Whistleblower Blog Archives - Page 20 of 35

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Offshore Tax Evasion and Cayman Islands Hearing Prompts Grassley’s Call to Follow IRS Whistleblower Program with Additional IRS Tools

July 29, 2008
Michael Sullivan

At the Senate Finance Committee’s hearing on the Cayman Islands and offshore tax evasion last week, Senator Charles Grassley reiterated the importance of the new IRS Whistleblower program to combat tax evasion, but also stressed the need for Congress to provide the IRS greater tools to address offshore tax evasion.

The July 24 hearing focused on GAO’s investigation into the Ugland House, a law firm’s office building in the Cayman Islands that is the registered address of thousands of corporations. The hearing also examined
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IRS Predicts Whistleblowers Will Be Important to Efforts to Combat Offshore Tax Evasion After UBS

July 28, 2008
Michael Sullivan

This past week the IRS Commissioner of the Large and Midsized Business Division summarized the IRS’s efforts to combat offshore tax evasion. He predicted that whistleblowers will become increasingly important to the IRS’ efforts, given the existence of the new IRS Whistleblower rewards.

IRS Commissioner Frank Ng described to Congress the “critical importance to tax administration in this country — the practice of sheltering U.S. earned income in foreign jurisdictions as a means of avoiding U.S. taxation.”

He identified as “Tier I” issues the following transactions::

Transfer of intangibles/cost sharing
Abusive foreign tax credit transactions
Abusive hybrid instrument transactions
Transfer pricing
Foreign earnings repatriation
The IRS Commissioner described some of what has been revealed through ongoing investigations:

Ongoing IRS Investigations

In the area of ongoing investigations, let me start by laying out some of the facts about one case that I am able to discuss, because the case that I am about to describe is a matter of public record. It involves a major Swiss bank.
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Nursing Home Operators Plead Guilty to Medicaid Fraud and Abuse of Patients

July 27, 2008
Michael Sullivan

Having lunch this week with a public servant who investigates heath care fraud, I was struck once again by his descriptions of abuses that nursing home residents too often suffer, many of which our whistleblower attorneys had also encountered in past cases.

It is damnable enough to steal federal and state taxpayer funds that are supposed to pay for care of our elderly through Medicare and Medicaid. It is another level of depravity to ignore our elder citizens’ medical needs–and even to steal from
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Hospital System Settles Medicare Fraud False Claims Act Allegations for $60 Million

July 26, 2008
Michael Sullivan

The government’s announcement this week of a $60 million Medicare fraud settlement with a Missouri hospital system is yet another example of the need for ongoing deterrence of health care fraud.

According to the government, Lester E. Cox Medical Systems violated the False Claims Act, the nation’s primary tool for combating fraud against taxpayer funds. Dating back to 1995 and continuing to recent years, Cox allegedly committed various unlawful acts, including submitting fraudulent cost reports to obtain Medicare funds, entering into illegal arrangements
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Whistleblower Awards Work To Protect The Government From Fraud

July 24, 2008
Michael Sullivan

The False Claims Act provides awards of 15 to 30 percent of judgments and settlements against those individuals and companies that perpetrate schemes to defraud the federal government. In the event a whistleblower files a lawsuit in the name of the United States, “blows the whistle” on the fraud scheme and a financial recovery results, the whistleblower is entitled to a percentage of the recovery. Those cheating the government pay these rewards. Not one dime comes from taxpayers. The reason for this is that the
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Acknowledging the Integrity That Whistleblowers Stand For in Bringing Qui Tam Whistleblower Cases Under the False Claims Act

July 18, 2008
Michael Sullivan

“What motivates whistleblowers” is a question that our whistleblower attorneys are asked frequently. Basic honesty and integrity–trying to do the right thing–is what we see most.

It is deeply satisfying when a whistleblower’s courage in insisting on honesty and integrity is recognized and applauded. I just received this note that was sent to a client who had “taken a stand” for honesty and integrity in handling federal grant funds at an educational institution, and I am reprinting portions here. Its truth and eloquence speak
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Major “Qui Tam” Whistleblower Law Amendments Clear House Judiciary Committee, Which Approves “False Claims Act Correction Act of 2007”

July 16, 2008
Michael Sullivan

Very important amendments to the nation’s major whistleblower law, the False Claims Act, cleared the House Judiciary Committee today. The False Claims Act Corrections Act of 2007 is intended to restore the False Claims Act to its originally intended usefulness. It will eliminate many “loopholes” that dishonest government contractors have used to avoid liability.

Our whistleblower lawyer blog has often written about the False Claims Act, the qui tam law that empowers private citizens to report fraud as whistleblowers or “relators,” and
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Whistleblower Attorneys at NELA Conference Address “Strategic Thinking in Whistleblower Cases”

July 1, 2008
Michael Sullivan

This past week, more than 450 of the country’s best employment lawyers who represent individuals gathered in Atlanta for the National Employment Lawyers Association’s Annual Conference.

I had the pleasure of appearing with a group of excellent attorneys on a panel of that discussed “Strategic Thinking in Whistleblower Cases,” moderated by Robin Potter of Chicago (who won a major victory last week).Speakers at the 2008 NELA Conference panel on “Strategic Thinking in Whistleblower Cases” were (front row) David Marshall and Bryan J. Schwartz,
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New IRS Whistleblower Rules Are Issued by U.S. Tax Court

June 5, 2008
Michael Sullivan

One of the most meaningful improvements of the new IRS Whistleblower Program authorized by Congress in December 2006 is that IRS Whistleblowers have an enforceable right to a reward when they report significant tax violations. To enforce that right, tax whistleblowers can seek review by the U.S. Tax Court of award decisions.

This week, the United States Tax Court has proposed amendments to its Rules of Practice and Procedure regarding whistleblower award actions, which can be found at http://www.ustaxcourt.gov/press/060208.pdf. The IRS Whistleblower Office is expected to review the proposed Rules now and provide feedback to the Court.

The Tax Court also has invited public comments on the proposed amendments, to be received by July 31, 2008.

Excerpts of the Tax Court’s announcement of the new proposed Rules for IRS Whistleblower claims are below:
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Whistleblower Lawyer Blog Update: New State False Claims Acts Reward Employees and Other Persons Who Report Fraud

May 23, 2008
Michael Sullivan

A wave of new “whistleblower” laws continues, inspired by the successes of the federal False Claims Act. These new laws include (1) state versions of the federal False Claims Act, and (2) the new IRS Whistleblower Rewards Program. At the same time, in 2008 Congress is considering legislation to strengthen the False Claims Act.

This article focuses on the new state False Claims Acts, which mirror the federal False Claims Act in important respects, but can differ in some significant ways. For employees who report fraud against the government and who face adverse employment actions, these new whistleblower laws may provide substantial relief.One of the new state whistleblower laws, the Georgia “State False Medical Claims Act,” became law on May 24, 2007. Participating in the signing ceremony with Governor Sonny Perdue were (shown above from left to right) Carrie Downing, Director of Legislative and External Affairs of the Georgia Department of Community Health; Dr. Rhonda Medows, Commissioner of the Georgia Department of Community Health; Inspector General Doug Colburn; Governor Perdue; Rep. Edward Lindsey, sponsor of the State False Medicaid Claims Act; whistleblower lawyer blog author Michael A. Sullivan of Finch McCranie, LLP; and Philip Consuegra, Legislative Assistant to Rep. Lindsey.

These new state False Claims Acts and the federal False Claims Act create civil liability for treble damages and potentially huge penalties for fraud and false claims submitted to the government. They authorize “qui tam” or “whistleblower” lawsuits by employees or other persons, who may share in the government’s recovery, as well as allow employees to recover damages for retaliation. These state False Claims Acts, like the federal Act, have unique procedural requirements that are foreign to most lawyers.

This article explains how the state False Claims Acts work, which itself requires an explanation of the unique and sometimes perplexing federal False Claims Act on which these state Acts are based. This article summarizes the background of the federal False Claims Act, outlines how it operates, and discusses the Act’s increasing use to combat fraud directed at public funds. This article also highlights the important differences between state False Claims Acts and the federal False Claims Act by focusing especially on one example, the new Georgia State False Medicaid Claims Act. Finally, this article also compares other states’ False Claims Acts, their retaliation provisions, and some of the recoveries that states have obtained to date.
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With Wall Street Bailout, Whistleblowers to Reveal Fraud and Abuses Through IRS Whistleblower Claims and Qui Tam False Claims Act Cases?

October 10, 2008
Michael Sullivan

Will the IRS Whistleblower Program and the False Claims Act be powerful weapons in redressing the fraud and abuse that led to the current financial crisis–and to the future fraud and abuse that is certain to target the “bailout” billions of taxpayer funds?

Fraud and abuse have never been in short supply. The ongoing financial crisis points to staggering amounts of past financial abuses that now threaten to wipe out Americans’ savings, if not undermine the world economy.

Now, the federal government’s stated
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1st Annual Report on New IRS Whistleblower Program Issued by Secretary of the Treasury

September 30, 2008
Michael Sullivan

When Congress authorized the new IRS Whistleblower Program in December 2006, it required annual reporting to Congress about how the new whistleblower provisions have been used, what results were obtained, and what recommendations to improve the program should be considered.

The Secretary of the Treasury has recently issued the first such Report, which summarizes the first 12 months of the new IRS Whistleblower Office.

For those who follow the IRS Whistleblower Program, the Report provides a look into the substantial progress made in a short time by this very small group within the IRS. These developments have been followed on this whistleblower lawyer blog since the infancy of the IRS Whistleblower Office.

Much-anticipated data about recoveries and rewards paid under the IRS Whistleblower Program is included in the Report. In FY 2007, the IRS paid $13 million in rewards to “informants” (whistleblowers), but those rewards were based on the lower percentages that applied before the IRS Whistleblower statute was amended effective December 20, 2006, to double the size of rewards available to 15-30% of the government’s recovery. Rewards for IRS Whistleblower claims submitted after December 20, 2006 should be much greater, especially since the new Program has generated a wave of submissions.

The IRS’s priorities for the Whistleblower Program in FY 2008 include revising old policies and procedures concerning whistleblower rewards, developing the criteria to be used in making reward decisions, soliciting feedback to help guide the new Program, and testing and then deploying a new case management system. (Some of the same information will be discussed in an upcoming article on “best practices” in pursuing IRS Whistleblower claims that I was requested to write for the TAF Quarterly Review, based on my interview of IRS Whistleblower Office Director Stephen Whitlock in early September.)

We congratulate the very capable staff of the IRS Whistleblower Office for all of their progress to date. For those interested in reading the full Report, the body of the Report is reprinted below:
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IRS Whistleblower Office Director and Tax Court Judge Gather with Whistleblower Attorneys

September 11, 2008
Michael Sullivan

For the second time since the new IRS Whistleblower office was created in early 2007, IRS Whistleblower Office Director Stephen A. Whitlock addressed questions from whistleblower attorneys at the Taxpayers Against Fraud annual conference yesterday in Washington. Joining him as panelists were U.S. Tax Court Special Trial Judge Lewis R. Carluzzo; Professor Dennis J. Ventry, Jr. of American University’s Washington College of Law; Erika Kelton of Phillips & Cohen LLP; and as moderator Paul D. Scott of the Law Offices of Paul D. Scott.
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Dismissal of Fraudulent Tax Shelter Charges Against Former KPMG Partners Is Upheld by Appellate Court

August 28, 2008
Michael Sullivan

As this whistleblower lawyer blog has discussed before, accounting firms that promote fraudulent tax shelters are prime targets of IRS enforcement efforts (often assisted by IRS tax whistleblowers).

In a decision last week, the prosecution of 13 former KPMG partners and other executives for their alleged involvement in fraudulent tax shelters was thwarted–again. A panel of judges from the Second Circuit Court of Appeals affirmed the trial judge’s dismissal of the charges against these KPMG defendants.

The court did not find the
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Attorney Assisting Offshore Tax Evasion Is Rewarded With Prison Sentence and Judgment to PAy of $2.7 Million

August 24, 2008
Michael Sullivan

As this whistleblower lawyer blog has written about often, abuses of offshore transactions have increasingly become a target of IRS enforcement efforts. A Utah attorney learned this lesson last week when he was sentenced to ten years in prison, and was ordered to pay $2.7 million, for his role in an offshore tax evasion scheme that deprived the government of more than $20 million in taxes.

Attorney Dennis B. Evanson of Sandy, Utah, was convicted of conspiracy to commit mail and wire fraud,
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New Jersey Medicare Contractor Settles Health Care Fraud Case under False Claims Act

August 16, 2008
Michael Sullivan

The Medicare program depends on the integrity of “trusted contractors” to process and pay Medicare claims. This past week, one of those “trusted contractors” operating in New Jersey, BlueCross BlueShield of Tennessee, agreed to pay the federal government $2.1 million to resolve allegations that it violated the False Claims Act.

BlueCross BlueShield of Tennessee operated as the primary Medicare Part A Fiscal Intermediary for New Jersey, under the name “Riverbend Government Benefit Administrators.”

The government had alleged that BlueCross BlueShield of Tennessee “failed to
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OIG Approves False Claims Acts of California, Georgia, Indiana, and Rhode Island, But Disapproves False Claims Acts of Florida, Louisiana, Michigan, New Hampshire, New Mexico, and Oklahoma

August 6, 2008
Michael Sullivan

The wave of new State False Claims Acts has generated a flurry of letters from the Office of Inspector General of HHS this past week. OIG has now “approved” the new State False Claims Acts of California, Georgia, Indiana, and Rhode Island, but has “disapproved” those of six other states: Florida, Louisiana, Michigan, New Hampshire, New Mexico, and Oklahoma.

As this whistleblower lawyer blog has written about extensively, Congress has created financial incentives for states to enact their own versions of the highly
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New Whistleblower Law Promotes Consumer Product Safety

August 5, 2008
Michael Sullivan

On July 31, Congress enacted a new Whistleblower Law designed to promote consumer product safety. The new federal legislation specifically was enacted to protect public and private sector employees who disclose to their employers, a regulatory agency or a state Attorney General any perceived violation of the Consumer Product Safety Commission. The law also provides protection for employees who refuse to participate in violations of the Consumer Product Safety Commission Act. Obviously, the purpose of this legislation was to protect employees who, in good faith,
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IRS Announces Process for Review of Whistleblower Claims by IRS Large and Midsize Business Division (LMSB)

August 1, 2008
Michael Sullivan

As another step toward the further development of the new IRS Whistleblower Program, our friends at the IRS Large and Midsize Business Division (LMSB) in Lower Manhattan have announced a three-step process for IRS Whistleblower claims that are eligible for the new “rewards” authorized by Congress in December 2006.

IRS Commisioner Frank Ng describes it as a “process for analyzing informant information and disseminating it to the field” for claims with at least $2 million in question, which is the threshold amount for whistleblowers
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Judges Address New State False Claims Act in Georgia

July 30, 2008
Michael Sullivan

At the annual “Continuing Judicial Education” conference in St. Simon’s Island, Georgia this week, I was honored to be invited to speak to the assembled judges about the new state False Claims Act in Georgia, the State False Medicaid Claims Act.

As this whistleblower lawyer blog has written about extensively, there is a wave of new state False Claims Acts across the country, as Congress has urged states to replicate the dramatic successes of the federal False Claims Act in stopping those
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