Deciding to become a whistleblower – whether under the qui tam provisions of federal or state false claims acts, the IRS Whistleblower Reward statute, or the SEC whistleblower program – is not a decision to be taken lightly.
While reporting fraud on the government can be personally rewarding from a moral, ethical and financial standpoint, it can also be very difficult in terms of the stress and anxiety associated with standing up to powerful corporate interests.
The decision to become a whistleblower can be a life-altering experience. Consult with attorneys experienced in whistleblower litigation, who will take time to ensure that all of your questions and concerns are identified and addressed. Only when you fully understand the pros and cons of becoming a whistleblower will you be able to make an informed decision.
One of the most rewarding aspects of becoming a whistleblower is standing in the shoes of the government while pursuing a recovery for fraud against taxpayers or (for the SEC) investors. Whistleblowers are courageous individuals who recognize a wrong and are willing to take risks in order to see that the wrongs are corrected. Taking such a step can be extremely gratifying, particularly when the whistleblower’s claims are proven and result in a recovery.
Of course, personal gratification isn’t the only benefit of becoming a whistleblower. For example, in qui tam cases under the federal False Claims Act, whistleblowers (or “relators”) can be entitled to a share of the recoveries that result from their lawsuits. This is intended to encourage people to step forward and take the risks involved in reporting fraud. The amount that the relator can receive most often ranges from 15% to 30%, depending on whether the government intervenes in the case and the extent to which the relator substantially contributes to the prosecution of the action.
Tax Fraud whistleblowers are likewise entitled to rewards for recoveries by the Internal Revenue Service (“IRS”) resulting from the whistleblower’s efforts. The Tax Relief and Health Care Act of 2006 specifies (in the right circumstance) that rewards for informants be at least 15% and as much as 30% of the total taxes, penalties and interest collected by the IRS. The final determination is dependent upon the whistleblower’s actual contribution to the case.
Likewise, the SEC and CFTC Whistleblower Programs provide financial rewards to whistleblowers who properly report covered fraudulent misconduct that leads to a civil recovery. A whistleblower who reports ANY securities law violations will receive a reward if the SEC and any other government authorities recover monies. Additionally, a whistleblower will receive 10 percent to 30 percent of the monies the SEC and other government authorities collect based on the whistleblower’s information if more than $1 million is collected.
Filing a qui tam or whistleblower suit is not for the light-hearted.
In addition to the stress and anxiety associated with reporting a fraud, qui tam cases are filed under court seal. This prohibits the whistleblower from disclosing the existence of the lawsuit to anyone. The purpose of the seal is to allow the government to covertly investigate the allegations made in the whistleblower’s case. Until the government’s investigation is complete, the relator is prevented from discussing the case with anyone, including family, friends or co-workers. This can be very difficult, and many of our clients have found it lead to feelings of isolation as the case progressed.
Conversely, once the government completes its investigation, the qui tam case will eventually be unsealed and the whistleblower’s identity will become a matter of public record. This could potentially have an adverse effect on the whistleblower’s employment, social activities, and other aspects of his or her life.
Finally, qui tam and tax fraud suits often take years to resolve, and the results cannot be predicted. The length of the process and the uncertainty that comes with it can be incredibly taxing on the whistleblower.
McEldrew Young Purtell Merritt, Attorneys-at-Law, represents whistleblowers nationwide. For a free confidential consultation, please call Eric L. Young, Esquire at 1-800-590-4116 or fill out our contact form.