How Much Do You Get for Whistleblowing?
Attorneys at McEldrew Young Purtell Merritt have represented whistleblowers for more than a decade. We have first hand experience with a number of the government’s reward programs including the False Claims Act, the Internal Revenue Service whistleblower program, and the Dodd-Frank whistleblower programs of the Securities & Exchange Commission and the Commodity Futures Trading Commission. Each reward law/program contains different provisions, but we can talk generally about the reward an individual might get for whistleblowing.
The Government only issues awards in successful cases. There is no upfront payment for information. When the litigation ends (whether it is 2 years – very fast – or 15 years), only then will you get a reward from the government. If the defendant gets on a payment plan, you might also receive your money in installments.
The standard amount the government offers to whistleblowers as a reward for blowing the whistle successfully is 10 to 30 percent of the amount the government recovers from the defendant. Each program varies, however. In a declined False Claims Act case, for example, the percentage is narrow – between 25 and 30 percent of the amount recovered.
Some programs have limitations on the amount of the reward. For example, there is a cap on the reward for FIRREA whistleblowers of $1.6 million. Although there has been talk of the need to lift this cap, it still exists for certain mortgage whistleblowers. There is also a cap on the recovery for FinCen whistleblowers.
Ultimately, when the amount of money that the whistleblower earns is based on a percentage, valuing a potential case requires some estimation of the amount of damages or penalties the government might be able to recover. In a securities case, the SEC might seek disgorgement of all profits earned as a result of the improper conduct. In a False Claims Act lawsuit, the Justice Department can seek a statutory penalty of between $5,000 and $10,000 (adjusted for inflation) for each false claim plus treble damages as compensation for its losses.
When all is said and done in a successful case, damages might be $1 million or they might be in the billions. In the SEC and CFTC programs, the government’s recovery must exceed $1 million to qualify for a reward.
When you are calculating your potential recovery, you will also need to plan for the subtraction of attorney fees. A contingency fee can take a healthy portion of the reward.
Government whistleblower awards have also been ruled to be subject to taxes. You will need to consult a tax professional on this matter, but the IRS will most likely take a healthy chunk of your reward as well.
We say all of this upfront not to discourage you from whistleblowing, but to ensure that you enter it with your eyes wide open. There are no guarantees in whistleblower cases. It is akin to a lottery ticket plus the satisfaction of knowing that you have done the right thing.