sided with a whistleblower who had accused a local company of falsifying records in order to earn bonuses it was never entitled to. The company, Recology, had an exclusive contract — estimated to be worth some $300 million per year — to collect and recycle garbage in San Francisco. Under the agreement, it was to be paid bonuses for exceeding certain goals. The whistleblower — a former supervisor at the company — alleged that employees were systematically inflating the weights of recyclable material, so that Recology appeared to be recycling more than it actually was.
“The fraud continued, full speed ahead, only until the whistleblower stood up,” says Jeffrey F. Keller, a partner at the San Francisco labor and employment law firm Keller Grover, and a veteran qui tam lawyer. “Whistleblowers are our eyes and ears on the inside, helping to spot, and rein in, the scams and frauds that harm us all. They need to be encouraged and supported, not just because they are doing the right thing, but because we need them very much.”
In recent years, an array of laws and programs have been enacted, or expanded, to incentivize and assist whistleblowers. An increasing number of states — including California — are passing new statutes, or beefing up existing ones. Meanwhile, federal agencies such as the Internal Revenue Service and the Securities and Exchange Commission have launched their own initiatives. Many of these efforts have taken their cue from the gold standard of whistleblower laws: the federal False Claims Act. That statute not only allows individuals to file suit against those alleged to be ripping off the government, but it allows the whistleblower to share in any eventual recovery. It also protects him or her from retaliation for speaking out. Since the False Claims Act was substantially modified in the mid-1980s, it has spurred the recovery of more than $34 billion that would otherwise have been lost to fraud.
“You don’t often see a lot of agreement about how a law fares, or whether it is taking a sound approach,” says Keller, “but with the False Claims Act, there is a very clear consensus: This is an extremely powerful tool in the fight against fraud. Each year, we are able to steer billions of dollars back to where it was intended to go: to fund vital programs and help individuals.” The emergence of more state laws, and programs within government agencies, he adds, is only adding to the success.
“Fraud shouldn’t be a cost of doing business for the government,” says Keller, whose firm has offices in Los Angeles and the San Francisco Bay Area. “It shouldn’t be something we just accept, but something we uncover and defeat. Whistleblowers let us do just that.”
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