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Whistleblower Blog

International Tax Evasion Targeted by IRS Move to Revamp Its Large Business Division

To battle offshore tax abuses and other international tax fraud and tax evasion, the IRS has announced that it is “realigning” and renaming its Large and Mid-Size Business (LMSB) division. To reflect its new emphasis, it will known as the “Large Business and International” division (LB&I).

As more transactions cross international borders, and more corporations and wealthy individuals use offshore tax havens and foreign low tax jurisdictions to avoid their tax obligations, the IRS is smart to focus more of its enforcement efforts in this way.

Based on our experience with tax whistleblowers, it is clear that the IRS Whistleblower Program is already seeing increasing numbers of tax whistleblower claims dealing with offshore tax abuses and other international tax issues.

The new IRS international unit will include a “transfer pricing” director, as well as a chief economist, who will oversee the IRS’s economic positions pertaining to transfer pricing.

(Transfer pricing, in ordinary language, involves a multinational company’s reallocating income or expenses between related entities in different countries with different tax rates to reduce taxes, by artificially increasing or decreasing the price one business entity charges another for goods, services, or intangibles. Transfer pricing cases can be good IRS Whistleblower claims.)

This action is the latest IRS step to address international tax evasion, including the investigation of the misuse of offshore accounts and foreign entities by U.S. taxpayers. Last fall, the IRS introduced a Global High Wealth Industry unit to improve monitoring of tax compliance by high income individuals, and their related enterprises.

Time will tell if the IRS succeeds in its stated goal “to create a more centralized organization dedicated to improving international tax compliance.”

The IRS announcement is reprinted below:
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Offshore Tax Havens Face Increasing Scrutiny, With IRS Whistleblowers Assisting

“Offshore” accounts are an increasing priority of IRS enforcement, aided by the new IRS Whistleblower Program. The Offshore World has changed and will never be the same again. The traditional tax haven assurance of secrecy and anonymity won’t necessarily work any more.

The US has concluded Tax Information Exchange Agreements (TIEA’s) with a number of Offshore jurisdictions. Although the TIEA’s fall short of comprehensive Double Tax Treaties, they allow the IRS to obtain tax information about entities and accounts in Offshore jurisdictions under
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How Whistleblower Lawyers Work Alongside Government Lawyers In Successful Qui Tam Cases Under the False Claims Act

When whistleblower attorneys bring a qui tam False Claims Act case, the most successful results usually occur when Government counsel and the whistleblower’s lawyers (Relator’s counsel) work together in what is known as the “public-private” partnership model.

This approach to qui tam cases allows the government to leverage its limited resources by calling on the resources provided by private attorneys. This is essentially a “joint prosecution effort, ” in which the government counsel and investigators can rely on Relator’s counsel at each stage,

–from the beginning of its investigation,

–to obtaining input for preparation of subpoenas for documentary evidence from the defendants,

–to review of evidence compiled by the government in response to subpoenas,

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New Rewards for Whistleblowers Reporting Bribery of Foreign Government Officials, Corporate Fraud In Foreign Government Contracts

When the President signed the new financial reform bill into law today, new whistleblower provisions quietly took effect to battle corruption, bribery, and corporate fraud to obtain foreign government contracts.

This new law creates the new SEC whistleblower program that we have followed since its gestation after the Madoff scandal broke. The SEC and the U.S. Department of Justice share jurisdiction over a growing and increasingly important area of enforcement, the Foreign Corrupt Practices Act (FCPA).

Bribery of foreign government officials in international business transactions, and false entries in books and records of those companies within the statute, are the targets of the FCPA. Whistleblowers whose information helps the SEC recover monetary sanctions from those corrupt entities in FCPA cases now have an enforceable right to a monetary award of 10-30%.

Based on the increasing number and size of these FCPA cases, the rewards to whistleblowers can be meaningful–as they must be to cause whistleblowers to come forward. Over the past decade, the government has pursued more and more FCPA cases, and some recover hundreds of millions of dollars.

Recall that, in late 2008, Siemens agreed to pay more than $1.6 billion to the United States and Germany, after allegedly paying “$1.4 billion in bribes to government officials in Asia, Africa, Europe, the Middle East and the Americas.” Announcing the guilty plea and settlement, the government described “a corporate culture in which bribery was tolerated and even rewarded at the highest levels of the company.”

The SEC obtained $350 million in disgorgement from that settlement, which was the largest FCPA settlement to date.

In announcing that 2008 recovery, the government explained that “there is no question that the Department has in recent years significantly increased its FCPA enforcement. From 2001 to 2004, the Department resolved or charged 17 FCPA cases. For the period of 2005 to 2008, that number is 42 resolutions, representing an increase of more than 200 percent within these four years as compared to the prior four-year period.”

With money scarce both at home and abroad, it is even more urgent to recoup funds lost to fraud. The new SEC whistleblower awards and Commodity Futures Trading Commission rewards should prompt more efficient law enforcement efforts to stop this fraud, just as the False Claims Act and the new IRS Whistleblower Program have shown is possible.

This corruption harms legitimate businesses, who cannot compete when corruption prevents a level playing field. This crime also causes damage to others, as the government explained in announcing the Siemens settlement. That transcript is reprinted below, and in part states:

For let there be no doubt that corruption is not a victimless offense. Corruption is not a gentlemen’s agreement where no one gets hurt. People do get hurt. And the people who are hurt the worst are often residents of the poorest countries on the face of the earth, especially where it occurs in the context of government infrastructure projects, contracts in which crucial development decisions are made, in which a country will live by those decisions for good or for bad for years down the road, and where those decisions are made using precious and scarce national resources.

To illustrate the types of corruption this new whistleblower law should bring to light more often, the government’s announcement of the 2008 Siemens settlement is reprinted below:
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Whistleblowers Reporting Derivatives Fraud? Whistleblower Incentives Must Be Paid by CFTC Under New Financial Reform Bill

The new financial reform bill that awaits the President’s signature this week has something important for potential whistleblowers with knowledge of fraud in options, futures, derivatives and other financial products within the jurisdiction of the Commodity Futures Trading Commission (CFTC). The bill will modify the Commodity Exchange Act to provide whistleblower rewards and protections.

Similar to the new SEC whistleblower awards for persons who reports securities fraud, the rewards to whistleblowers will be available if the CFTC recovers monetary sanctions of more than $1 million because of the whistleblower’s information.

Like SEC whistleblowers, CFTC whistleblowers will have an enforceable right to 10-30% of what the CFTC recovers in substantial cases when the whistleblower has “voluntarily provided original information to the Commission that led to the successful enforcement of the covered judicial or administrative action, or related action.” (Section 748 of Dodd-Frank Wall Street Reform and Consumer Protection Act, reprinted below).

Crucial to the success of these new whistleblower programs, whistleblowers will know that they will receive at least 10% of the recovery in significant cases when the whistleblower meets the law’s criteria.

The history of the nation’s major whistleblower statute, the False Claims Act, shows that guarantees of meaningful rewards are the critical element in causing whistleblowers to report substantial fraud. Fraud recoveries increased dramatically once Congress amended the False Claims Act in 1986 to provide meaningful whistleblower rewards of 15-25% in cases in which the government intervenes.

The new IRS Whistleblower Program is proving the same point, as quality submissions have poured in now that a right to a meaningful whistleblower award exists.

Congress has set forth general criteria for the CFTC to determine the amount of the award within the 10-30% range. Factors that the CFTC will consider include:

“(I) the significance of the information provided by the whistleblower to the success of the covered judicial or administrative action;

”(II) the degree of assistance provided by the whistleblower and any legal representative of the whistleblower in a covered judicial or administrative action;

”(III) the programmatic interest of the Commission in deterring violations of the Act (including regulations under the Act) by making awards to whistleblowers who provide information that leads to the successful enforcement of such laws; and
”(IV) such additional relevant factors as the Commission may establish by rule or regulation”.
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New SEC Whistleblower Program Approved by Senate in Financial Reform Bill

Since the SEC refused for years to heed Madoff whistleblower Harry Markopolis’ warnings that Madoff was running a Ponzi scheme, we have followed with great interest the efforts of those who sought to create the first meaningful SEC whistleblower program.

The Senate this week took an important step by authorizing a new SEC whistleblower program–one more potent than the SEC apparently wanted–as part of the Wall Street Reform and Consumer Protection Act.

When the Madoff fiasco surfaced, Congress asked why the law failed to encourage SEC whistleblowers to come forward, in the same way the qui tam whistleblower provisions of the False Claims Act have been so successful in rewarding whistleblowers for helping stop fraud against the government. Those same principles in the new IRS Whistleblower program have caused an explosion of valuable information presented by whistleblowers in exposing tax liability of many billions of dollars.

SEC leadership helped shape the tepid House version, which would have made rewards to whistleblowers wholly discretionary.

When we criticized the House version of the proposed SEC whistleblower rewards for that reason, staffers of the Senate Banking Committee contacted us to discuss what a meaningful whistleblower program should include, based on our experience with whistleblowers under the False Claims Act and IRS Whistleblower program. Our response was that, at minimum, a whistleblower with information about significant fraud must have a legally enforceable right to a meaningful reward.

Fortunately, the Senate version included such a right to an award of 10-30% in substantial cases, and the Senate view ultimately prevailed (see below text of whistleblower provisions in Section 922).

It remains to be seen how SEC leadership will respond. At this spring’s Offshore Alert Conference in Miami, an SEC official listened to his panelists describe how successful mandatory rewards have been in causing whistleblowers to come forward in False Claims Act cases and IRS Whistleblower claims, yet apparently failed to “get” that SEC whistleblowers need a similar incentive to come forward in the best cases.

In our experience in representing whistleblowers, persons with the most significant information will rarely come forward without an enforceable right to a meaningful reward. The SEC has not exactly fostered public confidence in its judgment in recent years. If it embraces whistleblowers as Congress has directed, the SEC will find that–like the IRS Whistleblower Office–it will receive better, and dramatically more, information about fraud within its jurisdiction.

The full text of section 922 regarding SEC whistleblowers is reprinted below:
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New IRS Procedures for Whistleblowers Should Encourage More Significant IRS Whistleblower Claims

This morning’s Washington Post quotes me, among others, in criticizing one aspect of the new procedures for IRS whistleblowers recently published in the Internal Revenue Manual. That one glaring defect aside, the new IRM procedures are welcome news that should encourage more IRS whistleblowers to come forward.

Today’s Post article by David Hilzenrath on the IRS whistleblower procedures makes the following point, among others:

“There’s apparently an institutional resistance to rewarding whistleblowers that will take some time to dissipate,” said Michael A. Sullivan
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TARP Fraud and Other Violations Alleged by SEC Against Chairman of Major Mortgage Lender

As we have written previously, the billions of “bailout” dollars to financial institutions through the TARP program inevitably would result in many fraud cases, including some by TARP whistleblowers.

Today, the SEC announced allegations of TARP fraud and securities fraud of more than $1.5 billion other violations against Lee B. Farkas, through his company Taylor, Bean & Whitaker Mortgage Corp. (TBW).

According to the SEC, Farkas “sold more than $1.5 billion worth of fabricated or impaired mortgage loans and securities to Colonial Bank. Those loans and securities were falsely reported to the investing public as high-quality, liquid assets. Farkas also was responsible for a bogus equity investment that caused Colonial Bank to misrepresent that it had satisfied a prerequisite necessary to qualify for TARP funds. When Colonial Bank’s parent company – Colonial BancGroup, Inc. – issued a press release announcing it had obtained preliminary approval to receive $550 million in TARP funds, its stock price jumped 54 percent in the remaining two hours of trading, representing its largest one-day price increase since 1983.”

Perhaps the SEC is showing a new attitude after the Madoff debacle. Whistleblowers should soon be able to participate in the new SEC whistleblower program, which is part of the financial reform legislation now being hashed out in conference committee.

The SEC’s full release is reprinted below:
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New IRS Whistleblower Claim Procedures for Determining Awards to Whistleblowers Announced

Today the long-awaited IRS Whistleblower Office procedures for determining awards to tax whistleblowers were announced in an update to the Internal Revenue Manual.

The new provisions for IRS Whistleblower claims address many details of how tax whistleblower claims will be handled. The full provisions are reprinted below:

Part 25. Special Topics
Chapter 2. Information and Whistleblower Awards
Section 2. Whistleblower Awards

25.2.2 Whistleblower Awards
25.2.2.1 Overview: Authority and Policy
25.2.2.2 General
25.2.2.3 Submission of Information for Award under Sections 7623(a) or (b)
25.2.2.4 Initial Review of the Form 211 by the Whistleblower Office
25.2.2.5 Grounds for Not Processing Claims for Award
25.2.2.6 Processing of the Form 211 7623(a) Claim for Award
25.2.2.7 Processing of the Form 211 7623(b) Claim for Award
25.2.2.8 Whistleblower Award Administrative Proceeding
25.2.2.9 Award Computation
25.2.2.10 Appeal Rights under section 7623(b)
25.2.2.11 Confidentiality of the Whistleblower
25.2.2.12 Funding Awards
25.2.2.13 Award Payment Procedures
25.2.2.14 Annual Report to Congress
Exhibit 25.2.2-1 1891 Letter
Exhibit 25.2.2-2 Rejection Letter – 1010 Letter
Exhibit 25.2.2-3 Acknowledgement Letter – Whistleblower Office
Exhibit 25.2.2-4 Debriefing Checksheet
Exhibit 25.2.2-5 Rejection Letter from the Whistleblower Office
Exhibit 25.2.2-6 Memorandum from Steven T. Miller, February 17, 2010
Exhibit 25.2.2-7 Sample Notice of Opportunity to Comment Letter
Exhibit 25.2.2-8 Sample Summary Award Report
Exhibit 25.2.2-9 Award Recommendation-Opportunity to Comment
Exhibit 25.2.2-10 Confidentiality Agreement
Exhibit 25.2.2-11 Sample Preliminary Award Report
Exhibit 25.2.2-12 Sample Determination Letter
Exhibit 25.2.2-13 Award Calculation Computation Guidelines (more…)

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Offshore Tax Violations: Sen. Grassley Calls For Accounting of Use of UBS Information Provided by Tax Whistleblower

Offshore tax evasion is a great priority for the IRS, and thus also the IRS Whistleblower Program.

Today, the leading advocate for robust whistleblower laws has called for the Treasury Department and the IRS to account for their use of information provided by the “UBS whistleblower,” Bradley Birkenfeld.

Sen. Chuck Grassley issued a press release today summarizing his letter to Treasury Secretary Tim Geithner and IRS Commissioner Douglas Shulman. Grassley commented on Swiss legislators’ move today to “unravel a U.S.-Swiss treaty that would allow for the disclosure of more client information to allow U.S. officials to review cases for potential enforcement of U.S. tax laws.”

“The action by Swiss legislators today to try to unravel an international treaty emphasizes the need for U.S. authorities to exhaust the information they have on U.S. taxpayers who use offshore accounts to evade taxes,” Grassley said. “Honest taxpayers deserve to know what’s happened with what could be very valuable leads, and if it’s nothing, they deserve to know why. It’s a matter of tax fairness and law enforcement. And the IRS shouldn’t wait for international agreements to fall into place when tax evaders can be identified through other appropriate tools.”

Grassley did not advocate for the UBS whistleblower’s release from federal prison, however, but focused on the government’s use of the information he provided. (See prior discussions of the UBS whistleblower’s case here).

Grassley, more than anyone, is responsible for passage of the December 2006 legislation that created the first meaningful IRS Whistleblower Program. The promising new IRS Whistleblower Program was inspired by the great successes of the nation’s primary whistleblower statute for exposing fraud, the False Claims Act.

Sen. Grassley’s announcement and letter today are reprinted below:
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Justice Department’s New Focus on Individuals’ Liability in “Yates Memo” Should Impact Qui Tam Whistleblower Cases under False Claims Act

Yesterday the Justice Department apparently responded to the frequent lament, “Why has almost no one gone to prison for the financial crisis?” DOJ signaled that it will now look to hold responsible both culpable individuals and their companies for corporate misdeeds–both criminally and civilly.

If DOJ means what it says, this policy change is profound. It should hit corporate officers whose business models are based on fraud and false claims. It should also snare high level executives who turn a blind eye to wrongdoing, and who typically get away with it.

Corporations can act only through the humans who run them. Sometimes those humans steer the business to corrupt methods.

Until yesterday’s change in DOJ policy, however, the few corporations brought to heel by DOJ for crimes, fraud, or false claims absorbed the consequences, while the individuals who directed the wrongdoing usually escaped responsibility. Those individuals were free to continue their corrupt practices at the same firm or a different one.

New U.S. Deputy Attorney General Sally Yates plans to change that result. As a federal prosecutor in Atlanta, Yates was not afraid of pursuing big cases against individuals and their companies, as I learned from representing clients in some of those cases.

Yesterday Yates issued a Memorandum titled, “Individual Accountability for Corporate Wrongdoing.” It is far-reaching, if implemented. Yates announced “six key steps to strengthen [DOJ’s] pursuit of individual corporate wrongdoing, some of which reflect policy shifts and each of which is described in greater detail below:
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SEC Whistleblower Office’s Stand Against “Silencing” Employees Through “Confidentiality” Agreements

Sean McKessy of the SEC Whistleblower Program is right to continue his mission against muzzling whistleblowers through “confidentiality” agreements, for one simple reason:

Intimidating witnesses from reporting fraud is a form of obstruction of justice.

Although “confidentiality” agreements may appear innocent on their face, a company’s suggesting in any way that its employees refrain from reporting fraud or other violations of securities laws crosses the line. Too often, that is often the effect of these agreements–if not the intent as well.

The SEC took action last month in filing and settling charges against KBR Inc. It announced this “first enforcement action against a company for using improperly restrictive language in confidentiality agreements with the potential to stifle the whistleblowing process.”

The SEC said that, in internal investigations, KBR required witnesses to sign confidentiality statements warning that they could face discipline and be fired if they discussed the matters with outside parties without the prior approval of KBR’s legal department. The SEC found that KBR violated SEC Rule 21F-17, which bars firms from impeding whistleblowers from reporting possible securities violations to the SEC.

As Mr. McKessy observed, “KBR changed its agreements to make clear that its current and former employees will not have to fear termination or retribution or seek approval from company lawyers before contacting us.” He warned that “[o]ther employers should similarly review and amend existing and historical agreements that in word or effect stop their employees from reporting potential violations to the SEC.”

Bloomberg BNA contacted me recently to comment on the prevalence of such misuse of confidentiality agreements, in a piece reprinted here in part:

“More and more we see firms attempt to conceal fraud by using ‘confidentiality agreements’ to intimidate witnesses from reporting wrongdoing to authorities,” said Michael Sullivan, a partner at Finch McCranie LLP, Atlanta, who represents SEC whistle-blowers.
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Qui Tam, IRS, CFTC, and SEC Whistleblower Claims Update: Today’s Whistleblower Law Symposium A Success

Since 2007, top officials from federal and state agencies and many of the country’s experts in whistleblower cases have gathered in Atlanta to discuss and debate anti-fraud efforts at the Whistleblower Law Symposium.

Today I was excited to chair our Whistleblower Law Symposium once again, as these experts explored the latest developments in qui tam cases under the False Claims Act, and SEC whistleblower, CFTC whistleblower and IRS whistleblower claims. The breadth of expertise of today’s speakers was unusual.

First, top enforcement officials from California, Georgia and Texas shared their approaches and priorities under their state False Claims Acts. We were honored to hear from Britt Grant, Solicitor General of Georgia, about Georgia Attorney General Sam Olens’ impressive new efforts to stop the theft of taxpayer funds.

Joining Britt Grant were California’s Nicholas Paul, Texas’ Ray Winter, and Georgia’s Van Pearlberg, who described how their offices battle Medicaid fraud that is brought to light in state False Claims Act cases. A special thanks goes to Jim Breen for moderating this discussion and sharing his own experiences in working with the states in pursuing large health care fraud cases.At today’s Whistleblower Law Symposium, Jim Breen joined me in presenting former Rep. Edward Lindsey with the “Integrity in State Government Award” from the Taxpayers Against Fraud Education Fund.

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Today’s SEC Whistleblower Award to Former Officer of Company Shows Flexibility of SEC Whistleblower Rules

The SEC announced today its first SEC Whistleblower award to a former company officer. The award of a half-million dollars was for “original, high-quality information about a securities fraud,” which resulted in an SEC enforcement action with sanctions of more than $1 million.

Typically, corporate officers, directors and other corporate fiduciaries are not eligible for SEC Whistleblower awards when they learn of fraud through employee reports. The SEC built in flexibility in its rules, however, when the officer waits “more than 120 days after other
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SEC Welcomes SEC Whistleblowers Who Are Foreign Citizens Living Abroad

Yesterday’s record award to an SEC whistleblower has far-reaching consequences because the SEC made clear it will reward foreign citizens living abroad who meet its criteria for a whistleblower award.

This decision rejects any suggestion that the SEC Whistleblower Program’s reach ends at the nation’s borders. The SEC recognized that a leading federal appeals court imposed such a limitation on the anti-retaliation provisions of the Dodd-Frank law, which authorized the SEC Whistleblower Program, but announced it is taking a different approach to whistleblower awards:
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SEC Whistleblower Receives Record Award of $30 Million

Today the SEC Office of the Whistleblower announced the largest-ever award to an SEC whistleblower: $30 million to a whistleblower living abroad.

The size of the award reflects the SEC’s seriousness about utilizing whistleblowers’ information to expose major securities violations. The SEC described this as “ongoing fraud that would have been very difficult to detect” without the whistleblower, according to the Director of the SEC’s Division of Enforcement, Andrew Ceresney.

Sean McKessy, Chief of the SEC’s Office of the Whistleblower, added that this award demonstrates
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FATCA – Foreign Bank Account Headaches

FATCA is being implemented in a number of countries outside the U.S., with the result that U.S. individuals who hold foreign bank or financial accounts and have not disclosed these accounts in the U.S., are about to be reported to the IRS.

(This post is by our colleague Richard Rubin of Rubin Law (www.rubinlaw.us), a tax attorney with significant experience in U.S. cross-border matters, including FATCA and U.S. international compliance.)

Bank accounts in countries outside the U.S. can cause headaches when owned by U.S. taxpayers. While owning foreign accounts has always entailed a reporting headache for U.S. taxpayers, the problem has recently heightened as a result of the FATCA legislation that is being implemented in a number of countries outside the U.S.

FATCA is a set of U.S. tax reporting rules that impact U.S. citizens, Green Card holders and other U.S. tax resident individuals who have accounts with non-U.S. banks or financial institutions.

An acronym for the Foreign Account Transactions Compliance Act, FATCA requires banks and financial institutions in countries outside the U.S.to provide the IRS with details of accounts that are owned by U.S. taxpayers. Although the mechanism varies slightly by country, in most countries where FATCA has been implemented banks and financial institutions are required to report these details to the Revenue Authority of that country, and the Revenue Authority is required to pass this information along to the IRS.
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What the Just-Released 2013 IRS Whistleblower Office Annual Report Means for Future Tax Whistleblowers

The just-released FY 2013 IRS Whistleblower Office Annual Report reveals clues to what the future holds for tax whistleblowers.

Steve Whitlock, Director of the IRS Whistleblower Office, gave a preview last Fall. Listening to an audience react enthusiastically to his SEC counterpart Sean McKessy discuss awarding more than $14 million to a whistleblower, Whitlock wryly observed that the IRS had “only” awarded $50 million to whistleblowers in FY 2013.

To those who follow the IRS Whistleblower Program closely, Whitlock’s comment was a rare moment to
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New York False Claims Act Case Against Sprint Nextel Takes Giant Step Forward

In a momentous decision that will impact many future cases, New York Attorney General Eric Schneiderman has just won a major victory in his pioneering tax fraud case against Sprint Nextel Corp.

The Appellate Division unanimously affirmed the trial court’s 2013 ruling (background discussed here) to allow Schneiderman’s first tax enforcement case under the New York False Claims Act to proceed.

The Complaint alleges that Sprint unlawfully failed to collect and pay $130 million in New York sales taxes on a portion of its revenue from fixed monthly access charges. Like the federal False Claims Act, the New York False Claims Act provides for recovery of three times the amount of damages incurred–“treble damages.”

A major aspect of Schneiderman’s victory was that it makes Sprint potentially liable under the New York False Claims Act for tax fraud that preceded the Act’s 2010 amendments to include tax violations. In fact, the court affirmed the trial court’s decision allowing the case to proceed in all respects:

The court properly denied the motion to dismiss the complaint in its entirety. Plaintiffs’ complaint adequately alleges that defendants violated New York’s False Claims Act (State Finance Law § 189[1][g]), Executive Law § 63(12) and Article 28 of the Tax Law by knowingly making false statements material to an obligation to pay sales tax pursuant to Tax Law § 1105(b)(2). Contrary to defendants’ interpretation, the Tax Law provision is not preempted by the Federal Mobile Telecommunications Sourcing Act (4 USC 116 et seq.).

The court also properly rejected defendants’ argument that the New York False Claims Act with respect to statements made under the Tax Law should not be given its stated retroactive [*2]effect. Defendants fail to show that the Act’s sanction of civil penalties, including treble damages, is so punitive in nature and effect as to have its retroactive effect barred by the Ex Post Facto Clause (US Const, art I, § 10).

We once again applaud the efforts of Attorney General Schneiderman and his office to protect the public’s purse though the New York False Claims Act. The case shows the value that tax whistleblowers can bring to stop those who refuse to pay their fair share of the tax burden.

The Attorney General’s announcement is linked here.
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First Large SEC Whistleblower Award Is Encouraging, As SEC’s “Loss” in Mark Cuban Case May Be

“Government shutdown” month (October 2013) has brought encouraging news from the SEC–including some good news you might not realize.

On October 1, the SEC announced its first SEC whistleblower award of more than $1 million. The Commission’s Office of the Whistleblowerer led by Sean McKessy awarded more than $14 million to a whistleblower who remains confidential. According to the SEC, the whistleblower’s information “led to an SEC enforcement action that recovered substantial investor funds.”

Two weeks later, a Texas jury found against the SEC
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